Carbon Border Adjustment Mechanism (CBAM)

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The Carbon Border Adjustment Mechanism (CBAM) has major implications for both importers of selected goods into the EU and producers in the countries of origin. The scheme aims to equalize the difference in carbon prices levied on high-emission products from EU versus non-EU manufacturers. Affected companies must gain an in-depth understanding of suppliers outside the EU from whom they procure CBAM-related goods and gather accurate primary emissions data.

At IntegrityNext, we are well-versed in helping companies navigate the complexities of regulatory due diligence and disclosure regimes. Our easy-to-use platform allows you to generate the supply chain insights you need to facilitate compliance with CBAM data collection and reporting obligations.

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Iron and Steel

How IntegrityNext can help

We have a strong track record of helping companies collect sustainability data from their suppliers, systematically and efficiently. In doing so, our customers can meet the requirements of a growing body of regulatory initiatives, including the German and Swiss Supply Chain Acts as well as the Norwegian Transparency Act, to name just a few.

We keep a close eye on ESG policy developments to provide our customers with timely and targeted solutions. With our platform, you will be able to perform the essential actions for CBAM:

  • Inform affected suppliers from third countries about your CBAM reporting obligations and their role

  • Request product and emissions data from suppliers through a simplified data collection template

  • Manage supplier requests in the platform and educate suppliers

The CBAM basics

The European Carbon Border Adjustment Mechanism (CBAM) is a cornerstone of the EU’s ‘Fit for 55’ package, a bundle of measures designed to ensure GHG emission reductions of at least 55% by 2030. In simple terms, the regulation puts carbon prices for EU products, which are subject to the European Emissions Trading System (ETS), and selected imported goods on an equal footing.

The goals of the CBAM are threefold: To avoid the relocation of carbon-intensive production to jurisdictions with lower climate policy standards than the EU, to level the playing field between EU and third-country businesses, and to prompt climate action in other parts of the world.

The CBAM imposes several compliance and disclosure obligations on importers, or indirect customs representatives, of specific products. In the beginning, the following commodities, including some of their carbon-intensive precursors and certain downstream products, are affected:

  • Aluminium
  • Cement
  • Electricity
  • Fertilizers
  • Hydrogen
  • Iron and steel

Before the end of the initial transition period on December 31, 2025, the scope may be extended to other sectors such as organic chemicals and polymers. By 2030, all the remaining product groups currently falling under the ETS are to be added.

The transitional phase

On October 1, 2023, the mechanism entered its transition period which extends through 2025. During this first phase, companies from a select group of industries are obliged to submit quarterly reports to the EU Commission. The first one is due on January 31, 2024. They cover numerous datapoints and require detailed information on

  • the type and quantity of imported goods
  • the actual total embedded emissions, including direct and for some products indirect emissions, calculated pursuant to specific methods
  • any carbon price applicable in the country of origin, including for any precursor material embedded in the final products
  • the location of the installations where the goods were produced

For more insights on the reporting requirements, please see Annex I of the CBAM Implementing Regulation.

The implementation phase

Starting on January 1, 2026, affected importers will have to purchase CBAM certificates to offset emissions embedded in their goods. More specifically, companies must fulfill the following obligations: 

  • Demonstrate ‘authorized CBAM declarant’ status to be entitled to import in-scope goods 
  • Calculation of embedded direct and indirect emissions of imported goods
  • Verification of declared embedded emissions by an accredited third party
  • Purchase and surrender of required number of CBAM certificates covering total embedded emissions
  • Submission of an annual CBAM declaration by May 31 of each year for emissions of imports from the preceding year; same deadline for surrendering CBAM certificates



October 1 – Transitional phase:
Affected importers are required to start collecting emissions data and prepare quarterly CBAM reports.


January 31: First CBAM report becomes due.


January 1: EU methodology becomes mandatory for emissions calculation.
By December 31: EU Commission to issue first review of possible extension of product scope.


January 1 – Implementation phase:
Gradual phase-in of CBAM financial adjustments and simultaneous phase-out of free EU ETS allowances begin.

Importers must have 'authorized CBAM declarant' status.


By May 31 of each year:
Need to purchase and surrender required CBAM certificates for emissions of preceding year. Submission of annual CBAM declaration.


December 31: CBAM scope expected to be extended to all products covered by the EU ETS.


Phase-out of free allowances under EU-ETS completed.

How to
get started

The CBAM is a highly complex regime which requires a sound understanding of regulatory obligations, your own company and supply chain dynamics.

Assess the impacts of the regulation

Analyze implications for your business and supply chain and identify imports into the EU falling under CBAM requirements.

Consider impact mitigation strategies

Review the potential of supply chain restructuring or the adjustment of production planning and sourcing strategies.

Assign internal responsibilities

Make sure the topic is managed by a dedicated team and pursue a cross-departmental effort.

Prepare for reporting obligations

Carry out a data gap assessment and set up adequate systems for emissions data collection, accounting, and reporting.

Engage your suppliers

Reach out to your suppliers early and establish open lines of communication.

Ensure capacity-building

Train internal staff and suppliers on the CBAM requirements.

EU emissions calculation methodology

Familiarize yourself with the method as soon as possible, it will be the only accepted approach from January 1, 2025.

Good to know
  • The European Commission provides extensive guidance on the regulation, including checklists, sectoral factsheets and other supporting documents for EU importers and non-EU installation operators.
  • The CBAM includes a penalty regime in case of noncompliance, including for failure to submit a report, incorrect or incomplete filing.
  • Products originating in Switzerland, Liechtenstein, Norway and Iceland are exempt from the rules.
  • Several countries are in the process of developing their own carbon border adjustment mechanisms, including the United Kingdom, Australia, Canada, Japan and South Korea, among others.