The Carbon Border Adjustment Mechanism (CBAM) took effect in the EU just over a year ago, and we’ve been helping our clients with compliance since the first reporting deadline in January of this year. Since then, Optera’s team of experts has gleaned some valuable insights about how to approach CBAM compliance. We’ve already covered the CBAM fundamentals, so today we’ll dive into the key lessons learned while helping our clients comply during CBAM’s transitional period.
A quick CBAM refresher
CBAM is the EU’s solution to prevent carbon leakage—the practice of moving carbon-intensive production to regions with less stringent environmental regulations. Currently in its transitional period until December 31, 2025, CBAM requires quarterly reporting of embedded emissions for each import valued over €150 of cement, iron and steel, aluminum, fertilizers, hydrogen, and electricity.
Starting January 1, 2026, the definitive period begins, adding financial adjustments based on embedded emissions to the reporting requirements that have already taken effect. The scope is also expected to expand to mirror all EU ETS categories by 2030.
Lesson 1: Start now, despite data limitations
One of the most significant insights from our first year of CBAM implementation is that the perfect shouldn’t be the enemy of good. While companies naturally want comprehensive, high-quality data for their CBAM reporting, our experience shows that even industry leaders are still working to achieve optimal data collection.
The key is to begin the process now, even if your data quality isn’t perfect. As reporting requirements tighten approaching 2026, companies that have already established their data collection frameworks will be better positioned to adapt to increased requirements. Making a good faith effort to collect and report data now provides valuable learning opportunities before the definitive period begins.
Also key to consider: whatever data you are able to collect and report now, you will be expected to improve year over year. “If we were to deliver the same data quality next year or the year after and those CBAM regulations are tightening… [reporting companies] need better quality data 2024,’ says Thomas Cazares, Senior Consultant here at Optera.
Lesson 2: Supplier education is critical
Perhaps the most crucial lesson we’ve learned is the importance of proactive supplier education. Many companies assume their suppliers might understand their CBAM obligations, but our experience shows this isn’t always the case. Even when suppliers are CBAM-affected, they may not realize it or understand the implications.
Successful CBAM compliance programs include:
- Targeted supplier education sessions specifically for CBAM-affected suppliers
- Clear communication about why suppliers are considered CBAM-affected
- Early engagement to ensure suppliers understand the required data points and are able to collect them on time
- Dedicated support channels for supplier questions and concerns
These educational efforts should begin well before data collection, to ensure suppliers have time to prepare and gather the necessary information.
Lesson 3: Identifying CBAM-affected suppliers is more complex than expected
While CBAM’s scope might seem straightforward on paper, identifying affected suppliers has proven to be more challenging in practice. “Figuring out which of your suppliers are CBAM-affected is a significant lift,” Thomas explains.
Companies often struggle with:
- Matching parent company versus subsidiary relationships
- Tracking specific material contents in products with complex upstream value chains
- Aligning procurement data with emissions accounting needs
- Managing varying levels of supplier sustainability maturity
Organizations should anticipate dedicating significant resources to properly identifying CBAM-affected suppliers, and may need to adjust their supplier lists as they gain better understanding of their supply chain’s CBAM exposure. Similar to how your emissions data will improve over time, your understanding of which suppliers are impacted may evolve.
Looking ahead: Prepping for the CBAM definitive period
As we move closer to CBAM’s definitive period in 2026, companies should focus on:
- Establishing robust data collection processes, even if initial data quality isn’t perfect
- Developing comprehensive supplier education programs
- Creating systems to accurately identify and track CBAM-affected suppliers
- Building flexibility into their compliance programs to accommodate regulatory evolution
The time to start preparing is now. While current requirements may seem manageable, the complexity and scope of CBAM will only increase in the coming years.
Ready to build your CBAM compliance strategy?
Our team of experts has hands-on experience helping companies navigate CBAM requirements and can help you develop a tailored approach for your organization. Contact us today to discuss how we can support your CBAM compliance journey and help you prepare for the definitive period ahead.
