The Carbon Border Adjustment Mechanism (CBAM) is the European Union’s landmark climate policy designed to address carbon leakage by levelling the playing field between EU producers and imports. It provides a structured framework for companies to measure, report, and account for the embedded carbon emissions in goods exported to the EU.
By complying with CBAM requirements, businesses can maintain market access, avoid potential penalties, and demonstrate leadership in low-carbon trade. The mechanism encourages companies to quantify their carbon footprint, adopt cleaner production methods, and integrate carbon considerations into their supply chain decisions.
Accurately monitor Scope 1, 2, and 3 emissions across your value chain to determine the embedded carbon emissions
Streamline the collection of primary emissions data directly from your suppliers using standardised data request templates
Compile embedded emissions data and necessary supporting information into submission-ready CBAM declarations
Receive timely updates on evolving CBAM regulations, methodologies, and reporting requirements to ensure continuous compliance
Oren’s CBAM solution equips businesses with the tools and expert support needed to monitor, manage, and report carbon emissions across their supply chains.
GHG Emissions Tracking & Decarbonisation: Accurately measure and track Scope 1, 2, and 3 emissions while implementing decarbonisation strategies to reduce your carbon footprint.
Simulate & Model CBAM Impact: Model the potential effects of CBAM on your operations, analyzing how carbon pricing and reporting obligations will impact your business.
Our CBAM advisory services offer in-depth guidance on navigating the regulatory landscape, including readiness assessments, data validation, and tailored strategies for compliance.
CBAM Readiness & Gap Analysis: Evaluate your alignment with CBAM standards, identify gaps, and implement strategies to ensure compliance.
Simplified Reporting & Verification: Generate detailed GHG reports, manage quarterly goods reporting, and streamline certificate management to avoid misreporting penalties.
Go Beyond Reporting.
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Executive Director, Shriram Pistons & Rings
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Senior Manager, Max Financial Services
Shalaka Ovalekar
Company Secretary and VP-Legal, ADF Foods
The Carbon Border Adjustment Mechanism (CBAM) is a policy initiative by the European Union (EU) designed to place a carbon price on imports of certain goods. This mechanism ensures that imported products are subject to the same carbon costs as those produced within the EU, thereby preventing "carbon leakage," where companies might relocate production to countries with less stringent emissions regulations.
CBAM initially targets imports of specific carbon-intensive products, including:
Steel and iron
Aluminum
Cement
Fertilizers
Electricity
These sectors are prioritized due to their significant carbon emissions during production.
CBAM is being implemented in phases:
Transitional Phase (2023-2025): During this period, importers are required to report the embedded emissions in their products but are not yet obligated to make financial adjustments.
Full Implementation (from 2026): Importers will need to purchase CBAM certificates corresponding to the embedded emissions of their imported goods, effectively paying a carbon price equivalent to that faced by EU producers under the EU Emissions Trading System (ETS). Companies are required to report on a broad range of sustainability topics, including:
Importers bringing covered goods into the EU are responsible for compliance. They must report the emissions embedded in their imports and, upon full implementation, purchase the necessary CBAM certificates. This responsibility ensures that the carbon cost is accounted for at the point of entry into the EU market.
Yes, non-EU companies with substantial activities in the EU are subject to the CSRD. Specifically, companies generating a net turnover of more than €150 million in the EU and having at least one subsidiary or branch in the EU meeting certain criteria will need to comply with the CSRD requirements.
Yes, to reduce administrative burdens, the EU has proposed exemptions for imports below certain thresholds. For instance, imports with a total value not exceeding €150 are exempted from CBAM obligations. Additionally, countries with carbon pricing mechanisms equivalent to the EU's may have adjusted obligations under CBAM.
CBAM complements the EU ETS by leveling the playing field between EU producers, who incur carbon costs under the ETS, and foreign producers, who may not face similar costs. As free allowances under the EU ETS are phased out, CBAM ensures that imported goods are subject to equivalent carbon costs, thereby preventing carbon leakage and promoting global emissions reductions.
During the transitional phase (2023-2025), importers must submit quarterly reports detailing the embedded emissions of their imported goods. These reports help the EU monitor and refine the mechanism before full financial obligations commence in 2026.
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