Over the next 12–24 months, the introduction of Carbon Border Adjustment Mechanisms (CBAM) across the EU and UK will fundamentally change how emissions are accounted for in international trade. For many UK organisations, particularly those involved in manufacturing, construction and supply chains, this represents a shift that is both regulatory and financial.
The Carbon Border Adjustment Mechanism is a policy tool designed to ensure that imported goods face a similar carbon cost to those produced domestically. The aim is to prevent “carbon leakage”, where production moves to countries with lower environmental standards to avoid carbon pricing, undermining climate policy and distorting competition.
In simple terms: If carbon has a cost domestically, it must also have a cost in international trade.
Two parallel mechanisms are being introduced:
The EU system is already in a transitional phase and will move to full financial implementation in 2026, requiring importers to purchase carbon certificates based on embedded emissions. The UK system follows shortly after and will apply a carbon price aligned to the UK Emissions Trading Scheme (UK ETS).
CBAM applies primarily to carbon-intensive sectors, including:
However, the impact is much broader than these sectors alone. You are likely to be affected if your organisation:
Many organisations underestimate their exposure because CBAM is determined at product and commodity code level, not just sector level.
For UK importers (UK CBAM), from 2027 businesses importing in-scope goods will need to:
This is a direct financial and compliance obligation.
For UK exporters (EU CBAM), while UK exporters are not directly liable under EU CBAM. However:
Even where volumes are low, data requests are still expected, as EU importers must report total volumes across suppliers. In practise, this becomes a commercial requirement, not just a regulatory one.
CBAM is not just another reporting framework. It represents a structural shift:
Poor or missing data will lead to higher default emissions values, increased carbon costs, and reduced competitiveness. Strong data enables lower exposure, better supplier positioning, and more informed decision-making.
This is effectively Scope 3 emissions becoming financially relevant.
While CBAM is a regulatory mechanism, the real challenge lies in:
Many organisations currently do not collect supplier emissions data, rely on estimates or spend-based models, and lack visibility across their supply chain. CBAM exposes these gaps.
Organisations do not need to solve everything immediately, but early preparation is key. Practical first steps include:
CBAM is part of a broader shift in how sustainability is integrated into organisations. It connects carbon accounting, supply chain management and financial performance.
It also signals what is coming next: greater scrutiny on Scope 3 emissions, expansion into downstream products, and increased linkage between carbon and procurement.
While CBAM introduces complexity, it also creates opportunity. Organisations that act early can:
CBAM does not change who is responsible for emissions, it changes how visible and financially relevant those emissions become. For many organisations, this will be the moment where carbon moves from sustainability reporting into core business decision-making.
If not, that’s where to begin.
Start with a free CBAM readiness check. Follow the link and answer the questions. It takes 2-3 minutes.
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