For the SupplyChainBrain, our Managing Partner Matthew Gardner explains the new EU regulation called the Carbon Border Adjustment Mechanism (CBAM), which came into effect in October 2023. This law requires companies importing certain carbon-intensive materials, such as iron, steel, and cement, into the EU to account for their carbon emissions. Starting January 1, 2026, these imports will be subject to a carbon tax. The regulation aims to prevent companies from offshoring manufacturing to regions without climate regulations.
Currently, importers must estimate the carbon intensity of their products, including raw materials, manufacturing, and transportation. This requires companies to gather detailed information from their supply chains, which poses challenges due to the lack of a clear methodology for calculating carbon impact. Matthew Gardner notes that while there is some uncertainty, companies need to start preparing now to comply with the law:
“I expect there will be a bit of a shakedown cruise as the law is put into place, but companies need to be aware of this, putting into place efforts to the best extent that are practicable.” – Dr. Matthew Gardner
Please find the article and the video here.
