diff --git a/api/v1/types.go b/api/v1/types.go
index 3721dc89..c6fc3ce1 100644
--- a/api/v1/types.go
+++ b/api/v1/types.go
@@ -10,6 +10,7 @@ const (
 )
 
 var DefaultAnnotations = []string{"scheduler.alpha.kubernetes.io/defaultTolerations", "openshift.io/node-selector"}
+var DefaultLabels = []string{"environment"}
 
 const (
 	Missing    Phase = "Missing"
diff --git a/internal/namespace/nsutils/nsutils.go b/internal/namespace/nsutils/nsutils.go
index 2cf449cc..061aa355 100644
--- a/internal/namespace/nsutils/nsutils.go
+++ b/internal/namespace/nsutils/nsutils.go
@@ -67,6 +67,8 @@ func LabelsBasedOnParent(parentNS *objectcontext.ObjectContext, nsName string) m
 	parentDisplayNameSliced := DisplayNameSlice(parentNS)
 
 	labels := make(map[string]string)
+	defaultLabels(parentNS, labels)
+
 	labels[danav1.Parent] = parentNS.Object.(*corev1.Namespace).Name
 	labels[danav1.Hns] = "true"
 
@@ -116,6 +118,15 @@ func defaultAnnotations(ns *objectcontext.ObjectContext, annotations map[string]
 	}
 }
 
+// defaultLabels updates the map of the ns labels with the DefaultLabels.
+func defaultLabels(ns *objectcontext.ObjectContext, labels map[string]string) {
+	for key, value := range ns.Object.GetLabels() {
+		if slices.Contains(danav1.DefaultLabels, key) {
+			labels[key] = value
+		}
+	}
+}
+
 // Depth returns the depth of a namespace from its annotation.
 func Depth(namespace client.Object) int {
 	if ownerNamespaceDepth, err := strconv.Atoi(namespace.(*corev1.Namespace).Annotations[danav1.Depth]); err != nil {
diff --git a/test/e2e_tests/subnamespace_test.go b/test/e2e_tests/subnamespace_test.go
index ef75e7ef..d05ae32a 100644
--- a/test/e2e_tests/subnamespace_test.go
+++ b/test/e2e_tests/subnamespace_test.go
@@ -276,16 +276,22 @@ var _ = Describe("Subnamespaces", func() {
 		FieldShouldContain("subnamespace", nsA, nsB, ".status.total.free.pods", "10")
 	})
 
-	It("should update the child namespace with the default annotations of its parent", func() {
+	It("should update the child namespace with the default annotations and labels of its parent", func() {
 		nsA := GenerateE2EName("a", testPrefix, randPrefix)
 		nsB := GenerateE2EName("b", testPrefix, randPrefix)
 
 		CreateSubnamespace(nsA, nsRoot, randPrefix, false, storage, "50Gi", cpu, "50", memory, "50Gi", pods, "50", gpu, "50")
-		AnnotateNSDefaultAnnotation(nsA)
+		AnnotateNSDefaultAnnotations(nsA)
+		LabelNSDefaultLabels(nsA)
+
 		CreateSubnamespace(nsB, nsA, randPrefix, false, storage, "25Gi", cpu, "25", memory, "25Gi", pods, "25", gpu, "25")
 		for i := range danav1.DefaultAnnotations {
 			FieldShouldContain("namespace", "", nsB, ".metadata.annotations", danav1.DefaultAnnotations[i])
 		}
+
+		for i := range danav1.DefaultLabels {
+			FieldShouldContain("namespace", "", nsB, ".metadata.labels", danav1.DefaultLabels[i])
+		}
 	})
 	It("should fail when deleting a subnamespace directly", func() {
 		nsA := GenerateE2EName("a", testPrefix, randPrefix)
diff --git a/test/testutils/composeutils.go b/test/testutils/composeutils.go
index 3642bac5..e2e092ba 100644
--- a/test/testutils/composeutils.go
+++ b/test/testutils/composeutils.go
@@ -70,12 +70,17 @@ func AnnotateNSSecondaryRoot(ns string) {
 	MustRun("kubectl annotate --overwrite ns", ns, danav1.IsSecondaryRoot+"="+danav1.True)
 }
 
-// AnnotateNSDefaultAnnotation annotates a namespace with the default annotations.
-func AnnotateNSDefaultAnnotation(ns string) {
+// AnnotateNSDefaultAnnotations annotates a namespace with the default annotations.
+func AnnotateNSDefaultAnnotations(ns string) {
 	MustRun("kubectl annotate --overwrite ns", ns, danav1.DefaultAnnotations[0]+"='[{\"key\":\"test\",\"value\":\"true\",\"effect\":\"NoSchedule\"}]'")
 	MustRun("kubectl annotate --overwrite ns", ns, danav1.DefaultAnnotations[1]+"="+"testServer")
 }
 
+// LabelNSDefaultLabels labels a namespace with the default labels.
+func LabelNSDefaultLabels(ns string) {
+	MustRun("kubectl label --overwrite ns", ns, danav1.DefaultLabels[0]+"=test")
+}
+
 // CreateRootNS creates/updates a root name with a given name
 // and with the required labels.
 func CreateRootNS(nm, randPrefix string, rqDepth int) {