Europe’s Green Regulations Place New Transparency Requirements on Textile Supply Chains

For many years, environmental requirements in the textile industry were often viewed as an additional set of criteria for production activities. That approach is changing. In Europe, new regulations are shifting the focus from encouraging businesses to voluntarily disclose their sustainability efforts to requiring products to be designed, manufactured and placed on the market with clearer environmental information.

This change has significant implications for manufacturers outside Europe, including Vietnamese businesses. An exported product must meet more than requirements for quality, delivery time and cost. Businesses must also be able to explain the product’s materials, production processes, energy consumption, chemical use, durability, reparability, reusability or recyclability when relevant requirements apply.

This is not a single standard designed exclusively for the apparel industry. It is a combination of policy areas covering ecodesign, extended producer responsibility, waste management, the prevention of misleading environmental information and due diligence responsibilities in supply chains. The practical impact will depend on each product, market and specific implementing regulation, but the overall direction is relatively clear: environmental data will become part of competitiveness.

From Voluntary Commitments to Verifiable Requirements

On June 13, 2024, the European Union adopted Regulation (EU) 2024/1781 establishing a framework for setting ecodesign requirements for sustainable products. The regulation expands the scope of ecodesign policy, which previously focused primarily on energy-related products. Clothing and footwear are among the product groups identified in the regulation as potentially subject to specific requirements.

The framework regulation does not mean that every requirement for textile products has taken effect immediately. Detailed criteria must be developed through subsequent European Union product regulations. This is an important point for businesses to note: a framework document should not be interpreted as meaning that all types of apparel must meet the same set of indicators at the same time.

Nevertheless, the policy direction has changed how brands and importers assess suppliers. Questions that were previously handled at the certification or factory-audit level are now tending to go deeper into individual material lines, specific production stages and the ability to cross-check data. A claim such as “using recycled materials” has limited value if a business cannot demonstrate the source of the material, the proportion used, the calculation method and the inspection records.

Digital Product Passports and the Data Challenge

One of the key concepts in the new framework is the Digital Product Passport. In essence, this is a mechanism linking a product to a set of data about its characteristics, origin and sustainability-related factors. The specific content, level of disclosure and access method will depend on the regulations applicable to each product group.

For textile businesses, the challenge is not simply creating a data code for a product. The more difficult issue is ensuring that the information behind the code is complete, consistent and verifiable. A shirt may involve yarn, fabric, dyes, accessories, packaging, cutting and sewing, and transportation. If data from different suppliers is recorded in different ways, it will be difficult for the business to consolidate it into a reliable file.

This makes data management part of production management. Businesses need to know which data is generated at the spinning mill, which data belongs to the weaving or dyeing factory, and which data is provided by the garment manufacturer and logistics provider. This must be accompanied by rules on access rights, retention periods, update mechanisms and responsibility when information is inaccurate.

Textile Supply Chains Must Be Standardized from the Materials Stage

The textile industry has a multilayered and fragmented supply chain. An order may use materials from several countries and pass through various specialized businesses before being completed at a garment factory. This fragmentation gives the industry flexibility in capacity and cost, but it also makes traceability more complex.

At the business level, the first step does not necessarily have to be an immediate investment in a large technology platform. More important is mapping the supply chain by product group and identifying the minimum data that needs to be collected. For materials, records may include fiber composition, source, relevant certifications and volume used. For production, businesses need to consider indicators such as electricity, water, chemicals, waste and loss rates if required by customers or regulations.

It is also important to distinguish between directly measured data and data declared by suppliers. A figure taken from an energy bill, meter or production record is fundamentally different from information entered only in a supplier’s declaration form. Both types of data may be necessary, but they should not be presented as having the same level of verification.

Businesses must also avoid a situation in which each department uses its own calculation method. For example, the concept of the “recycled material ratio” may be calculated based on the weight of the yarn, the weight of the finished product or the entire product including accessories. Without a consistent calculation boundary, results from different orders will be difficult to compare and may easily lead to disputes with customers.

Traceability Is Not Just a Technology Issue

Traceability software can support the collection and sharing of information, but technology does not create accurate data by itself. If procedures for weighing materials, recording production stages or controlling changes have not been standardized, digitization will merely transfer inconsistent data to a new system.

Businesses therefore need to combine three layers of work. The first is operational procedures at the factory and with suppliers. The second is a system of records, coding and cross-checking. The third is independent verification or internal assessment to identify discrepancies. These layers are particularly necessary when businesses use blended materials, recycled materials or purchase goods through multiple intermediary levels.

Impact on Vietnamese Businesses

Vietnam holds an important position in the international apparel supply chain, but many businesses still depend significantly on imported materials and customers’ technical requirements. As environmental requirements are incorporated more deeply into contracts, suppliers may have to meet the standards of brands, the regulations of importing markets and the requirements of inspection bodies at the same time.

The first impact is the cost of compliance. Businesses may need to invest in meters, data management systems, material testing, staff training and supplier assessments. For small businesses, these costs may create greater pressure than for corporations with dedicated legal, sustainability and information technology departments.

However, viewing this only as a mandatory expense would overlook part of the opportunity. When production data is standardized, businesses can identify abnormal consumption of energy, water or materials. Complete records can also shorten the time needed to respond to customer questionnaires and reduce the risk of having to provide the same information again for each order.

The second impact concerns material selection. Switching to recycled fibers or certified materials should not be done solely to create a marketing message. Businesses need to consider supply stability, the ability to meet technical specifications, durability, color, loss rates and verification methods. A material with favorable environmental characteristics on paper but an unstable supply may increase delivery risks.

The third impact concerns relationships with lower-tier suppliers. A garment factory may not directly control the weaving mill, dyeing factory or yarn manufacturer, but information from these businesses affects the records for the final product. As a result, supplier management capabilities will increasingly include assessing data quality, rather than checking only price and delivery time.

Reducing the Risk of “Greenwashing” Information

Alongside ecodesign regulations, Europe is also paying greater attention to environmental claims made to consumers. Directive (EU) 2024/825, empowering consumers for the green transition and adopted on February 28, 2024, amends consumer-protection rules to limit misleading environmental claims or labels. Member States have a deadline for transposing the directive into national law according to the timetable set out in the document.

For textile products, risks may arise when businesses use broad phrases such as “environmentally friendly,” “green,” “sustainable” or “good for the planet” without specifying their scope and supporting evidence. A product may reduce water use at one stage while still generating impacts elsewhere. Therefore, the broader the claim, the more complex the substantiation requirements are likely to become.

A safer approach is to describe the specific factor that has been measured and the limitations of the claim. Businesses should retain records for each piece of marketing information, define the comparison criteria and data period, and identify the person responsible for approval. If a third-party certification is used, it is necessary to clearly distinguish what the certification confirms, whether it applies to the material or the product, and how long it remains valid.

What Roadmap Should Businesses Follow?

At the initial stage, businesses can select several key export product groups to pilot data management. Conducting a pilot within a limited scope helps identify information gaps without disrupting the entire operation. The process can then be expanded to other product lines and suppliers.

The next area of work is developing a minimum data inventory. This inventory should be linked to the actual requirements of customers and markets, rather than collecting every type of information without a defined purpose. Data should be classified according to its level of reliability, provider, verification method and update date.

Businesses should also include data requirements in raw-material purchase contracts and processing contracts. If environmental information is requested only after production has been completed, the ability to supplement the records will be limited and verification costs may increase. Conversely, if responsibilities are defined from the outset, suppliers will clearly understand the documents, formats and deadlines they must provide.

Finally, departments that do not work directly with environmental policy should also be trained. Purchasing, engineering, quality, production and sales departments can all create or use relevant data. A sustainability commitment can operate in practice only when it is translated into specific procedures for these positions.

For Vietnamese businesses, the European market’s green requirements are both a pressure and a test of management capabilities. The advantage will not belong only to factories with modern equipment, but also to businesses that can demonstrate how their products are made. As regulations continue to be specified for different product groups, preparing verifiable data early will help businesses reduce surprises when new requirements enter contracts and market-access procedures.