Sustainable opportunities for Vietnamese goods to penetrate the global market

Vice President of the European Chamber of Commerce in Vietnam (EuroCham) Nguyen Hai Minh

What regulations is the European Union adopting to promote green transition in global supply chains?

The European Union is on a path to implement the Green Deal. Over the past few years, the European Union has been introducing new regulations, with the aim of integrating these regulations into the compliance of businesses. First, European businesses, then from European businesses they will set requirements, conditions and re-check those requirements, conditions within the group, at the same time in the entire supply chain in other countries.

There are many mechanisms, such as the supply chain due to diligence mechanism that has come into effect since July 2023. Within the next 2-4 years, EU member states will have to internalize this mechanism and require their businesses to strictly implement it.

The main objective of this regulation is that European businesses must assess their entire supply chain, assessing the impacts related to the environment and human rights. Then, there must be solutions and measures to minimize and eventually completely eliminate negative impacts from production and business activities throughout the entire supply chain. That will affect suppliers in the supply chain.

But it must be emphasized that this is not something new. Because up to now, large buyers, large corporations, and European businesses have had policies, rules, and standards that are widely recognized in the world and voluntarily applied. However, now these requirements have been formalized, forcing all businesses to comply to ensure consistency.

In addition to the supply chain due diligence mechanism, what other requirements do European businesses have to comply with regarding sustainability?

In addition to the supply chain due diligence regulations, European companies are also subject to sustainability reporting requirements. Other mechanisms include the anti-deforestation and forest degradation mechanism. This is a mechanism with very clear requirements: products imported and consumed in the European Union market must ensure that they do not cause deforestation or forest degradation.

With these requirements, exporters, especially with some specifically regulated items such as: beef; some other agricultural products such as coffee, cocoa; or some derivative products, will have to declare detailed information about where the product is harvested, where it is grown; or how the land plot must be coded.

Based on such information, importers and distributors in the European Union will make the necessary assessments and report to the State management agencies. They will then assess the risk for this product based on two components, one is an assessment based on the exporting country and the other is based on the information declared by the enterprise. They will then issue a decision on an action plan for such products. According to the original plan, this regulation will take effect from the end of 2024, but the European Union has decided to extend it by one year to 2025 to give countries like Vietnam time to prepare.

What do Vietnamese businesses need to do to meet EU green export standards?

To meet the EU's green export standards, Vietnamese businesses first need to pay attention to updating and understanding global changes, especially regulations related to trade and supply chains from European partners.

The government also needs to play a supporting role by domesticating green standards, making it easier for businesses to meet them by setting criteria that are consistent with domestic practices.

On the business side, those cooperating with European partners need to take advantage of information, advice and support from their partners to prepare for the transition. This requires time to adapt, not only for Vietnamese businesses but also for EU partners when they implement these new regulations.