The European Union’s Carbon Border Adjustment Mechanism (CBAM) is a pivotal initiative aimed at reducing carbon leakage and promoting sustainable production practices. Set to be fully implemented by 2026, CBAM will require importers to account and purchase credits for the carbon emissions embedded in certain goods entering the EU market.
In order to achieve CBAM readiness in an already complex regulatory landscape, establishing a dedicated CBAM compliance team within your organization is essential.
Understanding CBAM
CBAM targets imports of specific carbon-intensive products, including cement, iron and steel, aluminium, fertilizers, and electricity. Importers will be obligated to report the embedded emissions of these products and purchase corresponding CBAM certificates. This mechanism aims to equalize the carbon costs between EU-produced and imported goods, thereby encouraging global emission reductions. For an overview of CBAM, read this blog.
The Importance of a CBAM Compliance Team
Compliance with CBAM involves intricate processes such as emissions data collection, supplier engagement, legal adherence, accurate reporting, and supply planning to minimize costs. A cross-functional CBAM compliance team ensures that your organization can effectively manage these tasks, mitigate risks, minimize compliance costs, and uphold supply chain integrity.
Steps to Establish a CBAM Compliance Team
- Secure Executive Support: Obtain commitment from top management to emphasize the importance of CBAM compliance and allocate necessary resources.
- Identify Key Departments: Determine which departments are crucial for CBAM compliance, such as procurement, sustainability, legal, compliance, logistics, and finance.
- Select Team Members: Appoint representatives from each key department who possess relevant expertise and decision-making authority.
- Define Roles and Responsibilities: Clearly outline each member’s duties to ensure accountability and prevent overlap.
- Develop a Communication Strategy: Establish protocols for regular meetings, updates, and reporting to maintain alignment and transparency.
- Provide Specialized Training: Equip team members with knowledge about CBAM requirements, emissions accounting, and best practices in supplier engagement.
- Set Objectives and Timelines: Define clear goals and timelines to monitor progress and maintain momentum.
Key Considerations for the CBAM Compliance Team
- Supplier Engagement: Collaborate with suppliers to collect accurate emissions data, ensuring they understand CBAM requirements and the importance of timely information sharing.
- Data Management: Implement robust systems to collect, manage, and analyze emissions data from various sources, such as customs records and supplier information. Understanding data points and identifying gaps is crucial for comprehensive carbon accounting.
- Legal Compliance: Stay informed about CBAM regulations and ensure that contracts and agreements with suppliers include clauses mandating accurate and timely emissions data provision.
- Reporting and Documentation: Develop processes to generate CBAM compliance reports, helping your organization meet sustainability reporting requirements.
Conclusion
Establishing a CBAM compliance team is a critical step in preparing your organization for the forthcoming regulations. By fostering cross-functional collaboration and focusing on supplier engagement, data management, legal compliance, and accurate reporting, your company can navigate the complexities of CBAM effectively, ensuring compliance and promoting sustainable practices within your supply chain.
Should you need support with CBAM, please contact us here and one of our CBAM consultants will be in touch.
