They told you everything was green.
The ESG policy looked right. And you signed the deal. Then the audit report leaked. Then the complaints started flowing.
And you learned the hard way, what looked like sustainability was just storytelling.
The practice of greenwashing in Vietnam is no longer a branding issue. It is a legal and transactional threat. Contracts can collapse. Investment protections can erode. Market access can vanish. And international buyers would walk away.
In here, let’s together bring in a Vietnam lawyer’s view of how greenwashing in Vietnam becomes a legal trap, and how to defuse it using contractual agreements.
We’ll explore five common legal issues hidden in ESG claims, how Vietnamese business culture sometimes complicates these issues, and how to convert ESG risk into legal resilience in Vietnam.
Greenwashing in Vietnam is a Deal Risk, Not a PR Problem
Sometime ago, environmental talk was just a marketing bonus for ESG for exporters from Vietnam. Today, ESG compliance in Vietnam is made into law, trade agreements, financing conditions, and shareholder expectations. And that is where the real risk lies.
Because once ESG makes its way into a contract clause, it stops being soft. It becomes enforceable.
What might be difficult to notice is that, greenwashing in Vietnam sometimes, it is a selective truth. Highlighting a solar panel, hiding wastewater discharge. Claiming about fair wages, omitting the subcontractor practices. These partial truths form the basis of what lawyers call misrepresentation.
But there is another layer, Vietnamese business culture itself. The emphasis on building trust through relationships, the comfort with informal verbal assurances, and the reluctance to challenge a long-standing partner’s claims, all of these contribute to oversight that ESG claims can go unchallenged. ESG in Vietnam, for many companies, is still seen as branding rather than binding commitment.
How Legal Drafting Can Shield You from ESG Fiction
This is about what happens when things go wrong, and how to protect your deal before the greenwashing in Vietnam headlines hit.
We will discuss our opinions on how to:
- Recognize the different legal faces of greenwashing in Vietnam
- Use Vietnamese civil and commercial law to shift liability
- Consider using clauses that allow you to audit, terminate, and seek indemnity
- Prevent ESG surprises through due diligence
- Navigate cultural sensitivities while reinforcing contractual clarity
It’s ESG insurance, but instead of paperwork, it’s contract.
A Realistic Scenario Investors Face in Vietnam
Imagine this.
You are negotiating a joint venture with a Vietnamese company. Their claim is all materials are eco-certificated.
You invest.
Later, you receive a claim letter from an oversea client because it turns out, only part of the product meets the requirements which make the whole product is subject to ban regulation. The certificates are self-issued.
This is not just greenwashing in Vietnam, it is contractual fraud by omission. And unless your agreements had ESG-specific warranties, your legal options are limited.
Now put in the cultural challenge when your partner insists this was not a big issue and offers to fix it next season. In Vietnamese business culture, preserving the relationship often outweighs immediate compliance. But foreign investors cannot afford that, especially when legal obligations to clients and regulators are clear-cut.
5 Legal Triggers Where ESG Greenwashing in Vietnam Can Undo Your Deal
Let’s break this down into five key areas where greenwashing in Vietnam becomes a live legal trap for investors and business partners.
Misrepresentation and Fraud in Contract Formation
Under the Civil Code of Vietnam, contracts can be annulled if signed based on misinformation or deception. ESG claims that were material to the decision to invest, if later shown to be false, can form legal grounds for damages.
But the problem is ESG representations are often not treated like financial figures, so they’re left vague. And in Vietnamese practice, in many cases, mutual trust may even override written terms unless explicitly challenged.
Breach of Representations and Warranties
Careful drafted Share Purchase Agreement, Jointventure contracts, and supply agreements often include reps and warranties, statements of fact guaranteed by the other party. If ESG claims were included, and later proven false, they can form a breach.
Greenwashing in Vietnam undercuts these promises. But enforcing them may require pushing past the cultural discomfort of confrontation, something Vietnamese parties often resist unless clearly spelled out in the agreement.
Material Adverse Change (MAC) Clauses
You may have inserted a MAC clause for general compliance. But ESG breaches, especially if they result in license suspension, regulatory fines, or reputational damage, can qualify as a “material change” under Vietnamese law.
Without clear contractual timelines, these can delay enforcement and allow ESG risks to accumulate without you knowing in time.
Regulatory Penalties and Public Disclosure
Vietnamese laws like the Law on Environmental Protection, the Law on Advertising, and the Law on Consumer Protection contain strict clauses on misleading environmental claims.
Authorities are increasing scrutiny on sustainability deception. If your partner is caught greenwashing in Vietnam, investigations can halt operations, revoke licenses, and trigger retroactive liabilities, where you, as investor or buyer, get pulled in.
Do not expect a written confession or open admission in Vietnamese culture.
Crosswashing in Vietnam and Selective ESG Reporting
Crosswashing in Vietnam is when a company showcases a single positive ESG initiative, like renewable energy use, but hides parallel abuses, like water pollution.
This creates a legal trap, because even if their reports are technically true, they may be misleading by omission which can be interpreted as deceptive intent under unfair competition law.
Practical Legal Steps to Protect Against ESG Deception
Step 1: Define ESG in the Contract
Do not just say that the Company shall comply with ESG standards. Define them:
- Refer to Vietnamese laws
- Cite specific international frameworks
- Apply them across the supply chain
- State that these obligations are material, non-negotiable, and subject to inspection
Step 2: Draft the Greenwashing Clause
You need to review the contract and consider the clause which the seller represents that all ESG-related disclosures are materially accurate and complete. Any misrepresentation, whether by commission or omission, shall constitute a material breach, entitling the buyer to terminate and seek indemnity.
This helps make greenwashing in Vietnam is not just reputational, it is actionable.
Step 3: Holdbacks for ESG Milestones
Reserve a portion of payment tied to ESG compliance after some time, verified by third-party audit. This bypasses cultural hesitation to confront and ties ESG to cash flow, something no party ignores.
Step 4: Create Audit Rights with Surprise Inspections
Contracts should allow:
- Unannounced audits
- Document checks
- Worker interviews
- On-site testing
Greenwashing in Vietnam thrives where oversight is passive. This makes it proactive.
Step 5: Conduct ESG Due Diligence Like Financial Due Diligence
- Ask probing questions
- Verify permits
- Speak to employees
- Understand local norms
Sometimes, the red flag is not what is shown, but what is never asked. Do not assume local partners will volunteer bad news.
Make ESG Part of Your Legal and Cultural Intelligence
Greenwashing in Vietnam is no longer subtle. But it is also a cultural puzzle. In a business environment where harmony is prized over confrontation and trust is shown before verification, legal safeguards must do.
You do not need to mistrust your partners. But you do need to put your trust in writing, and back it with audit rights, clear terms, and enforcement paths.
Hence, in conclusion, greenwashing in Vietnam is not just a branding issue, it is a legal and commercial risk that can quietly undermine contracts, investor confidence, and regulatory standing. In a business culture where informal agreements and trust-based relationships are common, vague or misleading ESG claims can slip by unnoticed until it would be too late. The solution is not suspicion, but structure. Clear legal language, enforceable ESG clauses, and practical audit mechanisms can protect your investments. As ESG expectations rise globally, those who anticipate and address these risks legally will lead with resilience, clarity, and compliance in Vietnam’s fast-changing market.
Frequently Asked Questions (FAQ)
What defines greenwashing in Vietnam?
When companies exaggerate or misrepresent eco-friendly or ethical practices to influence business decisions, without substantive compliance or transparency.
Are ESG misrepresentations legally actionable?
Misleading green claims violate consumer, advertising, and competition laws. Contracts with ESG warranties also provide legal remedies.
How do you identify greenwashing before contracting?
Ask for permits, audit reports, and third-party certifications. Cross-check claims through site visits and staff interviews.
What is crosswashing?
Crosswashing occurs when companies publicly highlight one green initiative while continuing harmful practices elsewhere.
Can international investors face consequences from local greenwashing?
Investors may lose contracts, face lawsuits, or suffer reputational harm if their partners are exposed for false ESG claims.
About ANT Lawyers, a Law Firm in Vietnam
We help clients overcome cultural barriers and achieve their strategic and financial outcomes, while ensuring the best interest rate protection, risk mitigation and regulatory compliance. ANT lawyers has lawyers in Ho Chi Minh city, Hanoi, and Danang, and will help customers in doing business in Vietnam.
Source: https://antlawyers.vn/update/greenwashing-in-vietnam-5-legal-triggers.html
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