Data-driven approach to CBAM
A roadmap for preparing to meet Europe’s Carbon Border Adjustment Mechanism.
The Carbon Border Adjustment Mechanism (CBAM) is the EU’s landmark policy to prevent carbon leakage and promote global decarbonisation. As the EU tightens its climate goals under the European Green Deal, CBAM aims to ensure that imported goods are subject to the same carbon costs as those produced within the EU.
The transitional phase began in October 2023, requiring importers to submit quarterly reports on the embedded emissions of covered goods. By 2026, full compliance will be enforced, including the purchasing of CBAM certificates based on verified emissions.
If you’re a business importing certain carbon-intensive goods into the EU, such as iron and steel, aluminium, cement, fertilisers, hydrogen, or electricity, you are now subject to CBAM reporting requirements.
As companies gear up for this new regulatory landscape, accurate and high-quality carbon data is essential.
Before diving into data preparation, it is important to determine whether your company is subject to CBAM and what goods you import fall under the scope. During the transitional phase, importers had to submit CBAM reports every quarter via the EU’s CBAM Transitional Registry.
Each report must include:
- Total embedded emissions – both direct and indirect per tonne of imported product
- Production site details of non-EU suppliers
- Methodologies used to calculate emissions
- Verification status – verification was optional in the transitional phase but mandatory for full compliance
Knowing exactly what to report and by when helps you prioritise data collection and supplier engagement.
Then, companies should map out their supply chains. CBAM focuses not just on the final imported goods, but on how and where they were produced.
Start by mapping your supply chains for all products within the CBAM scope. This includes identifying non-EU suppliers and production facilities, understanding the production processes involved – especially any energy-intensive steps – collecting supplier contact information and establishing communication channels.
This mapping exercise is the foundation for gathering reliable primary data from your suppliers, which is preferred over using default values.
Primary data is key for CBAM compliance. You should aim to collect data from suppliers that includes direct emissions from production, such as the combustion of fossil fuels onsite, and indirect emissions from electricity consumption – based on the regional or national grid mix.
Data collection from your suppliers is one of the biggest challenges and probably the most time-consuming task for CBAM declaration.
Creating a strong communication channel with your suppliers is essential to reduce uncertainties and avoid last minute hassle. When requesting data, ensure suppliers are aware of the EU-approved calculation methods, such as those in the EU’s CBAM Implementing Regulation or ISO standards. Encourage them to maintain documentation and logs to support future audits.
Emissions calculations must align with EU guidance – the EU Emissions Trading System Monitoring and Reporting Regulation for example. They should also include all relevant emission sources and account for carbon content in raw materials where applicable, distinguishing between direct and indirect emissions clearly.
Use the official CBAM communication templates and tools where possible. These are designed to help importers ensure consistency and comparability across submissions.
Some businesses may choose to use Life Cycle Assessment or carbon accounting data to accurately report their emissions and identify potential reduction opportunities when possible.
Although third-party verification was not mandatory during the transitional phase (2023-25), preparing your data as if it were being audited is a smart move as, from 2026 onwards, emissions data must be verified by an accredited verifier.
To do this, keep source documents from suppliers, such as meter readings or fuel receipts; record calculation steps and assumptions clearly; and organise your data in a format that can be easily reviewed and checked.
Consistency and accuracy in reporting will require internal systems that support quarterly data collection and aggregation, data validation workflows, and version control and audit trails.
If your company already reports emissions under frameworks like the Carbon Disclosure Project, Greenhouse Gas Protocol, or the EU Emissions Trading System, you might be able to adapt these systems. However, CBAM’s focus on product-level emissions and import volumes means new processes and coordination with procurement teams will be needed.
CBAM marks a fundamental shift in how international trade interacts with climate policy. While the compliance requirements may seem complex, they also present an opportunity for businesses to gain better visibility into their supply chains and take a proactive role in carbon emissions reduction strategies.
By implementing sustainable practices along their supply chains, businesses can become more resilient to carbon border taxes.
The UK Government will introduce the UK CBAM on 1 January 2027. After consultation earlier in 2025, draft legislation is still under review.
