EU Green Regulations Are Reshaping Vietnam’s Textile Supply Chain

Europe’s textile market is moving from an approach focused solely on controlling finished products to managing the entire product life cycle. From design, material selection, energy consumption and chemical use to repairability, reuse and recyclability, an increasing number of requirements are being incorporated into the European Union’s (EU) policy framework.

For Vietnamese businesses, this shift is not simply about complying with a new set of technical standards. It may affect how companies develop samples, purchase materials, organize production, store records and work with international brands. Suppliers that focus only on price and delivery times will have to compete in an environment where environmental data, material origin and the ability to substantiate information are becoming increasingly valuable.

The EU’s Ecodesign for Sustainable Products Regulation, commonly known as the ESPR, creates a legal framework for the EU to establish sustainability requirements for specific product groups. The regulation does not automatically impose a complete set of specifications on all textile products as soon as it takes effect. However, it signals a clear direction: sustainability requirements will be integrated more deeply into product design and circulation.

From environmental requirements to data requirements

For many years, textile companies have typically received customer requirements through individual codes of conduct established by each brand. Common topics include restricted chemical lists, labor conditions, energy consumption levels and the proportion of recycled materials. The EU’s new model may standardize this information and link it more closely to individual products.

Adopted by the EU in 2024, the ESPR establishes the basis for developing requirements concerning durability, repairability, resource efficiency, recycled content, recyclability and product information. The specific scope of application will depend on subsequent regulations issued for each product group. Therefore, businesses should not view the ESPR as a single certification or a green label that can replace the entire assessment system currently in use.

The digital product passport is a notable change

One of the important concepts in the new policy framework is the digital product passport. In essence, it is a collection of electronic data associated with a product, a specific product or a product group, intended to provide information related to sustainability characteristics, origin and treatment options at later stages of the life cycle.

A digital product passport does not mean that all of a company’s business information must be made public. What data is required, who has access and how the data is connected will depend on the regulations applicable to each product group. However, this policy direction creates a practical requirement: businesses need sufficiently consistent data systems to answer questions about materials, processes and products when customers or regulators request the information.

For a garment order, the data may relate to fiber composition, material sources, finishing processes, chemicals used, energy consumption information or instructions for handling the product after the end of its life cycle. Not all of this information will necessarily appear in the same form, but the less able a company is to connect its data, the greater its compliance costs will be later.

Direct impacts on Vietnamese textile businesses

Vietnam holds an important position in the garment supply networks serving many international markets, including Europe. Trade relations between Vietnam and the EU are supported by the EU-Vietnam Free Trade Agreement, which entered into force in 2020. However, tariff preferences are only one part of competitiveness. As environmental and traceability requirements rise, the ability to comply with regulations will directly affect the ability to maintain orders.

The first impact will be felt in product development. Businesses may have to work with customers earlier to select suitable fibers, fabric structures, trims and finishing methods. A product with a design that is difficult to disassemble, uses multiple blended materials or lacks information about its composition will face more questions when customers assess its reusability and recyclability.

Next are requirements for suppliers. Garment companies generally do not control the entire materials supply chain. Fabrics, fibers, dyes, trims and packaging may come from many different suppliers. If each party uses its own method of recording data, exporters will find it difficult to create a consistent product file.

Another pressure concerns investment. Chemical management systems, energy measurement, wastewater treatment, waste management and record-keeping are no longer used only for internal inspections. These systems may become the infrastructure businesses need to demonstrate compliance to international customers.

Small and medium-sized businesses face greater pressure

Large companies often have sustainability departments, quality control teams and budgets for data systems. Meanwhile, many small and medium-sized businesses must allocate resources to daily production, so building traceability procedures or calculating environmental data may be viewed as an additional cost.

The difficulty is not limited to purchasing software. Businesses need to standardize material coding, supplier approval procedures, the timing of data recording and the responsibilities of each department. If information exists only in scattered spreadsheets or paper files, compiling it for each order will take time and may easily lead to discrepancies.

In the short term, some businesses may face higher costs when switching to certified materials, upgrading equipment or testing new materials. However, these costs should be distinguished from the costs of inadequate preparation. Expenses arising from urgently supplementing documentation, retesting materials or changing designs immediately before delivery are usually harder to control than investments made according to a planned roadmap.

Materials and design will determine circularity

Discussions about sustainable textiles often focus on the use of recycled fibers or bio-based fibers. These are important approaches, but labeling a product as “recycled” does not mean that the product has high environmental performance in every case. Assessment also depends on the source of the materials, the production process, durability in use, maintenance requirements and post-consumer treatment options.

Therefore, businesses should avoid an approach that simply replaces one type of fiber with another without considering the entire life cycle. A fabric with a high proportion of blended fibers may meet performance requirements but make sorting and recycling more complex. Conversely, a simpler design may support repair, extend the product’s useful life and reduce the amount of product discarded.

Design is also related to trims. Zippers, buttons, labels, sewing thread, coatings and decorative details can affect disassembly or recyclability. As brands begin to request more detailed data, design and purchasing departments will have to coordinate from the outset instead of addressing environmental issues after the sample has been completed.

Recycling should not be equated with sustainability

Increasing the proportion of recycled materials can help reduce the need for virgin materials in some cases. But to substantiate the benefits, businesses need reliable information about the material source, processing technology and related control steps. General claims such as “green,” “environmentally friendly” or “sustainable” without a clear scope and basis can increase communications and compliance risks.

A safer approach is to accurately describe characteristics that can be substantiated: fiber composition, material proportions, applicable standards, the scope of a certification and the date of assessment. If the data is incomplete, businesses should limit their claims rather than extend their messaging beyond the available evidence.

Supply chains need to shift from reacting to coordinating

EU green requirements cannot be addressed only inside a garment factory. An exported product usually involves multiple tiers of suppliers, from fiber, yarn and textile dyeing to packaging and logistics. If the lead company lacks a coordination mechanism, traceability will stop at the direct supplier level and fail to fully reflect the preceding stages.

A practical step is to map the supply chain for key product groups. The map should identify which suppliers provide the main materials, what data is available, what data is missing and which stages carry high risks related to chemicals, water consumption or energy use. This approach is more practical than asking all partners to provide every type of data from the outset.

Next, contracts and purchasing procedures need to clearly define responsibility for providing information. Supplier selection criteria should not be limited to price, quality and delivery time; they could also include traceability capabilities, data reliability and the ability to meet customers’ environmental requirements.

Industry associations, testing organizations and trade support agencies also have a role to play in this process. Small businesses may find it difficult to build a complete measurement and assessment system on their own, so consistent guidance, training programs and shared services can help reduce initial costs. Nevertheless, the business involved in the transaction remains ultimately responsible for the information provided to customers.

Competitive opportunities go beyond cost

The EU’s environmental policies create pressure, but they also open opportunities for businesses capable of supplying consistent and transparent products. As brands manage environmental risks in their supply chains, they tend to prioritize suppliers with strong data systems, clear processes and the ability to improve continuously.

This is an opportunity for Vietnamese businesses to move from purely contract manufacturing to deeper participation in product development. Companies with data on materials, testing capabilities and experience in process improvement will have a basis for discussing design, materials and production plans with customers from the earliest stage.

However, businesses should not expect green investment to automatically result in higher selling prices. The ability to recover costs depends on the customer, product type and market conditions. Companies need to assess the effectiveness of each project specifically, including resource savings, the risk of being excluded from the supply chain, audit costs and the possibility of extending the investment to other orders.

In the period ahead, issues to monitor include the EU’s specific regulations for each product group, data requirements for digital product passports, how brands pass obligations down to suppliers and the development of recycling infrastructure. These factors will determine the level of detail businesses must provide.

For Vietnamese textile businesses, the most practical preparation is not to wait for a final list of requirements before taking action. Companies can begin by taking stock of existing data, identifying key materials and processes, standardizing supplier records, controlling environmental claims and incorporating circularity criteria into the design process. Once the regulations are specified, these foundations will help businesses respond more quickly and reduce transition costs.