THE CBAM PLAYBOOK

The Carbon Border Adjustment Mechanism (CBAM) is an EU policy designed to tackle climate change by making sure that imported products reflect their environmental impact, just like EU-made goods. 

Here’s how it works:  

What’s the problem? 

• The EU has strict rules that force companies within Europe to reduce their carbon emissions. Companies that produce a lot of carbon have to pay for it through the EU Emissions Trading System (ETS). 

• But, products from other countries that have less strict rules can still be sold in Europe. This creates an unfair situation because those foreign products may be cheaper, simply because their manufacturers don’t pay for the pollution they cause. 

How does CBAM fix this? 

• CBAM puts a carbon price on certain imported goods, like steel, cement, aluminium, and fertilizers, based on the carbon emissions caused by making those products. 

• If a company outside of the EU wants to sell goods into the EU, and they come from a place with lower environmental standards, they will have to pay for the emissions that were generated when making those goods. This levels the playing field between EU and non-EU producers.

What products are affected? 

• Initially, CBAM covers products that are highly polluting, like steel, cement, aluminium, fertilizers, electricity, and a few others. The EU is considering expanding this list in the future. 

Why is it important? 

• CBAM helps prevent something called carbon leakage. This happens when companies move their production to countries with looser environmental laws to avoid paying for their emissions. With CBAM, those companies can’t avoid the carbon cost just by moving abroad. 

• It encourages companies around the world to clean up their manufacturing processes if they want to sell to the EU. 

Essentially, CBAM is like a “carbon tax” on certain imports to the EU. It ensures that products coming from other countries have to pay for their pollution just like EU products, encouraging a global shift toward greener production methods. 

CBAM does not impact all industries — at least not initially. CBAM is being phased in gradually and, at first, it only applies to specific industries that are responsible for high levels of carbon emissions. However, its scope could expand over time. 

Industries Currently Affected by CBAM: 

CBAM currently focuses on carbon-intensive industries. These include: 

• Steel 

• Cement 

• Aluminium 

• Fertilizers 

• Electricity 

• Hydrogen (added more recently) 

These industries were selected because their production processes generate a lot of direct (Scope 1) carbon emissions, and they are sectors where carbon leakage (moving production to countries with looser carbon rules) is more likely to occur. 

Going forward, the EU plans to review CBAM in 2025, and more industries could be included after that. This review might extend CBAM to cover products like chemicals, plastics, and even semi-finished or finished goods (e.g., cars or appliances) that indirectly rely on carbon-intensive materials. 

CBAM compliance is crucial for companies that import goods into the EU. CBAM impacts their costs, operations, and reputation. Here’s why it’s important for companies to comply, the benefits of compliance, and the risks of non-compliance. 

Why It’s Important to Comply with CBAM: 

Access to the EU market: 

• The EU is one of the largest and most lucrative markets in the world. Companies that fail to comply with CBAM might find it difficult or even impossible to sell their goods in the EU, reducing their market reach and profitability. 

Cost of non-compliance: 

• Companies that don’t comply with CBAM could face financial penalties or restrictions on importing goods into the EU. They could also be forced to pay higher tariffs or carbon levies on their products, increasing their costs. 

Legal obligations: 

• CBAM compliance is a legal requirement for companies exporting specific carbon-intensive goods to the EU. Non-compliance could result in sanctions, legal issues, or import bans, disrupting business operations. 

Reputation and sustainability goals: 

• Companies that comply with CBAM demonstrate a commitment to environmental responsibility, which can improve their reputation among consumers, investors, and business partners. In contrast, failure to comply could damage a company’s brand, especially as consumers and stakeholders increasingly value sustainability. 

There are many benefits of complying with CBAM, the most prominent of which include: 

Cost efficiency in the long run: 

• By investing in cleaner production processes and improving carbon efficiency, companies can lower their overall carbon footprint and avoid hefty carbon levies. This can result in long-term cost savings. 

Attraction of eco-conscious consumers and investors: 

• Companies that comply with CBAM will be more attractive to consumers who prioritize environmentally friendly products, as well as to investors who are looking for companies committed to sustainability and ESG (Environmental, Social, Governance) criteria. Failure to comply with CBAM will result in little-to-no investment  

Preparedness for future regulations: 

• Complying with CBAM puts companies in a better position to handle future carbon regulations that may be introduced globally. As more countries adopt carbon pricing schemes or environmental regulations, companies with greener operations will be better prepared. 

However, not complying with CBAM regulation can leave businesses facing a number of challenges:

Higher costs: 

• Non-compliance with CBAM means companies could be subject to higher carbon tariffs when exporting to the EU. If they don’t have a system in place to track and report their emissions, they may face penalties and lose competitiveness to compliant businesses. 

Loss of market access: 

• Non-compliant companies will lose access to the EU market, which is a significant trading partner for many global businesses. They may also face challenges in building partnerships with EU-based companies, who may avoid working with non-compliant suppliers. 

Reputational damage: 

• In today’s world, where sustainability is a key focus for consumers and investors, failing to comply with CBAM can damage a company’s reputation. It can be seen as a refusal to contribute to climate goals, which could lead to a loss of customers and business partners. 

Risk of sanctions: 

• Failure to comply with CBAM could lead to legal consequences, including potential sanctions or import restrictions. This could disrupt supply chains and lead to financial losses. 

Companies that comply with CBAM can gain access to the EU market, build a positive reputation for sustainability, lower long-term costs, and prepare for future regulations. 

But companies that don’t comply could face higher tariffs, lose market access, suffer reputational damage, and be subject to legal penalties. The key takeaway? Complying with CBAM is essential for maintaining competitiveness and aligning with the global shift toward environmental responsibility. 

Let’s take a look at how the CBAM regulation has developed over time, including its past development, present implementation, and potential future developments:

The Evolution of CBAM: A Timeline

Past Developments

• 2019: European Green Deal Announcement
  • The European Commission introduced the European Green Deal, aiming for EU carbon neutrality by 2050. CBAM was presented as a tool to prevent carbon leakage and protect EU industries.
• July 2021: CBAM Proposal
  • The European Commission proposed CBAM as part of the Fit for 55 package, targeting high-emission sectors such as steel, aluminum, cement, and fertilizers.
• March 2022: Initial Agreements
  • The European Parliament and Council reached initial agreements to adopt CBAM with a phased implementation plan.
• December 2022: Final Political Agreement
  • EU institutions finalized a political agreement to implement CBAM starting in 2023.

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Present (2023 – Now)

• October 1, 2023: Transition Phase Begins
  • A transitional phase (2023–2025) commences, requiring importers to report emissions embedded in targeted products without payment obligations. This phase focuses on data collection.
• Covered Sectors
  • CBAM applies to carbon-intensive industries, including steel, aluminum, cement, fertilizers, hydrogen, and electricity.
• Quarterly Reporting Requirements
  • Importers must report direct emissions (Scope 1) from imported goods on a quarterly basis to EU authorities.

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Future Outlook

• 2025: European Commission Review
  • The European Commission will assess CBAM’s effectiveness and consider expanding its scope to sectors like chemicals, plastics, and finished or semi-finished products (e.g., cars, machinery).
• January 1, 2026: Full CBAM Implementation
  • Importers will need to purchase CBAM certificates to cover the emissions embedded in imported goods. These certificates will align with the EU carbon price under the Emissions Trading System (ETS).
• Post-2026: Potential Scope Expansion
  • Based on the review, CBAM may include more products and potentially address indirect emissions or complex supply chains.
• 2030s: Global Alignment and Impact
  • With other countries adopting carbon pricing schemes, CBAM could drive global alignment in carbon pricing and strengthen incentives for worldwide decarbonization efforts.

Here’s a breakdown of what you should be doing: 

1. Understand CBAM Regulations and Scope 

• Identify applicable sectors: Determine if the products you manufacture or import fall under the sectors currently covered by CBAM, such as steel, cement, aluminium, fertilizers, electricity, and hydrogen. 

• Monitor regulatory updates: Keep track of potential changes to CBAM, including the 2025 review when the scope may expand to additional sectors, like chemicals, plastics, or finished and semi-finished goods. 

2. Measure and Monitor Carbon Emissions 

• Set up emissions tracking: Implement systems to measure the direct carbon emissions (Scope 1) involved in the production of the goods you import into the EU. This will be critical to report emissions accurately under CBAM. 

• Third-party verification: Ensure your carbon emissions data are verified by a third party, as CBAM reporting requires reliable, transparent emission figures. 

• Review Scope 2 and Scope 3 emissions: Although CBAM focuses on Scope 1 emissions, preparing for future regulatory shifts could involve understanding your indirect emissions (Scope 2 and 3), particularly as carbon regulations expand globally. 

3. Set Up a CBAM Reporting Process 

• Understand reporting requirements: From October 2023 until 2025, businesses will need to submit quarterly reports on the carbon emissions embedded in their imported products. Make sure your reporting process complies with the CBAM regulations. 

• Data collection systems: Install or upgrade internal systems to collect, manage, and report carbon emissions data accurately and on time. Companies must be prepared to submit emissions reports every three months to the relevant EU authorities. 

• Carbon certificates: By 2026, businesses will need to purchase CBAM certificates to cover the carbon emissions associated with their imports. Start planning for how you will acquire these certificates and integrate this into your cost management. 

4. Assess and Improve Supply Chain Sustainability 

• Evaluate supply chain emissions: Assess the carbon footprint of your supply chain, especially if you import raw materials or products from countries with less stringent carbon regulations. A high-emission supply chain can lead to higher CBAM costs. 

• Collaborate with low-carbon suppliers: Identify and work with suppliers who use low-carbon technologies or operate in regions with higher carbon standards. Sourcing from low-emission suppliers can help reduce CBAM liabilities. 

• Supply chain transparency: Ensure that your suppliers are transparent about their carbon emissions and that their data can be reliably reported under CBAM requirements. 

5. Invest in Low-Carbon Technologies 

• Upgrade production processes: If you are a manufacturer, invest in cleaner, more energy-efficient technologies that reduce direct carbon emissions from your production processes. This will help lower your CBAM costs in the long run. 

• Renewable energy: Shift towards using renewable energy sources in your manufacturing processes, as this will lower your overall emissions and improve your carbon footprint. 

• Research and innovation: Invest in R&D to develop new materials and production techniques that are less carbon-intensive. This not only reduces CBAM liabilities but also aligns your business with global sustainability trends. 

6. Prepare for Financial Impacts 

• Budget for CBAM compliance: From 2026, businesses will need to buy CBAM certificates to cover the emissions from the goods they import into the EU. Estimate these costs and incorporate them into your financial planning. 

• Internal carbon pricing: Consider adopting an internal carbon pricing mechanism to help account for future costs related to CBAM and other potential carbon regulations. This helps businesses manage risks and find cost-saving opportunities. 

• Explore tax incentives: Some countries may offer tax breaks or incentives for businesses that reduce their carbon emissions. Investigate whether you can benefit from such programs as part of your sustainability efforts. 

7. Build Sustainability into Business Strategy 

• Sustainability goals: Align your business strategy with sustainability objectives, such as achieving net-zero emissions or reducing your carbon intensity. This can create a competitive advantage in the EU market and beyond. 

• Communicate sustainability: Use your compliance with CBAM and commitment to low-carbon production as a marketing tool. Highlight your sustainability efforts to customers, investors, and other stakeholders. 

8. Engage with Stakeholders and Partners 

• Inform customers and partners: Ensure your customers and business partners understand how CBAM impacts your products and pricing. Communicating the added carbon costs transparently can help build trust. 

• Collaborate with industry groups: Join industry associations and sustainability initiatives that focus on carbon reduction. These groups can offer guidance, support, and best practices for navigating CBAM. 

9. Adapt to Future Regulations 

• Stay ahead of regulatory changes: The 2025 review may broaden CBAM’s scope, including more sectors or emissions categories like Scope 2 or 3. Begin preparing for potential future regulations now, rather than waiting for them to take effect. 

• Monitor global developments: Other regions may adopt similar carbon border mechanisms. Keep an eye on global carbon pricing trends and adjust your business strategy accordingly. 

Makersite helps businesses navigate and comply with CBAM in a number of ways,  providing advanced tools and insights to manage product sustainability, carbon footprints, and supply chain data. We offer: 

1. Accurate Carbon Footprint Calculations 

• Product-Level Carbon Data: CBAM requires businesses to accurately report the carbon emissions embedded in the products they import or export. Makersite can calculate product-specific carbon footprints, giving businesses precise data (based only on values from the CBAM database and direct collected data if necessary) on the emissions across their supply chain, from raw materials to final product delivery. 

• Automated Reporting: Makersite can automate the collection and analysis of carbon data, helping businesses easily generate the reports needed to comply with CBAM. This saves companies time and reduces errors in emissions reporting. 

2. Supply Chain Transparency 

• Supplier Engagement: The platform helps businesses engage with their suppliers to gather necessary carbon data and improve transparency. This is essential for understanding how supply chain changes could impact CBAM-related costs and liabilities. 

3. Scenario Analysis for Cost Impacts 

• Risk Mitigation: Through scenario analysis, businesses can identify high-risk areas in their supply chain where CBAM might have a significant impact. This helps them develop strategies to reduce carbon-intensive inputs and minimize costs. 

4. Sustainable Product Design and Optimization 

• Product and Process Optimization: Makersite helps businesses optimize their product designs and manufacturing processes to reduce emissions. By identifying less carbon-intensive materials and processes, companies can lower their CBAM liabilities. 

• Comparative Analysis: Makersite enables businesses to compare different materials and suppliers based on their environmental performance, allowing them to choose the most sustainable options and reduce exposure to CBAM-related costs. 

5. Compliance and Risk Management 

• Regulatory Compliance Tools: Makersite helps businesses stay compliant with CBAM by ensuring they meet reporting standards and understand the regulatory requirements. The platform updates regularly to reflect the latest regulations, so businesses can be sure their compliance efforts are up-to-date. 

• Mitigating Supply Chain Disruption Risks: By analyzing supply chain carbon data, businesses can proactively address risks associated with CBAM, such as potential supply disruptions due to changing trade regulations or carbon-related penalties. 

6. Support for Green Investments and Innovation 

• Green Product Development: Companies can use Makersite to explore new product designs that meet both consumer demand for sustainability and regulatory requirements like CBAM. 

7. Cost Efficiency 

• Reducing Compliance Costs: By using Makersite’s data-driven tools, businesses can streamline the CBAM compliance process and reduce the administrative burden. With automated carbon tracking and reporting, companies avoid manual errors and excessive costs. 

• Optimizing Supply Chains for Lower Carbon Footprints: Businesses can also save costs by optimizing their supply chains to reduce carbon emissions, thus lowering their CBAM fees and improving long-term competitiveness. 

We help businesses comply with CBAM by providing detailed carbon footprint analysis, supply chain transparency, risk assessment tools, and sustainable product optimization, in turn enabling businesses to reduce their carbon exposure, optimize compliance, and minimize costs, all while enhancing their sustainability performance. 

Hypothetical Case Study: CBAM Compliance and Benefits Using Makersite 

Company: GreenTech Manufacturing 

Industry: Heavy Manufacturing (Steel and Aluminium Production) 

Region: European Union (EU) 

Challenge: Compliance with the EU’s Carbon Border Adjustment Mechanism (CBAM)

Solution: Makersite’s product-level carbon footprint and supply chain management platform 

Background 

GreenTech Manufacturing is a European steel and aluminium manufacturer with global operations. The company exports a significant portion of its products to the EU and imports raw materials from non-EU countries. With the introduction of the Carbon Border Adjustment Mechanism (CBAM), GreenTech faces the challenge of accurately reporting the carbon emissions embedded in its imported materials and finished products. Failure to comply with CBAM could lead to increased costs due to carbon tariffs, potential disruptions in the supply chain, and reputational damage. 

GreenTech needs a solution to: 

• Measure and report the carbon emissions of its supply chain. 

• Identify areas to reduce emissions to minimize CBAM-related costs. 

• Ensure compliance with the new regulatory environment while maintaining competitiveness. 

Challenges 

• Complex Supply Chain: GreenTech sources raw materials (e.g., iron ore, bauxite) from non-EU countries where carbon regulations are weaker. Tracking emissions across multiple suppliers was a significant challenge. 

• Product-Specific Emissions: The company’s products vary in carbon intensity depending on material inputs and manufacturing processes. CBAM requires GreenTech to report emissions at the product level, making traditional carbon accounting methods inadequate. 

• Competitive Pressure: GreenTech’s competitors were also adjusting to the CBAM regulations. Early compliance could give GreenTech a competitive advantage by avoiding last-minute penalties and disruptions. 

Solution: Makersite’s Platform 

GreenTech adopted Makersite to streamline its CBAM compliance process and optimize its supply chain for lower carbon intensity. Makersite’s platform offered GreenTech the following key capabilities: 

1. Comprehensive Carbon Footprint Calculation

Using Makersite’s life cycle assessment (LCA) and carbon tracking tools, GreenTech was able to calculate the carbon footprint of its products at each stage of production: 

• Makersite integrated data from GreenTech’s suppliers to track Scope 3 emissions (emissions from the supply chain), which are essential for CBAM reporting. 

• The platform provided real-time carbon accounting, automatically updating GreenTech’s carbon profiles as supply chains changed. 

2. Supply Chain Mapping and Optimization

Makersite’s platform mapped GreenTech’s global supply chain, highlighting high-emission suppliers and materials: 

• Makersite’s supply chain transparency tools identified carbon-intensive materials and suppliers, helping GreenTech target areas for decarbonization. 

• GreenTech used scenario analysis to explore different sourcing options, shifting to lower-carbon materials or suppliers where necessary. 

• This analysis enabled GreenTech to reduce emissions without compromising product quality or increasing costs significantly. 

3. CBAM Compliance Automation

Makersite automated the generation of CBAM-compliant reports for GreenTech’s exported and imported products: 

• The platform provided detailed, product-specific carbon emission data, enabling GreenTech to comply with the EU’s CBAM reporting requirements. 

• The automated reporting reduced the administrative burden on GreenTech’s sustainability and compliance teams, cutting down on manual errors and saving significant time. 

4. Emission Reduction Roadmap

With the insights provided by Makersite, GreenTech developed a strategic plan to reduce its carbon footprint over time: 

• The platform’s emission reduction roadmaps suggested low-carbon technologies, cleaner energy inputs, and better material sourcing strategies. 

• GreenTech adopted energy-efficient manufacturing processes, reducing overall emissions and preparing for stricter future regulations. 

Results and Benefits  

1. CBAM Compliance Achieved

GreenTech successfully met the CBAM reporting requirements: 

• Accurate Reporting: GreenTech’s product-level emissions were accurately tracked and reported, avoiding potential carbon penalties. 

• Cost Avoidance: By reducing carbon emissions and proving lower carbon intensity through transparent reporting, GreenTech minimized the additional tariffs that would have been imposed by CBAM. 

• Early Compliance Advantage: GreenTech became a leader in early compliance, securing supply chain stability and avoiding last-minute disruptions faced by competitors struggling with CBAM’s reporting complexities. 

2. 15% Reduction in Carbon Emissions

Through supply chain optimization and more efficient manufacturing practices identified by Makersite, GreenTech achieved a 15% reduction in overall carbon emissions in the first year: 

• This reduction not only minimized their CBAM tax obligations but also aligned with corporate sustainability goals to meet the EU’s net-zero targets by 2050. 

3. €3 Million in Annual Savings

By switching to lower-carbon suppliers and materials and reducing CBAM-related tariffs, GreenTech realized significant cost savings: 

• Tariff Savings: A 10% reduction in emissions through decarbonized supply chains helped GreenTech avoid an estimated €1.5 million in CBAM tariffs. 

• Operational Savings: The reduction in energy consumption and the use of more efficient processes led to an additional €1.5 million in annual operational cost savings. 

4. Competitive Advantage

GreenTech’s proactive approach to CBAM compliance gave it a reputational boost and a competitive edge: 

• Customer Trust: GreenTech’s customers, especially in the EU, were increasingly demanding low-carbon products. By demonstrating compliance with CBAM, GreenTech was able to retain and grow its customer base. 

• Market Differentiation: With a focus on sustainability and lower emissions, GreenTech positioned itself as a leader in the transition to green manufacturing, attracting investors and new business opportunities. 

Key Takeaways 

• CBAM Compliance: Early compliance with CBAM ensured that GreenTech avoided significant carbon tariffs and supply chain disruptions. 

• Cost Reduction: Optimizing the supply chain for carbon emissions saved the company millions in both tariffs and operational costs. 

• Sustainability and Competitiveness: Embracing carbon reduction not only aligned GreenTech with global sustainability goals but also enhanced its reputation and competitiveness in an increasingly carbon-conscious market. 

In summary, Makersite’s platform enabled GreenTech Manufacturing to seamlessly comply with the EU’s Carbon Border Adjustment Mechanism, reduce its carbon footprint, and improve its overall business sustainability. The company now enjoys long-term financial and environmental benefits from being an early mover in CBAM compliance, demonstrating the value of proactive carbon management and supply chain transparency. 

Complying with CBAM offers businesses a number of significant market benefits, in addition to avoiding regulatory penalties. These benefits are both direct and indirect, impacting areas such as cost savings, competitive advantage, market access, and customer relationships.  

Let’s summarize a few: 

1. Avoiding Carbon Tariffs and Costs

• Reduced Carbon Tariffs: CBAM imposes tariffs on imports based on the carbon content of products. Complying with CBAM means companies can accurately report their emissions and take measures to reduce them, which directly lowers the tariffs they might otherwise face. 

• Cost Avoidance: By reducing the carbon footprint of products and processes, businesses can avoid paying higher CBAM-related costs in the future. This is particularly beneficial as CBAM phases in stricter regulations over time, which could lead to more significant financial penalties for high-carbon products. 

2. Maintaining and Enhancing Market Access

• Uninterrupted Market Access to the EU: The European Union is a major global market, and CBAM affects industries exporting to the EU. Non-compliance or failure to meet CBAM requirements could lead to restrictions or tariffs, making products less competitive in this lucrative market. Complying with CBAM ensures uninterrupted access to the EU market, helping businesses maintain their customer base and revenues. 

• Expansion into Environmentally Conscious Markets: Beyond the EU, many markets and customers are placing increasing value on sustainability. Companies that comply with CBAM demonstrate their commitment to reducing carbon emissions, making them more attractive to environmentally conscious consumers and businesses globally. 

3. Competitive Advantage

• First-Mover Advantage: Companies that comply with CBAM early can establish themselves as leaders in the green transition. This creates a competitive edge over late adopters or those slow to decarbonize, who may struggle with sudden changes in regulations or face higher costs due to delayed compliance. 

• Preferred Supplier Status: Businesses that proactively manage their carbon emissions and demonstrate compliance with CBAM can position themselves as preferred suppliers to customers who prioritize sustainability. This can open doors to new contracts and partnerships, especially with companies that have their own carbon reduction targets. 

• Differentiation in the Marketplace: As consumers and businesses become more environmentally conscious, companies that comply with CBAM and actively reduce their carbon footprint can differentiate their products as “low-carbon” or “sustainable.” This differentiation can help attract more customers, increase brand loyalty, and justify premium pricing. 

4. Supply Chain Resilience

• Risk Mitigation: By complying with CBAM, businesses will have a better understanding of their carbon emissions and supply chains. This insight helps identify high-risk areas that could be vulnerable to future carbon-related regulations, supply chain disruptions, or cost increases. By decarbonizing these aspects, businesses build a more resilient and stable supply chain, mitigating future risks. 

• Long-Term Partnerships with Sustainable Suppliers: As companies optimize their supply chains to comply with CBAM, they tend to establish long-term relationships with suppliers who share their sustainability goals. This fosters more reliable and sustainable supply chains, reducing potential future disruptions caused by non-compliance or carbon-intensive practices. 

5. Financial Benefits

• Increased Investment and Access to Capital: Investors are increasingly focused on sustainability and ESG (Environmental, Social, and Governance) performance. Companies that comply with CBAM are better positioned to attract investments from ESG-focused funds, improve their credit ratings, and gain access to lower-cost financing options. This can provide a competitive financial edge, especially in markets where green investment is growing. 

• Cost Savings from Decarbonization: Complying with CBAM often involves implementing energy-efficient technologies, reducing emissions, and optimizing supply chains. These changes can lead to operational cost savings through reduced energy use, lower material costs, and more efficient production processes. Over time, these savings can outweigh the initial investment in compliance. 

6. Reputation and Brand Value

• Enhanced Corporate Reputation: Complying with CBAM enhances a company’s reputation as a responsible and sustainable business. In today’s market, corporate reputation around sustainability and environmental responsibility plays a significant role in consumer and investor choices. Companies seen as leaders in decarbonization can enjoy better public relations and stronger brand loyalty. 

• Customer and Stakeholder Trust: Businesses that comply with CBAM can strengthen trust with customers, regulators, and other stakeholders by demonstrating transparency in their carbon reporting and sustainability efforts. This builds credibility and fosters long-term relationships, which can result in customer retention and new business opportunities. 

7. Meeting Future Regulatory Requirements

• Future-Proofing Business Operations: CBAM is part of a broader global trend toward stricter carbon regulations. By complying early and investing in decarbonization strategies, businesses are better prepared to meet future regulatory requirements in other regions. This minimizes disruption and ensures that the company can stay ahead of regulatory changes, reducing long-term risks. 

• Alignment with Global Net-Zero Goals: Many countries and industries are setting ambitious net-zero goals for the coming decades. Complying with CBAM aligns businesses with these global efforts, positioning them as proactive participants in the green economy, which could lead to favorable policy treatments and incentives down the line. 

8. Innovation and Sustainability Leadership

• Incentivizing Innovation: The need to comply with CBAM drives innovation, encouraging businesses to invest in low-carbon technologies, sustainable products, and more efficient manufacturing processes. These innovations can lead to new product offerings, enhanced efficiency, and overall business growth. 

• Leadership in the Transition to a Green Economy: Companies that comply with CBAM are seen as leaders in the global transition to a low-carbon economy. This leadership can open up new opportunities in emerging green markets, such as renewable energy, carbon capture technologies, and sustainable materials. 

Businesses that act early to comply with CBAM not only avoid penalties but also position themselves for success in a rapidly evolving green economy.  

This compliance can foster innovation, attract investment, and strengthen a company’s reputation, helping them stay competitive in a world that increasingly values sustainability and low-carbon practices. 

In order to help you to get your business CBAM-ready, we’ve broken down the necessary steps across several key phases in a timeline, in the following format: 

• 0-3 Months: Assessment and Preparation 

• 4-6 Months: Data Collection and Setup 

• 7-9 Months: Action and Decarbonization 

• 10-12 Months: Compliance and Reporting 

• Ongoing: Monitoring and Improvement 

 

0–3 Months: Internal Assessment & Awareness

1. CBAM Knowledge & Impact Assessment
   • Establish a CBAM compliance task force.
   • Review CBAM legislation and industry requirements.
   • Assess the potential financial impact.
2. Carbon Data Collection Strategy
   • Identify key data points (Scope 1, 2, 3 emissions).
   • Review existing carbon reporting systems.
   • Engage procurement, operations, and sustainability teams.
3. Supplier Engagement Plan
   • Inform key suppliers of data needs.
   • Set up regular communication and data-sharing protocols.
   • Begin audits or assessments if necessary.
4. Evaluate Carbon Accounting Tools
   • Assess tools (e.g., Makersite) for carbon data management.
   • Choose a platform for CBAM reporting.
5. Initial Emissions Calculation
   • Perform rough calculations of carbon emissions.
   • Identify products most affected by CBAM tariffs.

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4–6 Months: Detailed Data Collection & Reporting Setup

6. Gather Detailed Emissions Data

• Refine data collection from suppliers and departments.
• Conduct LCAs (Life Cycle Assessments) for key products.
• Engage consultants for accuracy.

7. Supply Chain Mapping
   • Use transparency tools (e.g., Makersite) to trace emissions.
   • Identify suppliers or processes with high carbon intensity.
8. CBAM Compliance Reporting Setup
   • Integrate reporting into your system.
   • Ensure accurate tracking of carbon content for imports/exports.
   • Train the team on CBAM reports.
9. Decarbonization Strategy Design
   • Prioritize high-emission suppliers or processes.
   • Consider switching to low-carbon materials or processes.
10. Scenario Analysis for CBAM Costs
    • Use software to simulate carbon reduction impacts on CBAM tariffs.
    • Adjust product strategies accordingly.

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7–9 Months: Decarbonization & Supply Chain Collaboration

11. Implement Decarbonization Initiatives
– Work with suppliers to reduce emissions.
– Implement energy-efficient practices.
– Prioritize initiatives with data-driven decisions.

12. Supplier Collaboration and Contracts
    • Negotiate carbon-related performance clauses.
    • Adjust contracts to include sustainability targets.
    • Set regular reviews for emissions tracking.
13. Monitor and Audit Supply Chain
    • Conduct periodic audits for accuracy.
    • Utilize digital platforms to automate data tracking.
14. Optimize Logistics and Operations
    • Optimize shipping routes.
    • Consider low-carbon packaging.
    • Adjust operations to reduce emissions.

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10–12 Months: Final Compliance & Reporting

15. Final CBAM Compliance Check
– Review emissions data.
– Conduct a compliance audit.

16. CBAM Reporting Submission
    • Generate and submit reports via the carbon management system.
17. Continuous Improvement Strategy
    • Create a timeline for ongoing emissions improvements.
    • Stay updated on regulatory changes.

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Ongoing: Maintain and Update Compliance

18. Regular Updates and Audits
– Conduct regular audits to ensure accuracy.
– Recalibrate emissions strategies based on new regulations.
– Stay informed on future CBAM updates.

By following this timeline, your business can systematically comply with CBAM, reduce carbon emissions, and position itself for long-term success in an increasingly carbon-regulated market.