diff --git a/.changeset/chilled-colts-heal.md b/.changeset/chilled-colts-heal.md
index 2e7af62912..6cf49518e8 100644
--- a/.changeset/chilled-colts-heal.md
+++ b/.changeset/chilled-colts-heal.md
@@ -2,4 +2,4 @@
 '@sap-cloud-sdk/generator-common': minor
 ---
 
-[Fixed Issue] Fix ESM client code compilation by allowing the `module` option to be set to `nodenext` in a custom `tsconfig.json` file.
+[Fixed Issue] Fix ESM client code compilation by allowing the `module` option to be set to `nodenext` or `node16` in a custom `tsconfig.json` file.
diff --git a/.github/actions/check-public-api/index.js b/.github/actions/check-public-api/index.js
index e5868d6d32..989a5932b9 100644
--- a/.github/actions/check-public-api/index.js
+++ b/.github/actions/check-public-api/index.js
@@ -70637,6 +70637,7 @@ function parseModuleKind(input) {
         es2015: typescript_1.ModuleKind.ES2015,
         es2020: typescript_1.ModuleKind.ES2020,
         esnext: typescript_1.ModuleKind.ESNext,
+        node16: typescript_1.ModuleKind.Node16,
         nodenext: typescript_1.ModuleKind.NodeNext
     };
     if (mapping[input.toLowerCase()]) {
diff --git a/packages/generator-common/src/compiler.ts b/packages/generator-common/src/compiler.ts
index b807258699..c8889562e4 100644
--- a/packages/generator-common/src/compiler.ts
+++ b/packages/generator-common/src/compiler.ts
@@ -256,6 +256,7 @@ function parseModuleKind(input: string): ModuleKind {
     es2015: ModuleKind.ES2015,
     es2020: ModuleKind.ES2020,
     esnext: ModuleKind.ESNext,
+    node16: ModuleKind.Node16,
     nodenext: ModuleKind.NodeNext
   };