How to register ESG for Export companies to the EU? (2025)

As of October 1, 2023, the EU has piloted its Carbon Border Adjustment Mechanism (CBAM), targeting products such as cement, steel, aluminum, fertilizers, electricity, and hydrogen. 

This mechanism requires importers to report the carbon emissions associated with their imported goods and purchase "carbon credits" if emissions exceed EU standards.
 Particularly for the steel industry, known for its energy-intensive and high-emission production processes, accelerating green production is essential to remain competitive.

The EU has enacted a regulation banning the import of agricultural and forestry products linked to deforestation or forest degradation after December 31, 2020. 

Effective from December 2024, this regulation applies to products such as:

• Agricultural goods: coffee, cocoa, rubber, palm oil, soybeans, and livestock.
• Forestry products: timber and wood-based items like printing paper, furniture, and charcoal.

Exporters to the EU must prove that their goods are not connected to deforestation; otherwise, they will face import bans.

The EU’s Farm to Fork strategy outlines five key goals to be achieved by 2030:

• Reduce the use of chemical pesticides by 50%.
• Cut nutrient losses in soil and water by 50%.
• Decrease fertilizer usage by 20%.
• Halve the sales of antibiotics for livestock.
• Convert 25% of agricultural land to organic farming.

This strategy requires exporting countries to meet equivalent standards to avoid environmental tariffs when exporting goods to the EU.

The textile industry is also facing stricter requirements from the EU, including:

• Manufacturers must take responsibility for the entire lifecycle of their products, including waste management.
• Textile products must be sustainably designed, recyclable, free of hazardous chemicals, and comply with rigorous eco-labeling standards.
• Burning or landfilling textile waste is limited, while circular production models are encouraged.

This requirement not only enhances product quality but also pushes the textile manufacturing companies to transform their business models to maintain access to the EU market.

The EU is a global leader in enforcing green and sustainable requirements.  Many companies are actively proving their green efforts with an ESG certificate. 

Having ESG certification enables import-export companies to:

1. Ensure compliance with the environmental and social standards set by the EU;
2. Demonstrate to partners that their goods meet low-carbon emission requirements and have no adverse environmental impact.

ESG certification serves as proof of a company’s commitment to sustainability values. It helps:

• Expand collaboration opportunities with international partners who increasingly prioritize socially responsible suppliers;
• Leverage trade incentives (for example, the EVFTA (EU-Vietnam Free Trade Agreement)), which offers tariff advantages for ESG-compliant products.

In the export industry, competition is no longer just about price but also about meeting market standards. ESG certification provides advantages such as:

• Meeting the selection criteria of major importers, especially in sectors like agriculture, textiles, and heavy industry;
• Reducing the risk of goods being rejected at customs or subjected to additional environmental taxes.

ESG certification is also an incentive for companies to be proactive, bring positive changes to the company operations:

• Save costs by optimizing resources and reducing waste;
• Better risk management, particularly as environmental and social factors increasingly impact global supply chains.

Import-export companies with ESG certification are often highly regarded by customers and investors:

• Showcasing social responsibility and transparency in operations;
• Strengthening brand reputation and fostering long-term trust with partners and customers.

• Waste management: Ensure waste management processes are complete and have no negative environmental impact;
• Energy optimization: Utilize renewable energy or adopt energy-saving solutions;
• Emission control: Demonstrate the ability to minimize carbon emissions in production or transportation.

• Labor policies: Ensure clear labor policies that provide safe, equitable working conditions and comply with legal regulations;
• Community contribution: Showcase a commitment to contributing to the development of local communities.

• Financial transparency: Maintain clear, fraud-free financial documentation;
• Anti-corruption policies: Implement risk management measures and prevent misconduct.