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Hypocrisy at COP28: Are youth voices being ignored on climate change?

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“Climate change and sustainability are global issues. It’s something everyone needs to be on board with. Not just on a personal level, but on a business level and a political level.”

At Makersite, our employees are here because of their expertise, their backgrounds and their belief in the ability of AI to solve today’s sustainability data challenges. Our staff across three continents have been hand-picked because of what they bring to the table. It’s no different with Alexa Born, one of our Enterprise Sales Managers.

Recently, as a key member of the UK Youth Climate Coalition (UKYCC), Alexa attended the COP28 summit in Dubai. With an M.Sc in Environmental, Economic and Social Sustainability and a background in sustainability-focused roles, she understands what’s at stake.

In the interview below, we sat down with Alexa to talk about her background in sustainability, her role in the UKYCC and COP28, and the hopes she holds for the future. We cover:

  • How Alexa’s role at Makersite – helping companies to decarbonize their supply chains – sits alongside her work with the UKYCC and COP
  • Concerns around Scope 3, sustainability reporting and a lack of action from big business
  • The inherent hypocrisy of hosting a climate conference in heavily oil-producing countries and using it as a platform to generate more oil deals
  • The difficulties of getting the concerns of today’s youth in front of our politicians and policymakers
  • The importance of building knowledge around climate and making sure that youth voices are heard

Makersite: Let’s start with the big question. What does sustainability mean to you?

Alexa Born: To me, sustainability is about being conscious of the impact of your actions and about thinking beyond just the here and now. I think people sometimes lose perspective that the greed of today is going to disrupt the needs of people in years to come.

M: Tell me about your background when it comes to sustainability. What got you interested? What motivates you?

AB: I have an older sister who entered the climate space when she was a teenager. As a little girl, that made me very aware of the topic from a young age. Because of her interest, I became interested. I then pursued Human Geography for my undergraduate degree and then went on to do a master’s in Sustainability. It’s something that has become embedded within me, both educationally and professionally.

M: So it was always your intention to pursue that kind of pathway?

AB: Yeah. I feel quite lucky. From a young age I always had it in my mind, quite clearly, that that was the kind of work I wanted to do.

M: Looking to the future, what do you hope to achieve from a sustainability perspective? Where do you see yourself – and the world – in the next 10 years?

AB: Sustainability is obviously a hot topic in terms of career paths. It’s something that a lot of people are very interested in at the moment. But it’s very hard to know what that landscape will look like in 10 years’ time. I certainly never saw myself in supply chain sustainability, but it’s something I became very interested in at university and now during my time at Makersite.

Looking ahead, I’ve always had a really strong interest in the intersectionality between health and sustainability and climate change. That’s something I’d like to move towards. But equally, where I am now with Makersite, and balancing that alongside climate activism, feels very fulfilling.

M: That segues nicely into my next question. Tell me a bit about what you do at Makersite, and how that dovetails with your work at the UKYCC and the recent COP28 summit in Dubai?

AB: Sure. At Makersite, I work on the business development side of the business. I speak to manufacturers in the UK and Nordic markets who are looking to decarbonize their supply chains, whether that’s due to regulatory pressure or ambitious targets (like achieving Net Zero by 2030) or whatever it may be. I reach out to them and see how we [Makersite] can partner with them to decarbonize their supply chains through sustainable procurement, better product design or another avenue.

In terms of how that relates to my work at COP, I was there predominantly as a youth activist and as a delegate of the UKYCC. The UKYCC runs a different campaign every year, and this year we campaigned on a Conflict of Interest (COI) policy – particularly relevant given where the event was held this year, and because of the obvious conflict of interest between the role of the presidency and the overarching goal of what the COP seeks to achieve.

I took the opportunity of being in that space to attend some really interesting side events around sustainability and to connect with some people from the industrial arena. I wanted to understand what people’s challenges are and what discussions are going on in relation to the problems that Makersite is seeking to solve.

From that perspective, Scope 3 emissions seemed to be a key pain point in pretty much every single one of the side events I attended. That definitely seems to be the biggest point of concern at the moment.

M: For those who don’t know, how would you describe COP? What are the goals of the event? Who attends?

AB: COP stands for Conference of the Parties. It basically provides an opportunity every year to bring together parties from all over the world and provide a platform for them to voice their concerns about what’s happening with climate change, as well as a chance to push their agendas on where they feel we should be globally on climate change. It is a global issue, after all.

I think the real beauty of COP is that it provides a platform to nations and parties that don’t tend to have as loud a voice in the global space. The small island states, for example.

M: And it’s those small island states that are the most vulnerable to the impact of climate change.

AB: Exactly. It gives those who are really suffering most a place to voice that and also an opportunity to contribute to the solutions that are being put in place to deal with, mitigate and adapt to the climate crisis.

M: You attended as a delegate of the UKYCC. You mentioned the campaign being undertaken this year, but what’s the goal of the Coalition more generally?

AB: Within the UKYCC we have different working groups. Each of those groups have a variety of goals. I’m in the COP working group. We send a delegation to attend the COP each year, where we seek to represent youth voices. When we’re recruiting for the UKYCC we make sure that we are as representative as possible geographically, demographically and so on so that when we go to COP and we’re lobbying UK negotiators and EU negotiators, we’re doing it on behalf of a true reflection of UK youth.

M: How do the negotiators treat you? Do they take what you have to say seriously? Do they understand the points you’re trying to get across?

AB: It’s a mixed bag. Every year we get told how important youth voices are to them and how much they want to know how we feel they’re doing, both positively and negatively. But getting time on calendars for the last few years has been increasingly difficult, which is frustrating.

For that reason, we’ve sought meetings with other important voices at COP. Members of the opposition, for example. We met with Ed Miliband. We met with some advisors of Humza Yousaf. When we’re unable to connect directly with negotiators, we do try and get a bit more creative. That being said, the second of the two delegations we sent this year did actually end up having some facetime with the UK negotiators and that allowed us to push our agenda a little bit.

M: Tell me more about your Conflict of Interest agenda. What does it mean? What’s the objective?

AB: We have a few asks. Our demands are that the UNFCCC (United Nations Framework Convention on Climate Change) formally recognizes the need to have a conflict of interest policy to prevent bodies or voices that don’t have our best interests at heart being in those spaces and lobbying for their own objectives.

This year, for example, KBPO (Kick Big Polluters Out) released some astounding evidence. COP28 had the largest amount of fossil fuel lobbyists in attendance ever. They were actually the largest ‘delegation’ apart from Brazil and the UAE at the whole summit. That doesn’t make much sense at a climate change conference. And that’s what we do – we go to COP and we protest against these actions. You wouldn’t allow tobacco companies to organize a health conference. So why are we allowing fossil fuel companies to organize and contribute to a climate change conference? Ultimately, how do you square the goals of COP with hosting in a nation like the UAE?

M: There’s definitely some hypocrisy there.

AB: Yeah, absolutely. We discussed a lot whether we even wanted to attend this year or not. That’s what’s a shame about this particular COP. The conflict of interest angle sparked the interest of a lot of people, and a lot of people who wouldn’t have interest in COP28 normally. Like the fact that the COP president used the event as a platform to generate more oil deals. I had friends, who otherwise would have no interest, speaking to me about that.

But the whole hosting it in Dubai angle does reduce the legitimacy of what is a really important conference. Last year it was in Egypt, Next year it’s in Azerbaijan. That’s three years in a row where oil-producing nations are hosting the COP. We’re seeing language around phasing out fossil fuels being watered down too. That’s clearly for the benefit of the host nations.

The beauty of the COP is that it represents everyone’s voice. Climate change is a global issue. We need to make sure that everyone is included in developing and implementing these solutions. If nothing else, COP28 has shown that that’s not easy.

Alexa COP28 UKYCC

M: You mentioned Scope 3 previously. What are your key takeaways from this year’s event?

AB: There are literally thousands of side events at COP and I only have so much time, so I could only attend a small percentage of them. And the ones I did attend were focused on issues that matter to Makersite. But the onus seemed to be predominantly on the value chain / supply chain / decarbonization piece. The challenges around Scope 3 reporting came up consistently.

One frustration I heard multiple times was that we’re at COP28 – the 28th one of these conferences – and we’re still talking about reporting. That’s the number one step. The first step. There’s a long way to go. There was a lot of frustration around reporting frameworks and their lack of synergy. Everything is very siloed, there’s a very limited sharing of information, there’s no standardized approach.

All of that makes it very difficult for organizations. They’re spending way too much time on reporting rather than actually working and dedicating their capacity towards the things that matter. Reduction strategies, for example. There were some interesting announcements about different coalitions that are starting to emerge. We’re seeing different industrial organizations starting to work together to establish some kind of standardization, particularly when it comes to working with suppliers and dealing with all of the paperwork that goes with that.

M: You’re well versed in this space. How can anyone interested in learning more educate themselves? What advice would you give to companies and people looking to take the next step?

AB: It’s about standardization and regulation to guide different industries and different organizations. As I’ve said several times, climate change and sustainability are global issues. It’s something everyone needs to be on board with. Not just on a personal level, but on a business level and a political level.

Frameworks like ESPR can be valuable for companies seeking guidance, but they’re not perfect and more work needs to be done so that they can be adopted more smoothly.

Personally, I’m still very much in the process of building my knowledge. There are some amazing resources out there, but it’s impossible to be an expert in everything. Speak to family and friends. Find out where your interest lies. Look for key voices that resonate with you. Social media is great – LinkedIn and Instagram particularly. People share incredible resources and, for me at least, it snowballs from there.

M: Ok, last question. What role do you see your generation playing when it comes to the climate crisis? What do you hope to achieve?

AB: My generation is the first climate-literate generation. It’s been there since day dot. It’s always been present in our lives. We’ve had the unfortunate reality of climate anxiety since day one. But with that comes power.

People in my generation, people that I know, are very concerned about this, and they’re very interested and very aware. Knowledge is power. In terms of our role, leveraging youth voices is huge. Unlike most other movements, youth voices have real leverage here. We’re the ones who have to deal with the consequences.

M: You’re facing the repercussions.

AB: Exactly. I think it’s really important for us to make the most of this unique position and educate those around us, particularly older generations who perhaps didn’t have the opportunity to learn from such a young age like we have. And I think as the job landscape continues to shift, it’s something we’re all going to be involved in one way or another. We need to take those opportunities when they arise.

But the education piece is the biggest one. We all know someone from the older generations who either doesn’t know or doesn’t want to know. And as the first climate-literate generation, it’s our responsibility to change that.

Navigating complexities in the automotive industry: Product sustainability & global regulatory compliance  

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While attending the Automotive Industry Action Group’s (AIAG) Hybrid IMDS & Product Chemical Compliance Conference in October this year, the Makersite team delved into what is driving — and hindering — the race to sustainability in the automotive industry. The challenges were clear: Regulatory changes, eco-design for sustainability, and new chemical replacement proposals are all ongoing issues, and ones that we’ve regularly encountered as we work with companies aiming to take the lead in sustainability and efficiency. 

With a heavy focus on global chemical regulations gradually converging with the core principles of product sustainability, it’s fundamental that responsible automotive organizations protect consumers, the environment, and the long-term viability of their industry. These efforts should be driven by a commitment to enhance environmental and human safety which, in turn, reflect a broader societal shift towards more sustainable manufacturing practices. However, there are still a few speed bumps on the way. 

The challenges of keeping up with chemical laws for the North American automotive industry  

The North American automotive industry is grappling with complex set of challenges when it comes to adhering to regional and global regulations, particularly regarding the complex chemical compliance directives coming out of the EU, Canada, South Korea, and China. While there is progress on the horizon, challenges remain within enterprises that are striving to innovate and move design forward.   

Rapidly changing regulatory environments, without a detailed roadmap, remain a significant barrier when it comes to making swift changes, driving innovation and remaining competitive, while also hindering consistent and valuable supplier engagement. 

Although the automotive industry appears to be unanimously onboard with working toward new compliance practices, the newest chemical restriction proposals, upcoming deadlines of reporting compliance, and maturing customer demands mean that many organizations are struggling to strike the right balance with regional and global governing bodies. Moving towards aspirational targets while staying within regulatory lines is a battle many are still fighting. This, in turn, leads us to the latest PFAS proposals, an area where many within the automotive industry still struggle. 

A love-hate relationship with PFAS  

The biggest challenge many automotive businesses face with PFAS (per-and polyfluoroalkyl substances) is that the chemical restriction proposals do not yet have seemingly solid replacements. There is particular concern around the proposed replacements’ applicable endurance and functionality. On one hand, PFAS have been utilized for their non-stick and water-resistant properties in products including car wax and windshield treatments, as well as in the automotive manufacturing process for certain components.   

However, the concern remains that when these chemicals are disposed of or released into the environment, they do not disappear quickly. Ultimately, those within the automotive industry must continue in their efforts to find alternatives that are just as effective but don’t have such a detrimental impact on the environment. In order to achieve this, more replacement options are needed. But without easy access to those replacements or more knowledge around where to source them, the challenge is clear – who exactly will supply them? 

The search for the supplier

Finding alternative suppliers of the essential elements and components for manufacturing a product is a painstaking process, and even the most sustainability-focused organizations can become confused. Once found, ensuring that suppliers are on board with the latest data requirements, quality standards, and delivery schedules is essential. The right collaboration tools and technologies help to streamline communication, share information, and keep everyone moving in the right direction. Transparency is also key, allowing everyone involved to see – and overcome – the challenges and obstacles that lie ahead. However, many automotive companies lack an all-in-one solution or something that can efficiently, sustainably and economically tackle the obstacles they face.  

The big data challenge   

From chemical proposals to 2050 goals, complex challenges abound. But without the standardization of data collection and enhanced visibility into multi-layered supply chain processes, the automotive industry remains somewhat in the dark. Harmonizing North American automotive standards with those of global markets is crucial for both consistent quality and seamless market access. Areas needing improvement range from supplier engagement to robust data management systems for harmonizing standards globally, but replatforming organizations and digitally transforming processes are offering the industry light at the end of the tunnel. 

Integrating AI into sustainability and compliance processes for data collection is pivotal. And with reporting requirements on the rise, digitizing supply chain data is an imperative. But what does a solution capable of addressing these challenges look like? 

Data management systems  

A properly constructed data management system that can unify these elements is key to ensuring that all stakeholders are working from the same foundations. AI is a new and evolving solution, and one that represents a huge – and logical – step forward. 

Ultimately, this isn’t about the human touch alone. Utilizing AI to meet compliance requirements and asses LCAs is a significant advance on current practices, providing instant granularity, transparency, and swift data scrutiny while allowing you to overhaul your product designs and supply chain choices for greener impact both now and in the future. 

With reporting requirements going through something of a growth spurt – now averaging more than 28 reports per organization – the demand for information has accelerated, making the digitization of intricate supply chain data more important. Ensuring that an organization can report at scale with the data transparency and traceability from in-house domains to the global supply chain landscape is a integral part of a smoother and more efficient operation. Archaic systems and processes risk hindering the futureproofing of a product’s sustainable life and design. 

Navigating sustainability with Makersite 

Sustainability data acts as the cornerstone of any project. Any organization truly seeking to succeed must futureproof product design, cross-referencing data to identify gaps and formulate a layer of aggregation. Unfortunately, many in the automotive or heavy equipment manufacturing industry have noted that their organization’s current processes or resources are keeping them from achieving those objectives. 

Managing your data and improving it rapidly is increasingly becoming an imperative. Integrating AI capabilities to evaluate your LCAs offers not only instant transparency but prompt data assessment, meaning that you can achieve granular visibility into the environmental footprint of your supply chains within months and make the necessary changes needed to your product designs within minutes. By opening up these possibilities, organizations are empowering their procurement teams to go fully green while maximizing their R&D teams’ design choices in the process. 

A SaaS solution that can not only simplify the roadmap to compliance, but also gives organizations the opportunity to make substantial efficiency gains is a game-changer. It enables innovation and industry-leading sustainability practices, casting the time-consuming days of manually navigating and interpreting regulatory complexities to the past.

While Makersite may not have the answer to what’s coming next with PFAS, we can provide the tools to drive product sustainability and enhance supply chain granularity, ensuring that automotive manufacturers can rapidly identify and address any issues from cradle, to gate, to grave.   

 

Why combining LCA and scope 3 removes the need for guesswork

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Better together

There are many good reasons to take a more granular approach to measuring scope 3. Aside from meeting changing regulatory requirements, the more detail and the more data you have, the easier it will be to assess where the emission hotspots are across your value chain, allowing you to prioritise reduction strategies. Additionally, it’ll help you to identify which suppliers are leaders and which are laggards in terms of their sustainability performance.

So why aren’t more organisations concerned about a higher – and deeper – level of accuracy? At a time when sustainability teams are trying to strike a balance between regulatory reporting and compliance, it makes absolute sense to collaborate with product teams in the business in order to ensure that the products being created are as sustainable and as circular as possible. Doing so will also generate efficiencies within the sustainability process, avoiding wasted resources and allowing for greater speed. But how do you achieve it?

The answer is straightforward: Combine LCAs with scope 3 reporting. Putting together a granular LCA is a time-consuming and intensive process. So is figuring out where the data is for scope 3. Despite this, many businesses still separate the two. Perhaps it’s time for a rethink.

Moving away from a siloed approach

We can all agree that working together is better than working apart. At a time when regulatory demands are more stringent than ever before, customer and stakeholder expectations are heightened and sustainability reporting requirements are multiplying at an unprecedented pace, operating in siloes is not the way forward.

It’s an idea that’s very much applicable when it comes to using the same data foundation for both LCAs and scope 3 reporting. Across the product development process in any area where scope 3 is used – from product engineering to product design to product management – LCAs and PCFs are a key tool when it comes to understanding what’s going on in the product.

However, when it comes to corporate reporting, it’s often the case that different methodologies are used to analyse the same products. If different parts of the organisation are working with different types of data they are very likely to find themselves running in opposite directions when it comes to the insights they stand to gain from their reporting. By any measure, this is not a good outcome.

When considering scope 3 and product reporting at a corporate level, many organisations currently opt for a spend-based approach (i.e. taking the financial value of a purchased good or service and multiplying it by an emission factor – the amount of emissions produced per financial unit – resulting in an estimate of the emissions produced.)

However, such an approach will result in an entirely different picture from a scenario where direct purchased goods are being looked at from an LCA perspective. The likelihood is that the organisation will either end up reporting fewer emissions or too many emissions when reporting for category 1 in scope 3. The process of a spend-based approach is simply too broad and based too much on guesses and speculation, and pales in comparison to the granular analysis that an LCA is capable of.

Indeed, it’s highly likely that the insights gained at a corporate level will differ wildly from those gained by, for example, a product engineering department – due solely to the different approaches commonly in use. When it comes to scope 3, a spend-based  approach has a level of abstraction that is so high that it is essentially impossible to get a real and detailed picture of what’s going on with your product, leaving you working with nothing more than a best guess as to what kind of impact it might have.

An unnecessary risk

So what does the future look like? An organisation that works hand-in-hand with a product at all stages – from early on in design to when it’s being built and the materials are being sourced – is one primed for success. But that synergy is only possible if all parties work from the same data foundation in order to drive decisions.

In today’s reporting environment, it’s not an overreaction to suggest that failing to take a joined-up approach will lead to the failure of many corporate reduction initiatives. A disparity and a lack of consistency between departments – from procurement to product development to engineering – is a risk that’s not worth taking.

Besides the operational waste generated by a siloed approach, there are numerous other risks to consider. A lack of granularity in your scope 3 reporting may lead your organisation to spend money on entirely the wrong end of its portfolio and is also likely to drive transformation and innovation in the wrong direction, the financial and reputational consequences of which may be irreparable (from losing market position to damaging stakeholder relationships to falling behind peers and competitors.)

Ultimately, in a scenario where an LCA analysis is done with one tool and scope 3 analysis is done via a spend-based approach, the result is the same: the organisation invariably has to correct their scope 3 reporting further down the line. It might seem easier to do both separately, but separating the two processes is a mistake – one pockmarked by contradictory insights from different departments, and one that risks leaving your organisation far behind peers who have had the foresight to combine both LCA and scope 3 under the same banner.

The benefits of using an LCA approach for scope 3

When we discuss using an LCA to calculate scope 3, it makes the most sense to look at category 1: ‘Purchased goods and services.’ This category includes all upstream (i.e., cradle-to-gate) emissions from the production of products purchased or acquired by the reporting company in the reporting year. Products include both goods (tangible products) and services (intangible products).

The data granularity gained from an LCA approach is significantly better than what could be achieved by using a spend-based methodology, with some companies having seen reductions of up to 90% in their scope 3 category 1 GHG emissions as a result. Furthermore, LCA data can also be used to explore decarbonisation pathways. Using already existing LCAs and PCFs and utilising data that is significantly more precise makes by far the most sense.

The pros for using actual data for calculating scope 3 GHG inventory far outweigh the cons. It is more scientific and more accurate. It considers entire cradle-to-gate transmissions. It conforms with globally recognised standards. It enables true decarbonisation. And it offers the ability to evaluate suppliers on carbon emissions as well as price, quality and delivery. A spend-based approach – inaccurate and outdated – is simply no longer fit for purpose.

Finally, beyond the obvious risks and inefficiencies we’ve highlighted in this article, it’s worth remembering that this a decision potentially worth many multiple millions. If you’re only conducting LCAs right now but find yourself in a position where scope 3 reporting is coming very soon then you’re reading this at the right time. If you’ve already separated LCAs and scope 3 reporting, then now is very much the time for change.

The emergence of ecodesign: Navigating the future of sustainable products

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Despite more than 25% of total revenue and profits across industries coming from the launch of new products, it’s been estimated that fewer than 1% of those products have sustainability as a design parameter. But times are changing. An ecodesign approach, coupled with market demand, emerging regulations and consumer pressure, is changing the way new products are designed as well as creating more sustainable supply chains.

Ecodesign, at its core, is an approach to designing products and services while considering environmental impact in every phase of the development and life of the product. With up to 80% of the ecological impact of a product happening in the design phase, it is essential that this first step acts as a gateway to getting more sustainable and circular goods into the world.

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As our world grapples with an urgent climate crisis and spiraling environmental degradation, the importance of ecodesign is clear. By incorporating ecological considerations from the inception to the disposal of a product, an ecodesign approach ticks a number of boxes when it comes to consumer needs, environmental responsibility, and economic feasibility, as well as reducing resource consumption, improving recyclability, enhancing energy efficiency, extending product lifespan, and promoting collaboration among supply chain stakeholders. The recent introduction of the Ecodesign for Sustainable Products Regulation (ESPR) promises to further elevate the significance and reach of ecodesign, pushing industries towards more sustainable practices.

However, its meaningful implementation is not without its challenges.

The challenges of ecodesign

  1. Stakeholder satisfaction: Pleasing all the stakeholders can sometimes seem like an impossible task. From regulators demanding compliance to customers seeking value, suppliers ensuring viability, and internal teams seeking clarity, achieving the right balance in your approach is integral to ensuring success.
  2. Complex supply chains: With fluctuating global markets, geopolitical instability and multi-faceted product lines, it can sometimes seem that there are simply too many subjects to address. The vastness of many supply chains adds a further layer of complexity when it comes to successfully embedding an ecodesign approach.
  3. Internal communication: The siloed nature of many business departments presents a particular challenge when it comes to communication. The ecodesign discussion brings with it topics that departments within organizations might not have broached before. Establishing and maintaining new lines of communication, aligning goals, and fostering understanding are pivotal.
  4. The data dilemma: In an age where data drives decisions, the lack of comprehensive, electronic data can cripple ecodesign efforts before they get started. This dearth of readily available and easily accessible information can hamper informed, environmentally-friendly decisions.

Five key takeaways:

As the conversation around ecodesign continues to evolve, certain topics are coming to the fore. Makersite’s Sophie Kieselbach recently spoke at Synergy Media Group’s ‘A Roadmap for Ecodesign’ webinar, where attendees focused on the following five key talking points:

A shift in focus:

Redefining aesthetics: The very foundations of product design are undergoing a transformation with ecodesign. While traditional designs primarily emphasized appearance and functionality, ecodesign integrates environmental considerations consistently.

Lifecycle thinking: Instead of merely focusing on the end product, ecodesign considers the entire lifecycle, upstream and downstream — from raw material extraction to disposal or recycling. This perspective ensures minimized environmental impact throughout the product’s existence.

ESPR’s extended reach:

Beyond energy efficiency: While previous regulations mostly addressed energy consumption, ESPR expands the focus to include factors like product durability, repairability, and recyclability.

Consumer empowerment: With a greater emphasis on product longevity and repairability, consumers are empowered to make informed choices, favoring products that won’t just end up as waste in a short time.

Collaboration is key:

Breaking silos: Ecodesign calls for departments that may have previously functioned in silos to come together. Marketing needs to understand the environmental impact, production teams should be informed about sustainable materials, and design teams must consider end-of-life scenarios.

Shared vision: For an ecodesign approach to be successful, the entire organization, from senior management to ground-level employees, needs to share the vision of sustainability and environmental responsibility.

Data is a valuable commodity:

Informed decision making: Ecodesign relies heavily on data and transparency. Understanding material impacts, energy consumption patterns, and waste generation rates requires robust data analytics.

Spotting trends: With accurate and comprehensive data, businesses can also anticipate market trends, making them better equipped to meet future regulatory and consumer demands and manage risk.

Ecodesign’s inevitability:

Consumer demand: As the global consciousness shifts towards sustainability, consumers are increasingly demanding products that align with their values. Ecodesign isn’t just a regulatory requirement; it’s becoming a market demand.

Environmental imperative: With the escalating climate crisis, sustainable product design isn’t just driven by economics or regulations — it’s an existential necessity. Businesses that adopt ecodesign aren’t just staying compliant; they’re contributing to global sustainability efforts.

Next steps for you:

If you’re looking to implement an ecodesign approach to the designing of your products and services, there are certain steps to take to ensure that your company is on the right path.

  1. Awareness and education: The first step towards integrating ecodesign is understanding its tenets and implications. Look to equip your team with comprehensive knowledge about ecodesign and emerging regulations like ESPR.
  2. Embrace collaboration: An open dialogue fosters innovation and increased adoption. Promote a company culture where departments actively engage in cross-functional discussions, ensuring full visibility when it comes to the embedding of ecodesign processes.
  3. Invest in data management: Prioritize the modernization of your data collection and management systems. A digitized, streamlined data system is the backbone of effective ecodesign integration. Ecodesign is only feasible when designers have data about the sustainability of their product, but also about its compliance, should costing, environmental, health, and safety criteria.
  4. Be proactive: Instead of waiting for regulations to enforce change, be a frontrunner. Proactively integrate ecodesign principles, setting industry standards.
  5. Engage and involve: Your end-users – consumers – hold invaluable insights. Engage them in your ecodesign journey, gather feedback, and make them active participants in shaping sustainable futures.

If you’d like to learn more about LCA software solutions for ecodesign, read more about Makersite’s ecodesign application.

Digging deep: Why supply chain resilience matters

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The sum of all parts

Where are you reading this post? On your phone perhaps. Maybe at your computer. Wherever you are and whatever you’re doing, take a moment to think about the device you’re using. It’ll be made from numerous components, which in turn are constructed from numerous materials sourced – in all likelihood – from all over the world.

We live in a time of ease and availability. But what happens when a material we rely on to build something useful to us is, for whatever reason, no longer readily or easily available? Are you able to source an alternative, and are you able to do it promptly enough to ensure that all the other steps in the production process aren’t impacted?

When it comes to creating a complicated product, it’s unlikely that a company is going to know everything about every component and every material that sits within it. They’ll likely know – and have excess stock of – key components, but what about something deep down the supply chain?

However, without full oversight, one missing element can grind the whole process to a halt. Whether through restrictions, regulations, or shortage in supply, not being aware of material availability represents a huge risk to your business. That’s why supply chain resilience is vital. 

Supply chain resiliency is a term that refers to the need for supply chains to be malleable and adaptable, where oversight and planning means that a business is prepared for unexpected events and disruptions within its supply chain to the extent that alternative options are readily available and operational continuity is assured. Or, in the most basic terms, it’s about having the right contingencies in place at the right time.


Looking beyond logistics

In order to make sure that your supply chain is as resilient as possible, deep-tier transparency is key. When most businesses speak about conducting a supply chain analysis, they’re really just talking about logistics. When they talk about automation in procurement, they’re mostly referring to source-to-pay tools. In reality, it’s necessary to take that analysis to a much more granular level. 

It’s estimated that some 90% of value may sit in the upstream supply chain, and yet many businesses don’t even have information – whether that’s data files, transactional data, detail on environmental impact or various other factors – about their tier 1 suppliers. Furthermore, the majority of risk and non-compliance issues occur with suppliers in tier 2 and below, but 65% of companies have no visibility at this level. Why? The reasons are simple: outdated systems, incomplete or scattered data, supply chain complexity and a deliberate opaqueness from suppliers when it comes to revealing ‘secret’ or sensitive operational details. To stay competitive, manufacturing enterprises need to fully understand the risk in the deeper tiers of their product supply chains. The companies that succeed not only create demand but execute on delivery. 

Supply chain analysis needs to encompass everything from raw material extraction to the end-of-life of the products a company makes and sells. By building a complete picture of their supply chain, a business will find itself not only able to understand their lower tier suppliers’ sourcing, regulatory and sustainability implications but to deliver their own results faster and to operate in a more cost-effective manner. 

 

Solving the issue 

We’ve established that a more resilient supply chain not only drives value but also delivers efficiencies likely to have a major impact on how your business functions. But diving deep into a supply chain is a Herculean task, even for the most advanced teams. Meaningful change is only possible through casting off existing, outdated processes within your organization.  

In order to succeed, collaboration and synergy are essential. Efficient supply chain management and reporting is easily scuppered by a siloed approach, where data scattered across various sources results in slow and costly manual efforts to tie information together.  

Seeking out an automated approach to Life Cycle Analysis (LCA) is one solution. Doing so would enable organisations to not only consolidate and enrich their data, but to perform comprehensive reporting and analysis and make data-driven decisions that will help to minimise risk. 

Now is the time to make dynamic changes at a functional level. The pay-off? Accurate, real-time information through the implementation of a harmonised master data repository. An automated approach – augmented by AI – will allow real-time scenario analyses, reducing friction between departments and helping teams to arrive at the right solution faster. 

 

Gaining the advantage 

With increased oversight and understanding of earlier production phases, a company is positioning itself to act both more promptly and more effectively in the event of a supply crisis. Identifying issues and alternative solutions in advance offers a crucial advantage over competitors who are not doing the same, allowing your business to optimise your supply chain for cost, environment, compliance and a variety of other factors. 

Businesses, at a minimum, should seek to understand exactly what components their products are made from – to have an understanding not only of the raw materials, but also of where the potential risks and shortages in terms of material availability might lie. Maintaining a strong relationship with suppliers is also crucial, as is as a willingness to monitor and act upon events happening in the wider world – from politics to conflict to emerging regulation. Being ready for supply chain disruption is half the battle. 

In a highly competitive business landscape, it’s the fine margins that make a difference. 

 

The RoHS Directive

Posted on by Laura Nodoph

In today’s globalized world, where electronics have become an integral part of our daily lives, concerns about the environmental impact of these devices have taken center stage. To address these concerns and pave the way for a more sustainable future, the European Union introduced the RoHS Directive. This directive represents a significant step towards reducing hazardous substances in electronic products and promoting eco-friendly manufacturing practices. In this article, we will explore the RoHS Directive, its purpose, and which companies need to adhere to its regulations. 

 

Why was the RoHS Directive put into place?

The RoHS Directive, short for the Restriction of Hazardous Substances Directive, was put into place to address the growing concerns surrounding electronic waste and the environmental impact of hazardous substances found in electrical and electronic equipment (EEE). It was first adopted by the European Union in 2003 and later revised in 2011 (RoHS 2) and 2015 (RoHS 3). 

The primary objectives of the RoHS Directive are as follows: 

  • Environmental Protection: To reduce the environmental impact of EEE by restricting the use of hazardous substances in their production. 
  • Public Health: To safeguard the health and safety of consumers and workers who come into contact with EEE. 
  • Recycling and Waste Management: To facilitate the recycling and proper disposal of electronic waste, minimizing the release of hazardous substances into the environment. 

 

What is the RoHS Directive?

The RoHS Directive sets strict restrictions on the use of specific hazardous substances in electrical and electronic equipment. These substances are: 

  • Lead (Pb) 
  • Mercury (Hg) 
  • Cadmium (Cd) 
  • Hexavalent chromium (Cr⁶⁺) 
  • Polybrominated biphenyls (PBB) 
  • Polybrominated diphenyl ethers (PBDE) 

Under the directive, the maximum permissible concentration of these substances is set at 0.1% by weight in homogeneous materials for lead, mercury, hexavalent chromium, PBB, and PBDE, and 0.01% for cadmium. 

It’s essential to note that RoHS applies to a wide range of electrical and electronic equipment, including household appliances, consumer electronics, lighting, medical devices, and industrial equipment. Manufacturers, importers, and distributors of these products must ensure that they comply with RoHS regulations before placing them on the European market. 

 

Which companies need to work under the RoHS Directive?

The RoHS Directive applies to various types of businesses involved in the production and distribution of electrical and electronic equipment within the European Union. These companies include: 

  • Manufacturers: Companies that produce EEE or components of EEE that contain the restricted substances must ensure their products comply with RoHS regulations. 
  • Importers: Entities that import EEE into the EU market, whether as finished products or components, are responsible for verifying that the items meet RoHS requirements. 
  • Distributors: Distributors within the EU are obligated to ensure that the EEE they supply complies with RoHS regulations. They should obtain compliance documentation from manufacturers or importers. 

 

In conclusion, the RoHS Directive is a vital piece of legislation aimed at mitigating the environmental and health risks associated with hazardous substances in electrical and electronic equipment. By restricting the use of these substances and promoting eco-friendly manufacturing practices, the directive contributes to a greener and more sustainable future. Companies involved in the production, import, or distribution of EEE in the EU must diligently adhere to the RoHS regulations to ensure compliance and promote environmental responsibility. 

Understanding the REACH Regulation 

Posted on by Laura Nodoph

The REACH regulation, having been in effect for several years now, has rapidly become a widely accepted and influential standard in the world of chemical regulation. Since its adoption in 2006 and its full implementation in 2018, REACH has consistently proven its effectiveness in enhancing the safety and sustainability of the chemical industry within the European Union (EU) and beyond. 

Over the years, REACH has successfully streamlined and replaced various existing EU chemical regulations, creating a unified and comprehensive framework for the registration, evaluation, authorization, and restriction of chemicals. This harmonized approach has not only simplified compliance for companies but has also improved the transparency and accessibility of chemical information for both industry stakeholders and the public. Furthermore, the influence of REACH has extended beyond the borders of the EU. Many countries and regions have looked to REACH as a model for their own chemical regulations, recognizing its effectiveness in safeguarding public health and the environment. Initiatives similar to REACH have emerged in various parts of the world, solidifying REACH’s reputation as a global standard in chemical management. 

This article sheds light on the REACH Regulation, delving into its origins, its scope, and the companies it impacts. 

 

Why was the REACH Regulation put into place?

Environmental Protection: One of the primary motivations behind the establishment of the REACH Regulation was the need to protect the environment. Prior to REACH, the use of chemical substances was governed by a patchwork of regulations, often with inadequate oversight. This led to widespread pollution, contamination of water bodies, and adverse effects on ecosystems. REACH was designed to mitigate these environmental risks by promoting the responsible use of chemicals. 

Human Health: Another critical concern addressed by REACH is the protection of human health. Many chemical substances can have detrimental effects on individuals who come into contact with them, whether through direct exposure or the consumption of contaminated products. REACH aims to ensure that chemical substances used in the EU do not pose undue risks to human health, particularly for workers in industries where these substances are commonly used. 

Promoting Innovation: While the primary focus of REACH is safety, it also encourages innovation. By requiring manufacturers and importers to provide detailed information about the chemicals they produce or import, REACH enables safer product development and fosters the creation of alternative, less hazardous substances. 

 

What is the REACH Regulation?

  • Registration: Under REACH, companies that manufacture or import chemical substances into the EU in quantities exceeding one ton per year are required to register them with the European Chemicals Agency (ECHA). This registration includes providing data on the substance’s properties, uses, and potential risks. 
  • Evaluation: ECHA evaluates the data submitted by companies to assess the safety of chemical substances. If a substance is found to pose a risk to human health or the environment, ECHA can impose restrictions or recommend authorization for its use. 
  • Authorization: Certain substances of very high concern (SVHC) may require specific authorization for use. Authorization is granted only if the use is deemed essential, and adequate control measures are in place to minimize risks. 
  • Restriction: REACH empowers the EU to restrict the use of hazardous substances if they pose an unacceptable risk. Restrictions can encompass limitations on production, import, and use of such substances. 
  • Communication: REACH emphasizes the importance of information sharing along the supply chain. Manufacturers, importers, and downstream users are obligated to communicate information on safe handling, risks, and risk mitigation measures.

 

Which companies need to work under the REACH Regulation?

Since 2006, companies that produce chemical substances within the EU or import them into the EU, regardless of their location, must adhere to REACH requirements. This includes not only chemical manufacturers but also producers of articles (products) containing substances that may be released during their use. Companies that import chemical substances into the EU from outside the EU/EEA must also comply with REACH. They share the responsibility for ensuring the safe use of these substances in the European market. Businesses that use chemical substances in their processes or products, such as industrial manufacturers, must follow the safety measures recommended in the Safety Data Sheets provided by suppliers and communicate relevant information to their employees. 

 

In conclusion, the REACH Regulation stands as a robust framework dedicated to safeguarding both the environment and human health. By promoting the responsible use of chemical substances, it not only addresses past challenges but also contributes to a safer and more sustainable future. Companies within the EU and those wishing to engage with the European market must understand and adhere to REACH, ensuring that their activities align with its goals of protecting people and the planet. 

Interview with Janine Thies, BMW Group Recycling and Dismantling Centre Strategy and Communications

Posted on by Laura Nodoph

“BMW is the place where I can have the biggest impact possible in my situation and a lot of powerful resources to enable change.”

What does sustainability mean for you?

Janine Thies: “For me, it is understanding the boundaries of our planet – full stop. That’s the most essential part of sustainability: understanding that there are limited resources and that it’s my responsibility to make sure I make a positive impact and contribute to conserving where we live. For me, it’s an elementary term.”

 

And in regards to this, what motivates you to work in sustainability?

JT: “It’s more of a passion than a job description. I’ve always felt very connected to nature since I was a kid. It was natural for me to be in nature for hours. I didn’t need any toys, but I needed to be out in nature and explore. Everything – every stone or leaf – has a meaning or a task. It’s fascinating that, in nature, everything makes sense.

Since we are also part of nature, I always seek to answer the question: What is my part in that system? This is what motivates me every day.”

 

How did you become a circular economy manager?

JT: “I can say I grew up with a sustainable mindset. My dad is an architect, and in our home, everything’s focused on natural materials. And to be honest, when I was a kid, I didn’t like that. But my dad made me understand that there are natural and artificial materials and their benefits and disadvantages.

I studied Russian, English, and business economics. After my studies, I started working at BMW as a so-called brand protection manager. I worked in the field of counterfeits where we were looking for fake manufacturing buildings where BMW parts got produced in an unauthorized way. These parts are not safe, and some customers can’t distinguish the original from the fake. I was responsible for the US and the Russian market. The peak of working as a brand protection manager was finding the manufacturing buildings where they produced the fake parts. In the US, I worked with the FBI a lot. When we located a building, they would raid the building while we would wait in a secured car nearby. You can really imagine it like you see it in movies.

Why do I tell you all of this? One day, one of the FBI agents I grew friends with was sitting next to me while a raid was happening and asked me: Why do you actually do that job? He asked me this because I would always talk to him about the urgency of changing our economy because of climate change. At that moment, I gave him the usual answer: Because we want the BMW customers to be safe from fake parts. But on my flight back to Germany, his question really had me thinking. I realized that the job of a brand protection manager was not what I was passionate about. So, all of a sudden, I decided to write a business case for the materials we found when we did our raids. Up to then, all materials found in raids were scraped. And this is how I found myself calculating how we could recycle and reuse the material while I was on the plane back to Germany.

Long story short: This is how I came to change jobs inside BMW and join their task force for a circular business. The task force, which I was a founding member of, grew very successful, and BMW created a venture out of it.

I didn’t join the joint venture but decided to join the recycling and dismantling team of BMW and became a circular economy manager.”

 

What are some things that you do to make your own life more sustainable?

JT: “Six years ago, I decided not to fly anymore. It just didn’t feel right to fly to a conference and then talk about the importance of sustainability on stage. That’s one thing.

Another thing is that I rarely eat meat, and if I do, it is from the region I live and very sustainably farmed. The third thing, of course, is talking with my kids about being part of nature and giving back so they grow up with the mindset of being part of nature.

And the fourth thing is supporting my husband’s business to grow more sustainable. He’s been a leadership trainer for 19 years, and four years ago, he changed his training into being in nature. To see how it developed and a lot of high-level management come there and understand the importance of being in balance with nature is really cool.”

 

What is something new you learned in the past year?

JT: “I learned something about myself. Big companies like BMW oftentimes get a lot of hatred, claiming that they could and should do a lot more for sustainability than they already do. What they forget is how eager and passionate sustainability people work at these kinds of global players. However, this totally affects me. I´m continuously questioning myself if I was in the right place. I´m absolutely impact-driven and realized that the needed shift in our economy needs all global players driven by passionate employees.

So, for me, BMW is the place where I can have the biggest impact possible in my situation and a lot of powerful resources to enable change.”

 

What do you think companies lack to become better at sustainability?

JT: “While a lot of people talk about technology, I’d say even more than technology, we need better people. As a keynote speaker, I get some deep insights into companies, and what most companies lack is investing in the development of their employees. These companies need to understand that sustainability is also a personal decision. People need to ask themselves what kind of world they want to create for their families and friends and how they can match their motivation with their daily work. Sustainability needs more than what is said in most job descriptions. If companies decide to come up only with technological solutions and they don’t develop the people and mindsets behind it, it’s not gonna work out.”

 

What would you rate your most successful measure for more sustainability and or circularity in the last years and why?

JT: “Eight years ago, I would have said it’s creating that business case. Next would be the founding of the joint venture. Today, looking back at the last 14 years, I’d say it is understanding how to create momentum for the people I talk to – no matter if it is in a one-on-one conversation or if I’m standing in front of hundreds of people on stage. I found a way to – in a matter of 30 minutes – take people on the personal journey of finding what is important to them, how to match that to their work, and creating concrete measures from it that they can apply straight away. And the best part: The measures are not only sustainable, they’re also profitable. I’d call that my biggest achievement of the last two years, especially because the thoughts I provoke are often multiplied by the people I talk to.”

 

What would you wish for from a legislative point of view?

JT: “Overall, I think sustainable decisions should be made easier for consumers from a monetary point of view. I don’t understand why, in Germany, we need to pay more taxes on vegetarian food than on non-vegetarian food. Why is flying as cheap as it is worldwide, or even owning a private jet?

Why are big oil companies allowed to destroy nature/ people, although they have been knowing their effects on climate change and human health for decades?

I think everyone can be part of the solution if laws, subventions, and tax reliefs focus on the real big levers and support the needed shift towards an economy that´s in peace with Mother Nature.”

The European Battery Regulation 

Posted on by Laura Nodoph

With the growing importance of batteries in the green transition, the EU aims to create a circular economy for the battery sector, addressing every stage of a battery’s lifecycle. This initiative is particularly crucial, given the anticipated ten-fold increase in battery demand by 2030. By replacing the 2006 batteries directive and enhancing waste management legislation, the regulation sets a new standard for sustainability, safety, and end-of-life management of batteries on a global scale. 

 

What is the EU Battery Regulation?

The European Battery Regulation, passed by the European Parliament and the Council in August 2023, applies to all economic operators involved in the EU battery market. This includes manufacturers, producers, importers, and distributors, covering a broad range of batteries. The regulation encompasses waste portable batteries, electric vehicle (EV) batteries, industrial batteries, starting, lighting, and ignition (SLI) batteries, and batteries for light means of transport (LMT), such as electric bikes, e-mopeds, and e-scooters. 

Under these regulations, EV batteries, LMT batteries, and rechargeable industrial batteries exceeding two kWh must carry a “clearly legible and indelible” carbon footprint declaration and label, detailing key information like recycled cobalt, lead, lithium, and nickel content. Economic operators must also adopt and communicate due diligence policies for critical raw materials supply, following international standards such as the OECD Due Diligence Guidelines and the UN Guiding Principles on Business and Human Rights. 

Additionally, the introduction of a digital battery passport for certain batteries enhances traceability, providing data on the battery model, specific usage, and more. All batteries, regardless of type, must carry labels and QR codes indicating capacity, performance, durability, chemical composition, and the “separate collection” symbol. Notably, the “CE” mark is now required for all batteries to demonstrate conformity with EU health, safety, and environmental standards, with labeling affixed directly on the device rather than the battery itself. 

The regulation’s core objective is to foster a circular economy in the battery industry by imposing comprehensive requirements throughout the battery lifecycle. This includes collection targets, material recovery goals, and extended producer responsibility. 

Producers are mandated to meet collection targets for waste portable batteries (63% by 2027, 73% by 2030) and have a dedicated collection objective for waste LMT batteries (51% by 2028, 61% by 2031). Moreover, the regulation sets ambitious targets for lithium recovery from waste batteries (50% by 2027, 80% by 2031), with potential adjustments based on market and technological developments. 

Minimum recycled content levels are established for industrial, SLI, and EV batteries (initially 16% for cobalt, 85% for lead, 6% for lithium, and 6% for nickel), supported by mandatory recycled content documentation. Recycling efficiency targets are set at 80% for nickel-cadmium batteries by 2025 and 50% for other waste batteries by 2025. 

The regulation also ensures that, by 2027, portable batteries incorporated into appliances should be removable and replaceable by end-users, benefiting consumers. LMT batteries must be replaceable by independent professionals. 

Find all the details here.  

 

EU Battery Regulation Timeline and Status 

The European Battery Regulation is scheduled to take effect on 17 August 2023, with enforcement commencing from 18 February 2024. It features a phased approach to rule implementation: 

  • August 2024:  
    • Economic operators, aside from due diligence policies and end-of-life management, will begin complying with their obligations. 
    • Conformity assessment procedures for batteries, with exceptions, start applying. 
  • August 2025:  
    • Rules pertaining to end-of-life battery management must be adhered to. 
    • Penalties for violations are to be established by Member States, aiming for effectiveness, proportionality, and deterrence. 
  • January 2026: Labeling and information requirements will be applicable, with QR code implementation deferred until 2027. 
  • February 2027: Companies must ensure removability and replaceability of portable and LMT batteries. 

By 31 December 2030, the Commission will assess the feasibility of extending carbon footprint declaration requirements to portable batteries and implementing a maximum life cycle carbon footprint threshold for rechargeable industrial batteries with a capacity of two kWh or less. 

 

How to prepare for the EU Battery Regulation

To prepare for compliance with the European Battery Regulation, companies in the battery industry should take several key steps. 

Firstly, it’s essential to thoroughly understand the regulation’s specific requirements and deadlines. This means investing time in comprehending the nuances of the regulation as it relates to your particular role and scope within the battery market. 

Simultaneously, a comprehensive assessment of current operations is necessary. This involves a detailed evaluation of existing battery products, manufacturing processes, and supply chains. The aim is to identify areas that require adjustments and modifications to align with the regulation’s rigorous standards. 

In parallel, companies must establish due diligence policies for the sourcing of critical raw materials, including cobalt, graphite, lithium, nickel, and others. These policies should conform to internationally recognized standards such as the OECD Due Diligence Guidelines and the UN Guiding Principles on Business and Human Rights. Ensuring transparency and responsibility within the supply chain is not only a regulatory requirement but also integral to sustainable business practices. 

By proactively addressing these aspects, companies can position themselves for successful compliance with the European Battery Regulation. This not only ensures adherence to regulatory obligations but also aligns with broader sustainability objectives, contributing to a more environmentally responsible and circular battery industry in line with the EU’s green transition objectives. 

The EU Carbon Border Adjustment Mechanism (CBAM) 

Posted on by Laura Nodoph

In a bid to combat carbon emissions and level the playing field for European businesses, the European Union (EU) has introduced the Carbon Border Adjustment Mechanism (CBAM). This mechanism, part of the EU’s “Fit for 55” package, aims to put a price on greenhouse gas emissions associated with imports compared to products produced within the EU. It also ensures that domestic manufacturers have equal competitive opportunities concerning greenhouse gas costs compared to their counterparts in non-EU countries. 

 

Why was CBAM implemented? 

The EU’s goal is ambitious: to reduce carbon dioxide (CO2) emissions by 55% by 2030 compared to 1990 levels. As part of this initiative, the EU has been gradually reducing the free allocation of EU Emissions Trading System (EU-ETS) certificates to energy-intensive industries. This reduction creates a risk of companies in certain sectors shifting their production to Non-EU countries due to cost considerations, potentially undermining the effectiveness of the EU’s emissions reduction measures. 

While EU-based businesses are already required to account for the carbon footprint of their production, CBAM extends this requirement to businesses importing goods from outside the EU, making importers of CBAM-covered products pay a carbon price to mitigate potential competitive disadvantages for domestic manufacturers of similar goods. 

 

What is CBAM? 

CBAM necessitates a carbon price on the import of specific goods produced outside the EU based on their associated carbon emissions. The price per CBAM certificate is determined by the average weekly price of EU Emissions Trading System (EU-ETS) certificates and multiplied by the number of CBAM certificates to be surrendered. Each CBAM certificate corresponds to one tonne of emitted CO2 (carbon dioxide), N2O (nitrous oxide), or F-gases (perfluorinated hydrocarbons) released during the production process of the imported goods. 

Importers can claim a reduction in the number of CBAM certificates to be surrendered if they can demonstrate that a carbon price was paid in the country of origin. 

 

 

Which companies are affected by CBAM? 

The following product categories are set to be included in CBAM starting from October 2023: 

  • Fertilizers (including precursor products such as ammonia and potassium nitrate) 
  • Cement (including bricks, clay cement, and other kaolin-containing clay and earthware) 
  • Iron (agglomerated iron ores and concentrates) and steel (including downstream products) 
  • Aluminum (including downstream products) 
  • Electrical energy 
  • Hydrogen 

Important: CBAM applies for companies that import the above materials but also for companies that import processed goods containing the above materials (especially for aluminum and steel)  

In the coming years, there are plans to expand the scope of CBAM to include all goods covered by the EU Emissions Trading System (ETS). Non-EU countries integrated into the EU Emissions Trading System or whose emissions trading systems are recognized as equivalent may be exempted from CBAM. 

 

CBAM Status and Timeline 

CBAM will be introduced gradually, beginning with a transitional phase from October 1, 2023, to December 31, 2025. During this period, companies will be required to calculate and document the direct and indirect emissions associated with the production process of imported goods subject to CBAM. They must submit quarterly reports, known as CBAM reports, by January 31, 2024, providing data on the quantity of imports, direct and indirect CO2 emissions abroad, and the potential carbon price paid in the country of origin. The CBAM report is submitted using the CBAM Transitional Registry which will be deployed for the use of Economic Operators in the EU as from the 1st of October 2023 together with a set of webinars and trainings which will facilitate the use of the registry and the submission of data during the transitional period. However, no financial compensation through the surrender of CBAM certificates is required during this phase.  

Find more information here.  

From January 1, 2026, CBAM will fully come into effect. At this point, companies will face more extensive obligations, including the need for a CBAM registration for the status of an “Authorized Declarant.” They must calculate the embedded direct and indirect emissions of imported goods into the EU, have the reported data on direct and indirect emissions verified by an accredited testing body, purchase the required number of CBAM certificates through a central platform to cover the embedded direct and indirect emissions, and submit an annual CBAM declaration by May 31 of each calendar year for emissions associated with goods imported in the previous year. 

 

 

 

How to prepare for CBAM 

Preparing for the implementation of the Carbon Border Adjustment Mechanism (CBAM) requires proactive measures. Companies should begin by conducting a comprehensive assessment of their supply chains to identify products that fall under CBAM’s purview. This involves calculating the direct and indirect emissions associated with their imported goods and considering potential carbon pricing mechanisms in the countries of origin. To streamline compliance, businesses should invest in robust data collection and reporting systems. Additionally, they should monitor updates and guidelines provided by regulatory authorities to ensure alignment with CBAM requirements. Ultimately, preparation for CBAM hinges on a combination of thorough assessment, technological readiness, and collaboration between public and private sectors to navigate the transition successfully.