EU Green Regulations Put Vietnam’s Textile and Garment Supply Chain Under New Data and Design Requirements

The European textile and garment market is shifting from an approach focused on production to one that manages the entire product life cycle. A garment is no longer assessed only by its price, seam quality, or delivery time. Design, material composition, repairability, durability, supply chain information, and end-of-life treatment are increasingly becoming part of market requirements.

For Vietnamese businesses, this change is taking place as the EU has adopted a range of policies to promote the circular economy and sustainable consumption. Ecodesign requirements for sustainable products, requirements related to extended producer responsibility for textiles, and plans to develop digital product passports are creating a new system of requirements. Not all obligations apply immediately to every business or product type, but the policy direction is relatively clear: environmental data will become increasingly closely linked to market access.

From Environmental Requirements to Traceability Requirements

On July 18, 2024, Regulation (EU) 2024/1781 establishing a framework for ecodesign requirements for sustainable products entered into force. The regulation replaces the previous approach, which focused mainly on energy-related products, while expanding the policy’s scope to many other product groups.

The regulation does not automatically impose an identical set of criteria on every product. Instead, the EU will develop specific rules for each product group through appropriate implementing acts or delegated regulations. The criteria may concern durability, repairability, resource efficiency, the percentage of recycled materials, recyclability, environmental footprints, or the provision of information to consumers.

What is particularly notable for the textile and garment industry is that products may be assessed not only at the point of shipment. Buyers and regulators may need to know what type of fiber a product is made from, how it can be disassembled or recycled, what substances it contains, and whether this information is supported by documented records.

This is an important difference from the traditional compliance model. Previously, a business could focus most of its resources on factory standards, chemical testing, and order quality inspections. Under the new policy environment, businesses must also build data-management capabilities covering the entire process from raw materials to finished products.

Digital Product Passports Will Change How Orders Are Managed

A digital product passport, commonly referred to as a Digital Product Passport, is one of the tools the EU plans to use to provide information about products and value chains. The legal framework for ecodesign requirements for sustainable products provides the basis for introducing these data requirements for specific product groups.

In practical terms, a digital product passport is not merely a QR code attached to a label. The value of the system lies in the quality, consistency, and verifiability of the data behind the identifier. Depending on the product group and specific rules, the data may relate to the manufacturer, material composition, material origin, use characteristics, repair, recycling, or end-of-life treatment.

For a garment order, data may need to be linked across multiple stages: yarn procurement, fabric weaving or knitting, dyeing, finishing, cutting, sewing, packaging, and transportation. If each stage uses a different coding system or record-keeping method, compiling information for the final product will be difficult and time-consuming.

This means that digitalization in textile and garment businesses goes beyond installing production-management software. Businesses need to determine what data must be collected, who is responsible for verification, how long the data should be stored, and how to handle inconsistencies in data from suppliers. Even a modern system can produce unreliable data if it lacks procedures for controlling inputs.

Raw Material Data Will Become Part of Competitiveness

In the textile and garment supply chain, garment manufacturers generally do not directly produce all the yarn, fabric, or chemicals used in their products. As a result, their ability to meet environmental requirements depends significantly on the level of cooperation from suppliers at earlier tiers.

Businesses should move toward classifying data according to its level of importance. Information on fiber composition, the percentage of recycled materials, material certifications, chemicals used, and processing stages is often directly related to the product dossier. This data should be collected using standardized forms and accompanied by appropriate supporting documents.

A certification for one batch of materials should not be confused with information that may be applied to a supplier’s entire output. The scope, validity period, assessment criteria, and inspection mechanisms of each certification may differ. As traceability requirements increase, keeping records and reconciling purchasing documents with actual production volumes will be just as important as holding a certification label.

Extended Producer Responsibility Creates Additional Pressure at the Post-Consumer Stage

The EU is also promoting the principle of extended producer responsibility for textiles. Under this approach, the costs and responsibilities related to collecting, sorting, reusing, or treating discarded products may be allocated more heavily to entities that place products on the market.

Specific requirements may vary depending on EU rules and those of individual member states. Exporters should therefore not regard this as an obligation that can be handled separately from customers or importers. In many cases, European buyers will be the parties asking suppliers to provide data, modify materials, or participate in their compliance programs.

The first impact may appear in product design. Products that use too many different materials, contain difficult-to-remove accessories, or include components that hinder recycling may be assessed less favorably in purchasing systems that emphasize circularity. However, recyclability cannot be evaluated solely through general claims. It also depends on collection infrastructure, sorting technology, and actual processing capacity.

This distinction should be made clear in communications about green manufacturing. A product with a high percentage of recycled material is not necessarily easy to recycle after use. Conversely, using a simpler fiber type may support end-of-life processing, but the product’s durability, function, and the impact of the entire production process must still be considered.

Vietnamese Businesses Face Impacts at Multiple Levels

The businesses most directly affected are manufacturers producing exports for European customers. However, the impact does not stop with garment manufacturers. Suppliers of yarn, dyeing and finishing services, trims, packaging, and logistics may also need to provide additional data or meet stricter environmental criteria.

At the order level, customers may require businesses to demonstrate material composition, resource consumption, or compliance with chemical lists. In the long term, these criteria may influence supplier selection, product design, and order allocation. When data becomes part of a capability profile, businesses that compete only on labor costs will face greater difficulty maintaining their position in the supply chain.

Small and medium-sized businesses may face a heavier burden because they lack personnel dedicated to environmental data, information technology, or trade law. Even so, digitalization does not necessarily have to begin with a complex system. Initial steps may include mapping the supply chain, standardizing data categories, harmonizing material codes, and identifying points with high traceability risks.

The more difficult issue lies in deeper supply tiers. A garment manufacturer may know its direct supplier but may not have sufficient information about the source of the yarn, chemicals, or earlier processing facilities. As regulations and customer requirements expand the scope of traceability, purchasing contracts need to clearly define responsibilities for providing information, inspection rights, and how incomplete data will be handled.

Compliance Costs Need to Be Considered Alongside the Risk of Losing Orders

Investments in data systems, testing, training, and process improvements increase costs in the short term. This is a practical concern, particularly when customers have not yet transferred all compliance costs into purchase prices. However, calculating only investment costs while ignoring commercial risks can also lead to poor decisions.

If a business cannot prove the composition or origin of its materials, a customer may have to replace the product, extend the approval process, or move the order to a supplier with clearer documentation. The risk is not limited to a single rejection; it also concerns the business’s reliability in subsequent selling seasons.

Conversely, well-organized data can help businesses reduce the time needed to answer questionnaires, limit duplicate inspections, and identify wasteful processes at an early stage. These operational benefits may emerge even when some legal requirements do not yet fully apply to a particular product.

Three Things Businesses Should Prepare Before Requirements Become Mandatory

First, businesses need to map the data for each key product group. The map should show where materials come from, the stages through which they are transformed, which entities issue the records, and where verification is not yet possible. The goal is not to collect every piece of data that could exist, but to identify the data that matters for customers, regulations, and product risks.

Second, businesses need to standardize how data is recorded and stored. Yarn names, fabric codes, composition percentages, units of measurement, lot numbers, and delivery dates should be used consistently by procurement, warehouse, production, and quality-management departments. When data is recorded differently by each department, creating a product dossier becomes overly dependent on manual work.

Third, businesses should engage with suppliers early. Contracts and supplier-assessment procedures should include requirements concerning data completeness, update deadlines, and accompanying evidence. If tracing materials all the way to their source is not yet possible, businesses should clearly record that limitation rather than making claims broader than their ability to prove.

Businesses also need to distinguish between three concepts that are often used interchangeably: legal compliance, meeting customer requirements, and obtaining voluntary certification. A certification may help demonstrate a particular characteristic, but it does not replace every legal obligation or every traceability requirement imposed by a buyer.

The Textile and Garment Market Will Compete on Supply Chain Reliability

The EU’s new regulations cannot automatically transform the textile and garment industry into a fully circular system. Collection and recycling infrastructure, material costs, data-verification capabilities, and coordination among countries remain issues that need to be addressed. Businesses must also avoid turning environmental information into marketing slogans when they lack corresponding evidence.

However, the policy direction has established a long-term requirement: exported products must be accompanied by reliable documentation on how they were made and how they will be treated after use. For Vietnam’s textile and garment industry, this increases the role of domestic raw material suppliers, testing organizations, data-management platforms, and supply chain collaboration models.

Businesses that prepare early will have more time to test procedures, determine costs, and negotiate with customers. Businesses that wait until all obligations become mandatory before beginning to collect data may have to handle multiple orders, suppliers, and standards at the same time.

In the next phase, the key issue to monitor is not only when the EU introduces specific requirements for each product group. More important is how importers, brands, and retail systems translate those requirements into purchasing conditions. When data on materials, durability, and circularity is incorporated into supplier-selection processes, information-management capability will become part of production and export capability.