CBAM Readiness: Reduce Risk and Optimize Costs

The European Union's Carbon Border Adjustment Mechanism (CBAM) is no longer a future regulation that EU importers can monitor from a distance. With the definitive phase now underway, CBAM is rapidly reshaping how organizations gather and manage carbon emissions information from across their global supply chains.  

While the regulation applies directly to importers bringing carbon-intensive goods into the European Union, the scale of its impact will depend partly on whether suppliers outside of the EU can provide verified embedded emissions information. 

CBAM represents a fundamental shift in carbon reporting. Historically, carbon emissions associated with suppliers were often reported voluntarily under scope 3, category 1 or 2 for purposes such as sustainability reports or disclosures to organizations such as the Carbon Disclosure Project (CDP) or EcoVadis.  

Under CBAM, carbon emissions associated with suppliers become a business-critical input that can influence the financial obligations associated with imported products.  

CBAM requires EU organizations importing covered products to report embedded emissions and purchase CBAM certificates based on those emissions. If verified embedded emissions data are unavailable, importers may need to rely on regulator-established default values, which can increase certificate obligations and associated costs. 

Preparing for CBAM requires more than general inquiries with suppliers about carbon emissions. It requires a detailed examination of exposure and supplier engagement to prepare and share specific, verified embedded emissions information.

Importers that postpone preparation may have limited visibility into their exposure and may need to rely on default values if suppliers cannot provide verified embedded emissions information, which may increase CBAM certificate obligations and associated costs.

Importers that begin preparing now can have a greater opportunity to identify exposure early, bridge supplier data provision gaps, and build confidence in their ability to optimize their CBAM costs through maximum avoidance of default embedded emissions values.

1. Determine whether your imported goods fall within CBAM scope

Organizations should evaluate imported and exported products against applicable European Union Combined Nomenclature (CN) customs codes and identify where covered products exist within their operations and supply chains.  

2. Evaluate supplier embedded emissions data readiness

Organizations should assess whether their suppliers can consistently collect, calculate and maintain emissions information at the level of detail required by CBAM. This includes reviewing data sources, methodologies and quality control processes that support the information entered into the Communication Template for Installations.

3. Facilitate supplier development of embedded emissions data  

For suppliers exhibiting low levels of readiness, establish proactive mechanisms to help improve their capabilities through initiatives such as training and preparatory checklists.

UL Solutions helps importers prepare for CBAM through readiness and pre-verification services designed to evaluate supplier readiness to provide verified embedded emissions information when needed.

We are actively pursuing CBAM verifier accreditation through applicable EU National Accreditation Bodies and intend to offer accredited CBAM verification services directly to suppliers once accreditation is granted. Until then, organizations can leverage readiness, gap assessment and pre-verification services to begin building the foundation for future compliance.