The European Union's Carbon Border Adjustment Mechanism (CBAM) is a landmark policy requiring importers to account for the carbon footprint of their goods. System Veritas supports businesses in navigating and preparing for CBAM reporting — a critical obligation for any organisation importing specified goods into the EU.

What is CBAM?

CBAM is a carbon pricing instrument designed to place a fair price on the carbon emissions generated during the production of carbon-intensive goods entering the European Union. Its broader aim is to encourage cleaner, more sustainable industrial production in non-EU countries.

Who Needs to Comply with CBAM Reporting?

CBAM reporting obligations fall on businesses importing specific goods into the EU. The key entities required to comply include:

• EU Importers — Any company established within the EU that imports CBAM-listed goods is required to submit CBAM reports, including both direct importers and those using indirect customs representatives.
• Indirect Customs Representatives — Businesses acting on behalf of importers to clear goods through EU customs may also be responsible for CBAM reporting, provided they have given explicit agreement and are using their own Economic Operators Registration and Identification (EORI) number during the import process.

CBAM-Listed Goods

CBAM currently targets a defined set of carbon-intensive product categories, including Aluminium, Cement, Iron and Steel, Electricity, Fertilisers, and Hydrogen.

As CBAM is an evolving policy, the list of covered goods may expand over time. Businesses are strongly encouraged to monitor official EU updates to remain current with any regulatory changes.

How to Fulfil CBAM Requirements

Step 1: Identify Emission Sources

The foundation of a sound CBAM report is a clear understanding of where GHG emissions arise within the production lifecycle of your imported goods. This requires a thorough breakdown of the production process, including raw material extraction, transportation, energy consumption during manufacturing, and waste disposal — each of which contributes to the product's overall carbon footprint.

Step 2: Collect Activity Data

For each identified emission source, carefully gather the relevant quantifiable activity data, which typically includes raw material usage, energy consumption by type and volume, and total production output and import quantities for the reporting period.

Step 3: Identify Suitable Emission Factors

With a clear picture of your emission sources and activity data, the next step is to apply appropriate emission factors — conversion coefficients that translate activity data (such as tonnes of steel produced) into corresponding CO₂ emissions.

Step 4: Compile the CBAM Report

Using the calculated emissions data and your chosen methodology, you can proceed to prepare and submit your CBAM report in accordance with EU requirements.