Is your business ready for CBAM?

Why carbon border rules matter – even if they don’t apply to you (yet). 

Carbon border rules are quickly moving from policy papers to operational reality. For companies importing into the EU or the UK, the message is clear: carbon performance is becoming a condition of market access. 

So, what do these rules actually mean and are businesses really prepared? 

What is the EU CBAM? 

The EU Carbon Border Adjustment Mechanism (CBAM) has been designed to try to level the playing field between EU producers who pay for their emissions and foreign producers who do not.  

It aims to avoid "carbon leakage", where production shifts to countries with weaker climate policies, and ensure fair competition. 

If you are importing certain high-emission goods into the EU, you’ll soon have to report the embedded carbon emissions and pay a carbon price. If the country you are importing from already has carbon taxes or prices and these have already been paid on the product then this amount will be subtracted from the price paid on import. If the proposed changes from the omnibus package come into effect then the CBAM minimum threshold will be set at 50 tonnes mass. This will exempt 90% of importers but will still cover ~99% emissions. 

What are the key dates? 

• Now (2023–2025): Transitional phase. Importers must report emissions, but no payments required yet. 

• From 2026:  There is some uncertainty currently as to what form the CBAM will take from 2026 onwards as updates the original legislation is included within the EU omnibus. The most recent announcement from the EU (26th February 2025) is a legislative proposal should be expected early 2026. 

Which sectors are covered (so far): 

• Cement 

• Iron & steel 

• Aluminium 

• Fertilisers 

• Hydrogen 

• Electricity 

A full review of the CBAM will occur later in 2025 including an assessment of the potential to extend the CBAM to “other ETS sectors, downstream goods, indirect emissions”. More sectors are likely to be added in the future and the administrative burden on those companies impacted can be significant - reporting needs to be accurate, auditable, and traceable. 

What is happening in the UK? 

The UK has confirmed it will implement its own CBAM from 1 January 2027, following a similar approach to the EU. There is currently a technical consultation running until 3rd July with further detailed guidance expected in advance of the commencement of CBAM. 

While it won’t involve the purchase of certificates, importers will still face a carbon levy based on the UK carbon price, minus any carbon price already paid in the country of origin. This will affect companies who import a total value of ‘CBAM goods’ over £50,000 in a give year or expect to import goods above that value in a coming month. 

What are the key dates? 

• Start Date: 1st January 2027 

• Covered sectors: Aluminium, iron & steel, cement, hydrogen, fertilisers (electricity not included). It’s important to note that not all imports in these sectors will be subject to CBAM and that the legislation will only apply to specific ‘CBAM goods’. The goods and sectors included in CBAM will be kept under review beyond 2027. 

• Emissions scope: Covers Scope 1 and Scope 2 emissions 

• Reporting: Companies will need to report embedded emissions using either actuals or default values 

• Mechanism: A tax-style adjustment, not a tradable certificate system 

Are businesses ready? 

At sustain:able, we’re seeing a mix of concern and confusion, especially among SMEs and fast-growing firms. 

Some assume it won’t apply to them…..others aren’t sure where to start…..many don’t have the systems in place to calculate or report product-level emissions. 

It’s important for companies to be ready, so even if you’re not currently exporting to the EU or UK, this may still matter.  

You might be: 

• A supplier to a company that is 

• Looking to expand into Europe 

• Part of a multinational group that needs consistency 

• Trying to future-proof your operations 

Our key recommendation here is the earlier you start preparing, the better positioned you’ll be. 

What can companies do now?

Here are some suggested first steps that you can take today to be prepared to deal with Carbon Border Taxes: 

• Start understanding and measuring your emissions, especially for materials/products in CBAM sectors 

• Understand your supply chain and where carbon hotspots might exist 

• Build emissions literacy across procurement and operations teams 

• Track changes in policy so you’re not caught off guard 

• Factor in future carbon costs in your commercial and growth planning 

• Look for areas in which these emissions can be reduced – reducing emissions can take time so the sooner you start the better! 

How sustain:able can help 

We help companies build practical, credible carbon readiness. For our clients, this includes: 

• Calculating full lifecycle emissions, including embedded emissions, for products and materials 

• Mapping emissions across your supply chain 

• Developing templates and reporting systems for CBAM compliance 

• Training procurement and sustainability teams 

• Scenario planning for growth into regulated markets 

• Support with stakeholder, lender, and board communication on carbon exposure 

Carbon border rules = Business resilience 

CBAM (and its UK equivalent) are not just regulatory hurdles, they’re signals of a new global standard, one where carbon data is no longer a nice-to-have, but a business asset. 

Whether you’re already exposed or planning for future growth, now is the time to get your emissions data in order.  

Please get in touch to see how we can help you to be better prepared for dealing with Carbon Border Taxes: rachel@esgable.com