Europe's green rules: a door as well as a wall

Europe is one of Vietnam's most important customers. In 2025, Vietnam exported 56.2 billion US dollars of goods to the European Union, helped by the EU–Vietnam Free Trade Agreement, in force since 1 August 2020. Europe is now also changing what it asks of its suppliers.

What is changing

The EU Deforestation Regulation will require companies placing coffee, wood, rubber, cocoa, palm oil, soya and cattle products on the European market to show that they were not produced on recently deforested land. After two postponements, it applies from 30 December 2026 for large and medium-sized companies and from 30 June 2027 for micro and small ones. Vietnam has been classified as a low-risk country, which means simplified checks, but buyers will still ask where the farms and plantations behind their goods are located.

The Carbon Border Adjustment Mechanism has applied since 1 January 2026 to imports of iron and steel, aluminium, cement, fertilisers, electricity and hydrogen. European importers must account for the carbon emitted in making these goods, and they will naturally prefer suppliers who can report it. Japanese buyers are moving in a similar direction: Japan's new sustainability disclosure standards, phased in for the largest listed companies from the financial year ending March 2027, include emissions in their supply chains.

Why this can be good news

Rules like these reward companies that know their own business well. In the coffee sector, a 2025 survey found that only about 10 per cent of smallholders kept plot-level records. That is a gap, but also an opportunity: producers and exporters who can offer reliable traceability are expected to win steadier and better-paid contracts. Vietnam itself is heading the same way, with its commitment at COP26 in 2021 to reach net-zero emissions by 2050 and a domestic carbon market now in its pilot phase.

Mostly low-cost steps

Much of the preparation is not expensive. Record where raw materials come from. Keep simple, consistent records of energy use and production. Ask suppliers for the same, and help them where needed. Save energy where it is easy, which lowers costs as well. And talk to European and Japanese customers early to learn exactly what they will need. Companies that treat this as good housekeeping rather than bureaucracy often find that their whole operation runs better as a result.