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Lam Nguyen Hoang Thao, lawyer, Russin & Vecchi |
This practice might attract eco-conscious customers who are willing to pay a premium for environmentally friendly products, thus providing businesses with a market advantage. In many countries, greenwashing is illegal and can result in severe penalties, loss of customer trust, and reputation damage.
Greenwashing scandals have shaken major corporations. In 2022, global fashion giant H&M faced a lawsuit in the US over its “Conscious Choice” collection, for misleading consumers with exaggerated sustainability claims that lacked credible evidence. Earlier this year, Clorox Australia was fined AUD8.25 million ($5.2 million) by the Australian Competition and Consumer Commission for falsely marketing its ocean-bound plastic recycled bags as eco-friendly, despite insufficient evidence.
Apple is also currently facing a lawsuit over its claim that two of its Apple Watch models are carbon-neutral. The claim is based on Apple’s contributions to afforestation projects in Kenya and China, which generate carbon credits to offset its emissions. However, serious doubts have been raised about whether these projects would have existed without Apple’s involvement. Even Singapore’s Changi Airport has been criticised for its “carbon-neutral” status linked to ineffective offset projects.
In Vietnam, where economic development must now align with environmental actions, these scandals should serve as a strong alert for Vietnamese businesses. They should take proactive steps to avoid such pitfalls.
To highlight their green efforts and commitment, businesses often label their products with consumer-appealing terms such as “eco-friendly”, “sustainable,”, “carbon-neutral,” or “net-zero”. These labels must be supported by proper evidence, otherwise, they risk becoming the basis for greenwashing. While Vietnam has yet to enact specific laws targeting greenwashing, existing regulations can serve as a foundation for legal actions against deceptive environmental claims.
Firms must be aware of these regulations to ensure compliance and avoid potential violations. Article 45 of the Competition Law 2018 bans unfair practices such as providing false or misleading information to attract customers. Violations can result in fines ranging $4,000-$8,000. The Vietnam Competition Commission enforces penalties for such competition offences.
Under the Law on Protection of Consumers’ Rights 2023, Article 21 mandates that companies provide accurate and complete details about product quality, utility, origin, and other attributes. Meanwhile, Article 10.1 prohibits deceiving or misleading consumers with false, incomplete, or inaccurate information about products or services. Overstating the environmental benefits of a product or service may be considered providing inaccurate information under this provision.
Articles 49 and 50 allow consumer protection associations to support consumers and report violations, and assist state agencies in addressing deceptive practices. Violations of these obligations are penalised with fines of $800-1,200, alongside a requirement to publicly retract the false claims. While current domestic penalties may seem modest compared to international fines, the reputational harm and corrective measures, such as forced public retractions or suspension of licences, can significantly impact businesses.
The Law on Advertisement 2012 also provides another layer of oversight. Article 8.9 prohibits advertising inaccurately about product quality, utility, or origin, as well as any claims that could cause confusion about a business’s capabilities, which can include misleading environmental claims. Violations carry fines of $2,400-3,200. Additional sanctions may include licence suspensions of 5-24 months, mandatory removal of deceptive advertisements, and public apology requirements. Finally, under the Commercial Law 2005, businesses are prohibited from engaging in deceptive practices. Article 109.7 bans false advertising about product attributes, and Article 123.5 forbids displaying goods that misrepresent their quality to mislead customers.
We can look at the international context on this issue. In Australia, the Australian Consumer Law regulates misleading or deceptive conduct and false representations about goods, with penalties reaching up to $31.47 million. In Europe, the 2024 Greenwashing Directive bans unverified eco-labels, exaggerated claims based on a single product or business aspect, and vague terms like green or sustainable unless supported by recognised standards. As for the United States, the FTC Act governs deceptive practices and environmental claims, with fines of up to $50,000 per violation.
As Vietnam undergoes an energy transition, businesses should take key steps to ensure their sustainability claims are credible. All environmental claims should be supported by solid evidence, such as verifiable data, third-party certifications, and comprehensive reports on carbon emission cuts, waste reduction, and more.
Transparency should be a priority. Firms should openly disclose both achievements and challenges in sustainability efforts, rather than making unverified carbon-neutral claims. If using carbon offsets, businesses should select carbon credits verified by highly reputable standards such as the Verra or GS, avoiding cheap but unreliable options. Companies should train their staff, especially marketing teams, to ensure that their marketing materials comply with international standards. The legal department should stay updated on new Vietnamese and international regulations, which will help businesses mitigate compliance risks and maintain credibility.
Greenwashing has become a serious legal and ethical issue with real consequences. To avoid risks, firms should ensure their sustainability claims are honest, clear, and backed by evidence. By learning from international lessons, we can turn sustainability into a true advantage while avoiding the costly pitfalls of greenwashing.