Greenwashing in Vietnam: Assessing Legal Consequences and Future Direction

With the rise of environmental awareness in Vietnam, consumers are becoming more conscious of sustainability in their buying choices. Although there are no specific laws against greenwashing in Vietnam, current advertising regulations and consumer rights ensure that companies remain accountable.

As environmental consciousness continues to grow in Vietnam, consumers are increasingly considering sustainability in their purchasing decisions. The rising demand for eco-friendly products and services is reshaping markets, with consumers seeking out goods that are advertised as having a reduced environmental impact.

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However, with this rise in eco-consciousness comes the challenge of greenwashing, the practice of companies misleading consumers about the environmental benefits of their products or services. As consumers increasingly seek to support businesses that align with their values, some companies exploit consumers’ good intentions by overstating or misrepresenting the sustainability of their offerings.

While Vietnam does not have specific regulations banning greenwashing, existing laws related to advertising, market competition, and consumer rights may still implicate companies that engage in such practices. But beyond the potential legal repercussions, greenwashing can have severe consequences for a company’s reputation and brand integrity. As consumers become more knowledgeable and discerning, they are increasingly quick to call out businesses that fail to live up to their eco-friendly promises.

Moreover, Vietnam has begun to implement more formal mechanisms for verifying environmental claims through the Vietnam Ecolabel. This state-administered certification system helps businesses demonstrate their commitment to sustainability and provides consumers with a trustworthy guide to identify environmentally friendly products.

Laws and regulations on misleading advertising and consumer protection in Vietnam

Although there are no laws explicitly prohibiting greenwashing in Vietnam, several provisions prohibiting false or misleading advertising to consumers are likely to cover greenwashing activity.

The Law on Advertising, the Law on the Protection of Consumer Rights, the Law on Commerce, and the Law on Competition all contain clauses governing activities related to advertising and promotional materials, including obligations to provide truthful and accurate information and prohibitions on false and misleading advertisements.

Violations of some provisions carry potential fines of up to VND 200 million (US$7,670), and severe violations run the risk of suspensions and confiscation of profits.

Below, we outline some of the key legal provisions regulating advertising to consumers in Vietnam.

Advertising Law of 2012

Several articles of Vietnam’s Law on Advertising of 2012 (the “Advertising Law”) have provisions prohibiting false advertising and obligating advertisers to provide truthful and accurate information on their products and services, both to consumers and to third parties displaying their marketing materials.

For instance, Clause 9 of Article 8 prohibits businesses from advertisement that is false or misleading regarding “the business capabilities or ability of an organization or individual to supply products, goods, or services” or “the quantity, quality, price, utility, design, packaging, brand, origin, type, service method, or warranty period of the products, goods, or services that have been registered or publicly announced”. Clause 2 of Article 12 requires advertisers to provide service providers or publishers with accurate information and to ensure that the product, goods, and service quality are consistent with the advertisements.

Articles 13 and 16 also entitle advertising service providers and advertising audiences to receive truthful and accurate information regarding the products or services being advertised.

Companies found violating the Advertising Law may be liable for fines of up to VND 200 million, among other administrative penalties. Fines specifically for false or misleading advertising range from VND 60 million (US$2,301) and VND 80 million (US$3,068).

Consumer Rights Law of 2023

The Law on the Protection of Consumer Rights (“Consumer Rights Law”) contains provisions complementing the Advertising Law. Article 10 prohibits organizations or individuals trading goods or services from attempting to deceive or mislead consumers through advertising activities. This includes concealing or providing incomplete, false, or inaccurate information about the goods or services, the reputation and business capabilities of the organization, and the nature of transactions between consumers and the trading parties.

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Article 21 requires companies to “provide accurate and adequate information about products, goods, and services”, including quality, uses, and origin. Violation of these two articles carries possible penalties of VND 10 million (US$383) to VND 30 million (US$1,150).

Companies engaged in greenwashing could additionally be found to be exploiting the right of consumers to choose healthy and sustainable products. Under Article 4 of the Consumer Rights Law, consumers are entitled to “select a healthy and sustainable consumption environment”, where “sustainable consumption” is defined as “the efficient use of products, goods and services in a way that minimizes negative environmental and socio-economic impacts while meeting consumption or domestic needs of individuals, families and organizations”.

Article 4 also allows consumers to request compensation for damage if a product or good is inconsistent with that advertised by a company, and to file complaints if a company violates their rights.

Commercial Law of 2005

The Commercial Law of 2005 establishes regulations to ensure that businesses provide truthful and complete information about their goods and services. Article 14 mandates that traders provide consumers with accurate and sufficient details about the products or services they offer, and they are held accountable for the truthfulness of this information. If a business violates these provisions, they may face administrative sanctions, and in cases where the violation constitutes a criminal offense, the violator may be subject to criminal prosecution. Additionally, if the violation causes harm to the state or other parties, the company must compensate the affected individuals or entities.

Moreover, articles 100 and 109 specifically prohibit misleading sales promotions and advertisements about the quantity, quality, price, origin, or other characteristics of goods and services. Articles 112 to 114 outline the responsibilities of commercial advertisers and advertising service providers, ensuring that the information used in advertisements is accurate and truthful. Violations of these provisions can lead to significant legal consequences for companies involved in false advertising or deceptive marketing practices.

Competition Law of 2018

The Competition Law of 2018 addresses unfair competition practices, including false or misleading advertising. Article 45 prohibits businesses from providing deceptive information about their products, services, or promotional offers with the intention of attracting customers from competitors. Companies engaging in such practices may face a range of penalties, including fines of up to 10 percent of their total turnover from the previous fiscal year, with a maximum fine of VND 2 billion (US$76,701) for unfair competition violations. For other violations, fines can reach up to VND 200 million (US$7,670).

Standards for ecolabels in Vietnam

Although Vietnam does not have laws against greenwashing, the country is gradually expanding its environmental compliance framework, stipulating new standards for sustainable production and eco-friendly consumption. These efforts are part of the government’s broader strategy to align with global environmental goals and to address growing concerns about the environmental impact of goods and services. The introduction of the Vietnam Ecolabel program is a key step in this direction, providing clear criteria for assessing the environmental sustainability of products and services.

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The ecolabel program is a state-administered certification system that identifies products and services deemed environmentally friendly based on rigorous life cycle assessments. Governed primarily by Circular No. 02/2022/TT-BTNMT and Decree No. 08/2022/ND-CP, the Vietnam Ecolabel recognizes goods that have reduced environmental impact throughout their production, use, and disposal phases compared to similar alternatives.

The ecolabel is important because it promotes sustainable production and consumption, helps consumers make greener choices, and can offer certified businesses competitive advantages, including incentives from the government. The ecolabel is awarded based on both general and product-specific environmental criteria, covering aspects such as raw materials, production processes, pollution limits, energy use, recyclability, and environmental management systems.

In November 2023, the Ministry of Natural Resources and Environment (MONRE).issued Decision No. 3257/QD-BTNMT, which introduces Vietnam Ecolabel criteria for environmentally friendly plastic packaging. This Decision specifically targets biodegradable and recycled plastic packaging made primarily from polyethylene (PE) or polypropylene (PP), setting standards for material composition, banning hazardous additives, and requiring specific biodegradability or recycled content thresholds. For example, biodegradable packaging must achieve at least 90 percent biodegradation within two years, and recycled packaging must contain at least 20 percent recycled material with specified physical dimensions.

Maintaining consumer trust

As the demand for sustainable products and services continues to rise in Vietnam, companies must recognize the risks associated with greenwashing, both from a legal and reputational standpoint. To avoid greenwashing and maintain consumer confidence, businesses should prioritize transparency and accuracy in their marketing materials. This means ensuring that all claims about the sustainability or environmental benefits of products are truthful, verifiable, and supported by solid evidence. Misleading or exaggerated claims run the risk of both violating advertising and consumer rights laws and eroding consumer trust.

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