Workers at a wood processing factory in Bắc Ninh Province. Vietnam's wood industry is expected to meet ESG standards, the EU’s Deforestation Regulation (EUDR), the Carbon Border Adjustment Mechanism (CBAM). VGP Photo
The global shift towards green supply chains is placing mounting pressure on Vietnam’s export industries, particularly the wood, agriculture and processing sectors, experts warned at a workshop in Hanoi on November 26.
Businesses must be ready to comply with ESG standards, the EU’s Deforestation Regulation (EUDR), the Carbon Border Adjustment Mechanism (CBAM) and the domestic carbon market expected to pilot in 2026, they said.
Opening the workshop, Adapting to Global Green Supply Chains: Challenges and Opportunities for Vietnam’s Exports, organised by the Vietnam Chamber of Commerce and Industry (VCCI), Tran Thi Thanh Tam, director of VCCI’s Centre for Supporting Small and Medium Enterprises, stressed that green transition had become a mandatory requirement to maintain orders and competitiveness as the EU and the United States tighten environmental and supply chain responsibility rules.
According to Associate Professor Vu Anh Dung of VinUniversity, the wood industry, one of Vietnam’s key export pillars, is facing rising pressure from non tariff barriers and new technical regulations. In 2024, Vietnam’s wood and wood product exports reached USD 14.7 billion, nearly 70 per cent of which came from finished furniture. The United States accounted for about 55 per cent of the total value, while the EU contributed roughly USD 500 million.
Although the EU-Vietnam Free Trade Agreement has removed tariffs on many product groups, compliance costs have emerged as the biggest challenge for exporters. Enterprises must meet increasingly complex requirements on timber legality verification, FSC or PEFC certification, chemical testing under REACH and strict obligations under EUDR, including GPS based traceability for each plot of land.
From May 2025, Vietnam will be classified by the EU as a low risk country, reducing inspection rates to about 1 per cent. However, this benefit applies only when exporters provide full documentation and traceability data. EUDR requires evidence that products are not linked to deforestation after December 31, 2020, along with precise coordinates and a declaration of negligible risk. This remains a major hurdle for thousands of small processing facilities lacking digital tools, data systems and standardised traceability platforms.
Alongside external pressures, Vietnam is nearing a significant milestone with the planned launch of its domestic carbon market. Economist Le Duy Anh said the 2025-28 period would focus on building technical infrastructure, a national registry, quota management software and mechanisms for carbon credit trading and offsetting. Full operation and quota auctioning are expected from 2029.
Enterprises capable of early emissions measurement and reduction will gain dual advantages: maintaining orders from major markets such as the EU, the United States and Japan, and generating carbon credits from energy saving measures, renewable energy use or improved waste management. According to IFC recommendations, businesses can save 10 to 20 per cent of energy costs through systematic measurement and optimisation.
Small and medium enterprises, however, face significant difficulties due to the absence of emissions data systems and the high cost of greenhouse gas inventories. Only two to three organisations in Vietnam can currently conduct inventories to international standards, forcing many SMEs to sell carbon credits through intermediaries, which reduces revenue and discourages green investment.
Experts suggested that state policies could further support exporters by reducing corporate income tax for certified deforestation free products, exempting VAT on machinery and equipment for sustainable transition and forming shared compliance cost groups within industrial clusters to lower certification and inspection expenses for SMEs.
Speakers concluded that ESG, EUDR, CBAM and the emerging carbon market are becoming new standards rather than optional commitments. Green transition, they noted, should be seen not as an added cost but as a key driver for sustaining and expanding Vietnam’s export market share. The preparedness of enterprises in data, traceability systems and carbon measurement capacity will determine their competitiveness in the global shift towards greener supply chains.
