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CBAM: Definition & important aspects
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CBAM in a nutshell:
The Carbon Border Adjustment Mechanism (CBAM) is an EU border adjustment system that levies CO2 charges on imports of certain CO2-intensive products from non-EU countries. For procurement, this means the need to document CO2 emissions in the supply chain and to factor additional costs for imports from third countries into the procurement strategy.
Example: A European steel processor imports 1,000 tons of steel from India in 2026, generating 1.8 tons of CO2 per ton, which at a CO2 price of €90/ton leads to CBAM costs of €162,000, unless comparable CO2 costs can be demonstrated in the country of origin.
Contents
Introduction to CBAM in purchasing
What is CBAM in purchasing?
CBAM, or Carbon Border Adjustment Mechanism, is a European Union regulation that aims to reduce CO₂ emissions from imported goods and create a level playing field. With the introduction of CBAM, importers are obliged to purchase CO₂ emission certificates for the imported products, which reflect the CO₂ emissions during production. This is intended to prevent companies from relocating their production to countries with less stringent environmental regulations in order to save costs.
Main components of CBAM in purchasing:
- Emissions recording: Recording of CO₂ emissions generated during the production of imported goods.
- Purchase of certificates: Purchase of emission certificates corresponding to the CO₂ emissions recorded.
- Reporting obligation: Obligation to regularly report CO₂ emissions to the competent authorities.
- Transitional register: Establishment of a transitional register to track CO₂ emissions and the certificates acquired.
- Customs tariff numbers: Determination of the relevant customs tariff numbers for the categories of goods concerned.
Importance for buyers:
- Cost control: By taking CO₂ costs into account in procurement decisions, buyers can better control the total cost of goods.
- Transparency and traceability: Clear documentation of CO₂ emissions and the certificates acquired improves transparency in the supply chain.
- Legal certainty: Compliance with CBAM regulations minimizes legal risks and potential fines.
- Sustainability goals: Supporting the company's sustainability and climate protection goals by selecting environmentally friendly suppliers.
- Supplier relationships: Promoting a collaborative partnership with suppliers who also implement sustainable practices.
Areas of application of CBAM in purchasing
CBAM affects a wide range of industries and products that are imported into the EU. The regulation is particularly aimed at industries that produce high CO₂ emissions, such as the steel, aluminum, cement and chemical industries. For buyers, this means that they must select their suppliers carefully and take their CO₂ emissions into account.
Examples of areas of application:
- Steel industry: Use of CBAM to procure steel products with lower CO₂ emissions.
- Aluminum industry: Use of CBAM to select aluminum suppliers that use sustainable production methods.
- Cement industry: Use of CBAM for the procurement of cement products that are produced with low CO₂ emissions.
- Chemical industry: Use of CBAM to select chemical suppliers with low CO₂ emissions.
- Food industry: Consideration of CO₂ emissions in the procurement of packaging materials and food ingredients.
- Textile industry: Use of CBAM to select textile suppliers that implement sustainable production practices.
Strategies for the successful implementation of CBAM:
- Data integration: Ensuring seamless integration of CO₂ emissions data from different sources to optimize the use of CBAM requirements.
- Employee training: training the purchasing team in dealing with CBAM regulations and the use of CO₂ data.
- Partnerships with suppliers: Working with suppliers to reduce CO₂ emissions and ensure compliance with CBAM.
- Pilot projects: Implementation of pilot projects to evaluate the effectiveness of CBAM applications in purchasing.
- Continuous monitoring and adaptation: Regular review of CBAM implementation and adaptation to changing requirements.
Success factors:
- Clear objectives: Definition of clear objectives and requirements for the CBAM implementation.
- Top-down commitment: Support and active involvement of the management level in the implementation of CBAM.
- Data quality: Ensuring the accuracy and completeness of CO₂ emissions data to support precise analyses and decisions.
- Interdisciplinary cooperation: Cooperation between purchasing, IT, sustainability departments and other relevant departments to promote holistic implementation.
- Flexibility and adaptability: Ability to flexibly adapt CBAM strategies to respond to changes in the market or supply chain.
CBAM compared to other procurement processes
In addition to CBAM, there are various other approaches and methods in purchasing that can also contribute to optimizing the procurement strategy. A comparison of these methods helps buyers to select the appropriate tools for their specific requirements.
CBAM:
- Benefits: Promotes sustainable procurement and CO₂ reduction; supports compliance with legal requirements; strengthens market position through sustainable practices.
- Disadvantages: Can be complex and resource intensive; requires accurate data and close collaboration with suppliers.
RFX processes (RFI, RFQ, RFP):
- Advantages: Offer a structured and systematic approach to procurement; enable a well-founded and objective evaluation of suppliers; promote transparency and competition.
- Disadvantages: Can be time and resource intensive; require specific knowledge and experience in dealing with different types of requests.
Strategic sourcing:
- Advantages: Long-term focus on optimizing supplier relationships and ensuring quality; integration of market research and supplier development.
- Disadvantages: High implementation costs; requires close cooperation and trust with suppliers.
E-Procurement:
- Advantages: Automation of purchasing processes, reduction of administrative effort and errors; improved transparency and traceability.
- Disadvantages: High initial investment in software and training; dependence on technology and possible technical problems.
Agile procurement:
- Advantages: High flexibility and adaptability to rapidly changing market conditions; promotion of innovation through close cooperation with suppliers.
- Disadvantages: Requires an agile corporate culture and well-trained employees; can lead to inconsistencies if there is a lack of discipline.
Decision-making factors for buyers:
- Corporate goals: Long-term and short-term goals of the company influence the choice of suitable purchasing approaches.
- Market conditions: The stability and dynamics of the market determine the flexibility and risk appetite of procurement strategies.
- Resource availability: Available financial and human resources influence the implementation and management of purchasing approaches.
- Supplier structure: Number and variety of suppliers as well as their performance and reliability.
- Technological infrastructure: availability and use of technologies to support purchasing processes.
The choice between CBAM and other procurement approaches should be based on a thorough analysis of the company's specific needs and framework conditions in order to select the optimal procurement strategy.
Conclusion: CBAM as a strategic success factor for sustainable procurement management
CBAM is an important tool for companies that want to make their procurement processes more sustainable while ensuring compliance with legal requirements. By integrating CBAM into procurement management, companies can reduce their CO₂ emissions, increase transparency in the supply chain and ensure the quality of procured goods and services. Despite the challenges, such as complexity and high implementation costs, the benefits of CBAM offer significant opportunities for a sustainable and competitive procurement strategy. With clearly defined processes, the use of modern technologies and the promotion of a cooperative relationship with suppliers, companies can successfully implement and continuously improve CBAM. This not only contributes to the efficiency and sustainability of procurement, but also strengthens the competitiveness and sustainable development of the company. Overall, CBAM is a valuable tool in any buyer's toolbox and helps companies to make their supply chains more efficient, secure and environmentally friendly.
