The Department of Climate Change (DCC), under the Ministry of Agriculture and Environment, is working with international partners and consultants to implement voluntary carbon labelling for business products in Vietnam.

The initiative, sponsored by the Energy Transition Partnership, is to be carried out from now to May 2026. The target is to provide technical input and necessary support for the DCC to design and introduce a voluntary carbon labelling scheme, and prepare the private sector for carbon accounting and carbon emission reduction through a pilot programme in selected sectors.

It will assess the existing domestic policy framework and infrastructure and identify what is needed further for effective voluntary carbon labelling in Vietnam. Lessons learnt from international case studies will be used to propose enabling policies, regulations, and capacity-building measures for the Ministry of Agriculture and Environment.

According to the multidisciplinary consulting company RCEE-NIRAS, the programme will propose a design for voluntary carbon labelling, including technical components, certification and verification, institutional arrangements, implementation procedures, and capacity-building.

After that, the consultant unit will pilot the designed units in selected sectors based on a set of criteria. It will include awareness-raising, training, and communication activities to encourage the carbon labelling concept for Vietnam’s energy-intensive export sectors.

“Vietnam’s legal framework has no institutional mechanism for carbon labelling. The pilot implementation of a carbon labelling programme, based on voluntary participation, contributes to enhancing capabilities and increasing competitive advantages for businesses. In terms of technical support, the implementing agency aims to develop policies to assist the private sector in building capacity for inventory, assessment, and other sustainable development efforts,” said Hoang Anh, an expert at RCEE-NIRAS.

It is anticipated that 11 industry groups or sub-sectors will be affected by international mechanisms such as the European Union’s Carbon Border Adjustment Mechanism (CBAM), which include energy-intensive and high-emission industries, as well as sectors currently impacted by energy transition policies.

“Thus, we are considering selecting these industries for qualitative and quantitative assessment. These industries include aluminium, cement, chemicals, electrical equipment, food processing, iron and steel, plastics, and more,” said Hoang Anh.

DCC deputy director Nguyen Tuan Quang said, “Carbon labelling will help reduce carbon leakage or carbon shifting between countries, which meets the demand of developed countries applying the CBAM. It will also be a solution to enhance the businesses’ competitive capacity in the context it is a short time before the EU imposes emission taxes.”

The transitional period for the CBAM began in October 2023 and will continue until the end of 2025. During this period, importers of goods must submit reports that include the carbon price due in the country of origin for the emissions. This primarily applies to goods with a high risk of carbon leakage, such as iron and steel, cement, aluminium, fertilisers, electricity, and hydrogen.

After the transitional period, importers will be required to acquire certificates corresponding to the carbon price applicable under EU rules. After the transitional period, importers will be required to acquire certificates corresponding to the carbon price applicable under EU rules.

Voluntary carbon labelling has been implemented in many countries and has proven highly successful in guiding businesses and citizens to recognise the importance of reducing greenhouse gas emissions through smart production and consumption activities.

The PWC’s 2024 Voice of the Consumer Survey, which collected the perspectives of more than 20,000 consumers from over 30 countries and territories, indicated that consumers are willing to spend an average of 9.7 per cent more on sustainably produced or sourced goods, even as cost-of-living and inflationary concerns weigh.

The survey also suggested that more than 80 per cent of consumers said they are willing to pay more for sustainable produced or sourced goods. In terms of a price premium, some consumers are willing to pay on average 9.7 per cent more for goods that meet specific environmental criteria, including locally sourced, made from recycled or eco-friendly materials, produced in a supply chain with a lower carbon footprint, and more.

Sabine Durand-Hayes, global consumer markets leader of PwC France, said, “Consumers are increasingly feeling the squeeze of inflation and rising prices in essential goods such as groceries, however in that context, they are prioritising products that are sustainably produced and sourced. In the year ahead, companies must balance consumer affordability and environmental impact if they are to source and retain consumers.”

Around the world, many businesses have adopted carbon labelling and reaped significant benefits. In Japan, companies like Panasonic and Sony implemented this work for electronic products, boosting sales by meeting the demands of environmentally conscious consumers. Similarly, in Europe, major retailers such as Tesco and Marks & Spencer have applied carbon labelling to food products, enhancing brand image.

Source: Vietnam Investment Reivew