CBAM in focus

CBAM (the EU’s Carbon Border Adjustment Mechanism) risks exposing the cost of siloed compliance, says Matthew Ekholm in the May 2026 issue of ISMR, unless companies rethink management.

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The EU’s Carbon Border Adjustment Mechanism (CBAM) has entered its definitive period, creating a new layer of compliance to importers of steel, aluminium, cement, fertilisers, hydrogen and electricity. 

The EU policy aims to heavily reduce ‘carbon leakage’ by ensuring that emissions are priced consistently, regardless of where the material or product in question was produced. It will do this by putting a carbon price on imported goods, so they face a similar climate cost to products within these categories made inside the region. Importers of these materials, which are often seen as carbon-intensive, are obligated to report emissions and now purchase CBAM certificates that reflect the emissions.

As CBAM enters its definitive phase in 2026, steel and aluminium importers are moving from quarterly emissions reporting to a new reality: financial exposure. Emissions data must be verifiable, auditable and sourced from increasingly complex global supply chains. What was once a transitional reporting exercise has become a cost centre. Importers must now purchase CBAM certificates reflecting embedded emissions, and the accuracy of that data directly impacts their bottom line.

Taking a strategic view

This regulation is creating a reflection point for the sector. It has evolved from a reporting obligation to a cost and operational consideration, with compliance, and the accurate purchase of CBAM certificates (increasingly reliant on the verifiability of emissions data) accessed from supply chains that are only growing in complexity.

Many businesses have initially approached the CBAM as a targeted exercise, separate to other looming regulatory pressures or requirements, with a clear focus on meeting its deadlines. While this focused approach could be a fast-tracked way to meeting these deadlines, businesses need to look beyond this initial phase as enforcement intensifies.

To read the rest of this article in the May 2026 issue of ISMR, see https://joom.ag/nAKd/p42