FOCUS ON SUSTAINABILITY
“ After the CBAM transition period , in 2026 , importers of the goods subject to regulation will need to register with national authorities and purchase CBAM certificates . Some may leverage procurement technology to meet CBAM compliance .”
SUSTAINABLE SUPPLY CHAINS
The European Union ’ s Carbon Border Adjustment Mechanism ( CBAM ) heralds a shift to sustainable business practices for manufacturers in the metals supply chain .
The European Union ’ s Carbon Border Adjustment Mechanism ( CBAM ), that will end its transition period in 2026 , is one of the measures put in place by the EU with the objective of combating climate change to become climate-resilient by 2050 . By tightening its regulations and putting policies , legislations and strategies into place to prevent or minimise the impact of climate change wherever possible , the European Union is emphasising the importance of shifting to sustainable business practices .
With CBAM , the EU aims to counter the effect of carbon leakage which occurs when companies based in the EU move carbonintensive production abroad to countries where less stringent climate policies are in place , or
By
Simon Thompson VP , Northern Europe , Jaggaer .
purchase from outside the EU for the same reason . The goods affected include iron , steel , aluminium , cement , fertilisers , electricity and hydrogen .
After the CBAM transition period , in 2026 , importers of the goods subject to regulation will need to register with national authorities and purchase CBAM certificates , whose price will be based on the weekly average auction price of EU ETS allowances , expressed in €/ tonne of CO₂ emitted . As a result , CBAM effectively puts a price tag ( 15 % -30 % price increase ) on the carbon emissions embodied in certain imported products .
About the Author
Simon Thompson is VP , Northern Europe , for IT systems manufacturer , Jaggaer . The company has over 30 years of experience in the industry and provides an intelligent , source-to-pay , AI-powered , supplier collaboration platform designed to ensure “ a responsible , resilient and efficient supplier base .”
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