CBAM is evolving from a reporting requirement into a business and competitiveness challenge. For exporters and their suppliers, the time to prepare is now.
The EU's Carbon Border Adjustment Mechanism (CBAM) is entering a new phase, placing greater emphasis on emissions data, verification, and carbon costs.
But what does this mean for businesses in India and across the Asia-Pacific region?
What is CBAM?
CBAM is designed to create a level playing field between goods produced within the EU and imported products by applying a carbon cost to certain imports.
Its objectives are to:
- Reduce greenhouse gas emissions.
- Prevent carbon leakage.
- Balance carbon costs between EU and non-EU producers.
- Encourage cleaner production practices.
Why does 2027 matter?
The transitional period has allowed businesses time to familiarize themselves with CBAM requirements. The next phase will place greater emphasis on actual emissions, verification, and financial accountability. The deadline for the submission of verified CBAM reports is September 30, 2027 and declarants may begin to purchase CBAM certificates as early as in February of 2027.
As a result, CBAM is no longer solely an environmental or reporting matter.
It is increasingly becoming a commercial, supply-chain, and strategic business issue.
First question: Are your products covered?
Businesses should not assume that every product manufactured from steel or aluminium automatically falls within the scope of CBAM.
Instead, organizations should review the relevant Combined Nomenclature (CN) codes to determine whether their products are covered.
Understanding product applicability is the first step towards CBAM compliance.
The greatest challenge: Obtaining accurate emissions data
One of the most significant challenges facing organizations is obtaining reliable actual emissions data.
Why is this important?
Because reliance on default values can result in substantially higher carbon costs.
For example, an illustration discussed during the webinar demonstrated an estimated CBAM cost of approximately €28 per tonne of billet produced in India using actual emissions data, compared with approximately €247 when default values were used.
The quality of emissions data can therefore have a direct impact on profitability and competitiveness.
Your suppliers matter too
Organizations need not export directly to the EU to be affected by CBAM.
Consider the following example:
A supplier provides materials to a manufacturer that exports complex goods to the EU. The manufacturer may require verified emissions data from that supplier to meet CBAM requirements.
Where such data is unavailable, default values may need to be applied, potentially increasing CBAM-related costs.
Supplier readiness is therefore an essential component of CBAM readiness.
CBAM readiness requires organisation-wide engagement
CBAM cannot be managed exclusively by sustainability or environmental teams.
Relevant data may reside across multiple functions, including:
Production | Procurement | Energy Management | Finance | Supply Chain | Supplier Management
Organizations should establish clear processes to determine:
Where the data originates.
Who is responsible for maintaining it.
How it is calculated.
What evidence supports it.
Whether it can withstand independent verification.
The focus should extend beyond data collection to encompass data traceability and governance.
Do not confuse CBAM with Product Carbon Footprinting
While Product Carbon Footprints (PCFs) can provide valuable insights, they do not automatically demonstrate CBAM compliance.
The methodologies and reporting requirements differ considerably.
However, organizations that already measure and manage carbon emissions are likely to possess a strong foundation upon which to build their CBAM capabilities.
Five questions every organisation should ask
Businesses embarking on their CBAM journey should begin by addressing the following questions:
- Are our products within scope?
Review applicable products and CN codes.
- Do we have access to actual emissions data?
Identify available data and assess any gaps.
- Can our suppliers provide the required emissions information?
Engage suppliers early and evaluate their preparedness.
- Is our data sufficiently traceable?
Ensure all figures can be supported by credible evidence.
- Are we prepared for verification?
Identify weaknesses and address them before formal verification begins.
Start early and appoint a CBAM champion
One practical recommendation arising from the webinar was the appointment of a dedicated CBAM Champion within the organisation.
This individual can:
- Develop internal expertise.
- Coordinate activity across departments.
- Drive supplier engagement.
- Interpret regulatory requirements.
- Support organisational readiness.
Targeted training can also help organizations understand reporting obligations, data requirements, verification expectations, and the potential commercial implications of CBAM.
Building the Bridge to 2027
CBAM should not be viewed as a requirement to address only when deadlines approach.
The most effective strategy is to begin now.
Early preparation allows organizations to assess product applicability, improve data quality, engage suppliers, strengthen internal capabilities, and address compliance gaps well before regulatory deadlines.
For organizations across India and the wider Asia-Pacific region, CBAM represents far more than a compliance obligation. It has the potential to influence costs, profit margins, supplier relationships, sourcing decisions, market access, and long-term competitiveness.
Every organisation must start building its bridge to 2027 today through better data, stronger supplier engagement, robust governance, and a clear understanding of how CBAM will affect its operations and value chain.
