Greenwashing occurs when a business misleads the public by exaggerating the environmental benefits of its products or services. The practice is intended to attract eco-conscious customers willing to pay a premium for environmentally friendly products, thus providing a market advantage. In the EU, the US, Australia and other developed countries, greenwashing is illegal and can result in severe penalties, loss of customer trust, and reputational damage.
From various media channels, greenwashing scandals have shaken major corporations. For instance:
- H&M, a global fashion giant, faced a lawsuit in the US in 2022 over its “Conscious Choice” collection, as it was alleged to have misled consumers with exaggerated sustainability claims.[1]
- Clorox Australia, in early 2025, was fined AUD 8.25 million (approximately VND 130 billion) by the Australian Competition and Consumer Commission for marketing its “50% Ocean Bound Plastic Recycled Bags” as eco-friendly, despite insufficient evidence.[2]
- Apple is currently facing a lawsuit over its claim that two Apple Watch models are “carbon neutral”. The term “carbon neutral” takes credit from Apple’s contributions to afforestation projects in Kenya and China, which generate carbon credits to offset its emissions. The claimants allege that, regardless of Apple’s involvement, these projects would already have existed.[3]
In Vietnam, where economic development must take environmental protection into account, these disputes may serve as a strong alert for Vietnamese businesses. The objective should be to avoid false claims.
This article reviews Vietnam’s legal framework as it relates to greenwashing claims. We provide actionable strategies for businesses to mitigate risks.
Green labels
To highlight their “green” efforts and commitment, businesses often label their products with consumer-appealing terms such as “eco-friendly”, “environmentally friendly”, “sustainable”, “green”, “carbon neutral”, “net zero”, “made from recycled materials”, “bio-degradable”, or “compostable”, and more.
However, these labels must be supported by evidence. Otherwise, they risk becoming the basis for greenwashing claims. The consequences of greenwashing are significant in Vietnam. There are fines and other penalties. The largest danger, however, is loss of consumer trust, damage to brand integrity, and restrictions on accessing green finance.
Vietnam’s Legal Framework
Vietnam has no specific laws that target greenwashing by name, but existing regulations serve as a foundation for legal action against deceptive environmental claims. Businesses must be aware of these regulations to ensure compliance and avoid violations.
First, Article 45 of the Competition Law 2018 prohibits unfair practices such as providing false or misleading information to attract customers. Violations are subject to fines ranging from VND 100 million to VND 200 million. The Vietnam Competition Commission enforces penalties for such competition offenses. While the fines themselves are comparatively modest, the concern should be that the market can react negatively to false or misleading information.
In addition, under the Law on Protection of Consumers’ Rights 2023, Article 21 requires that companies provide accurate and adequate information about their products and services. Companies must also label goods in such a way to ensure truthfulness, clarity, accuracy and must reflect the true nature of goods.
Additionally, 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 is a form of inaccurate information under the law. More consumers are prepared to challenge false or misleading information.
Articles 49 and 50 allow consumer protection associations to support consumers and report violations and assist state agencies to address deceptive practices. Violations of these obligations can be penalized by fines ranging from VND 20–30 million, alongside a requirement to retract the false claims publicly. Consumer protection associations have begun to act in cases of misinformation or false advertising.
A recent and notable false advertising case involves Chi Em Rot Group JSC and its product – Kera vegetable candy. The company was initially fined 125 million VND by the HCMC Food Safety Office. A user had these candies tested by the Quality Measurement Standards Technical Centre 2, after watching the advertisement, and the results are said to have shown that a box of 30 tablets contained only 0.51 grams of fiber, far below what was advertised. No finding has been made, and the case is still under investigation.
Again, 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 licenses, can significantly impact a business.
The Law on Advertisement 2012 provides another layer of oversight. Article 8.9 prohibits inaccurate advertising about product quality, utility, or origin, as well as any claims that could cause confusion about a business’s capabilities. This can include misleading environmental claims. Violations carry fines ranging from VND 60 – 80 million. Additional sanctions may include license suspension of 5 to 24 months, mandatory removal of deceptive advertisements, and a public apology. Again, it is the reputational impact rather than the legal consequences that is most worrisome to producers.
Lastly, 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 promoting goods and services that misrepresent their quality and so mislead customers.
To repeat, consumer groups have become more willing to challenge inaccurate information.
The International Context
In Europe, the 2023 Green Claims Directive bans unverified eco-labels and exaggerated advertisements if based on only one or few products. Vague terms like “green” or “sustainable” are also banned unless supported by recognized standards such as the EU Ecolabel or ISO 14024 on Environmental labels and declarations.
In the United States, the Federal Trade Commission Act governs deceptive practices and environmental claims, with fines exceeding USD 50,000 per violation. Additionally, breaches involving carbon offset transparency or ESG disclosure fraud under Securities and Exchange Commission regulations can lead to hundreds of thousands or even multimillion-dollar penalties.
The Australian Consumer Law regulates misleading or deceptive conduct and false representations about goods, with penalties reaching AUD 50 million.
Currently, the State Bank of Vietnam is awaiting the Prime Minister’s approval of the green classification list. Without clear guidance, financial institutions hesitate to issue green loans to business borrowers. One of their biggest concerns is that businesses might commit “greenwashing” offenses, which would cause them serious issues with investors and may result in legal penalties.
Strategies to avoid greenwashing
As Vietnam undergoes an energy transition, businesses should take clear steps to ensure that their claims of sustainability are greenwash-free.
First, all environmental claims should be supported by solid evidence, such as verifiable data, third-party certifications and comprehensive reports on carbon emission reductions, waste reduction, or product lifecycle assessments. There are credible third party certifiers or verifiers that will do the necessary testing and, if passed, will issue certification of a company’s environmental health.
Secondly, businesses must be cautious when using terms like “green” or “eco-friendly” to promote their products or services. The Ministry of Agriculture and Environment sets the criteria and provides certification for the Vietnam Ecolabel, recognizing environmentally friendly products and services. According to the criteria outlined in Circular No. 02/2022/TT-BTNMT (amended in 2025) for evaluating eligibility for the Vietnam Ecolabel, the assessment covers the following aspects of products and their manufacturing processes: raw materials, materials, and fuel; production technology; environmental management systems; technical specifications and permissible pollution limits for the product or service; and provisions for recovery, recycling, treatment, and disposal, along with other factors. The application process for an Ecolabel is governed by Decree No. 08/2022/ND-CP (amended in 2025).
Thirdly, transparency is necessary when advertising products or services. Businesses need to honestly share both their sustainability successes and their challenges, instead of using unproven “green” claims.
Fourthly, if using carbon offsets, businesses should select carbon credits verified by highly reputable standards such as the Verified Carbon Standard or Gold Standard, avoiding cheap but unreliable options.
Additionally, companies should train their staff, especially marketing teams, to ensure that all claims are accurate and comply with international standards and legal regulations. This is becoming more and more a business necessity as there are groups willing to act as whistleblowers.
Finally, the legal department should stay updated on newly issued international greenwashing regulations and those from the Ministry of Environment, which will help businesses mitigate compliance risks and maintain credibility.
Conclusion
Greenwashing can have serious consequences. In today’s competitive environment, a loss of clients’ trust can compromise or invalidate business development efforts. Moreover, if businesses commit greenwashing, the chance to obtain green financing will drop, and restrictions imposed by international frameworks will follow.
The current fines imposed by the Vietnamese government may be less worrisome; however, there is existing legislation that permits the public to make claims for misrepresentation or false advertising. Environmental misinformation is increasingly newsworthy to the general public. Boycott campaigns, while still rare, are a potential threat.
As Vietnam continues to integrate into the global economy, businesses must align with international standards to remain competitive. To avoid greenwash risks, businesses should ensure that their environmental claims are honest, clear, and backed by credible evidence. By learning from international lessons and by closely monitoring Vietnam’s evolving regulations, it’s possible to avoid paying the cost of greenwashing.
For further information, please contact:
Lam Nguyen Hoang Thao, Russin & Vecchi
LNHThao@russinvecchi.com.vn
[1] https://www.business-humanrights.org/en/latest-news/usa-hm-faces-greenwashing-class-action-lawsuit-over-alleged-misleading-false-marketing-of-sustainable-clothing-line/.
[2] https://natlawreview.com/article/australia-greenwashing-half-yearly-review-asic-and-accc-prosecutions-and-accc#google_vignette.
[3] https://www.reuters.com/technology/apple-sued-over-carbon-neutral-claim-watches-2025-02-27/.
