Eighty percent of the 7,000 domestic textile enterprises are small- and medium-sized, so capital for green production is a challenge for them

The EU requires Vietnamese exports to meet the environmental requirements of the European Green Deal, the bloc’s strategy aiming to make the continent carbon neutral by 2050. In particular, the EU requires textile products to be manufactured using environmentally friendly materials and processes, as well as eco-labels on product packaging. It also requires textile products to meet the New Industrial Strategy for Europe, and the EU Strategy for Sustainable and Circular Textiles.

Le Tien Truong, Chairman of the Board of Directors of the Vietnam National Textile and Garment Group (Vinatex), said shifting towards green production is the best solution to comply with the EU’s sustainability regulations for textile products.

Eighty percent of the 7,000 domestic textile enterprises are small- and medium-sized, so capital for green production is a challenge for them, as the green financial system is still in its infancy.

Since 2023, the German Agency for International Cooperation (GIZ) and the Vietnam National Innovation Center have implemented the Green Technology Incubator program funded by the German government to finance green technology for textile enterprises. The program has connected seven export textile companies with nine new technology solutions from innovative startups.

Director for Sustainable Economic Development at GIZ Vietnam Dennis Quennet said there is great potential for sustainable production in the textile industry, such as minimizing water and energy use, and efficient waste management.

The Viet Thang Jean Co., Ltd., for example, has applied laser technology, automatic cutting technology, nano dyeing technology, and Turkish washing technology, among others, to better and green production. Viet Thang Jean has achieved the Oeko-Tex certification, a globally recognized safety standard for textiles.

Vinatex Chairman Le Tien Truong said that if businesses move faster than the market, they could get financial losses when the supply of green textiles exceeds demand, and if they move slower than the market, they will be unable to enter new supply chains.

Therefore, the Government needs to institutionalize green standards in the textile industry with specific development roadmaps and objectives in line with the global green economic development trend. The green textile development roadmap should clearly state the goals and specific regulations for short-term phases, involving the roles of stakeholders and financial mechanisms to achieve these goals, such as public-private partnerships and green financial mechanisms.

Government regulations should serve as baseline conditions and guidelines for new and in-depth investments to align with the green economy’s direction, avoiding waste of material wealth. However, these goals must be very flexible and continuously adjustable according to market developments rather than being fixed as in the current 5-year plans or 10-year strategies and plans.

The Government should also adopt policies to support, encourage and adjust business behavior towards green transformation and the application of green initiatives through credit, tax, and land use tools. Particularly, financial policies should supplement cash flow and cost advantages for businesses implementing green production.

Research and application of green technologies, such as renewable energy, efficient use of energy and water, resource management, and waste treatment can help minimize negative environmental impacts and create sustainable resources. It is necessary to enhance cooperation with partners and equipment suppliers to learn and transfer advanced technologies in the textile and garment industry.