Trading with the EU Under CBAM: Implications for Importers and Exporters
In this interview, Jaime Amoedo, Executive Director and Co-founder of The ESG Institute, explains what the European Union’s Carbon Border Adjustment Mechanism (CBAM) means in practice for importers and exporters trading with the EU.
CBAM was introduced with a transitional period running from October 2023 to 31 December 2025, during which companies were required to report emissions data but did not yet face a financial obligation. As of 1 January 2026, CBAM has entered its definitive phase, meaning EU importers must now purchase and surrender CBAM certificates linked to the embedded emissions of imported goods.
This shift marks a turning point for global trade with the EU. CBAM is now a live compliance, cost, and market-access issue for both EU importers and non-EU exporters.
In this edition of The Sustainability Gazette, we explore the real implications of CBAM, why exporters must take it seriously, and how businesses can navigate the regulation strategically.
Jaime, CBAM has moved from a transitional period into full enforcement. What does this change mean in practical terms for importers and exporters?
The transition from reporting-only obligations to full financial enforcement is fundamental. During the transitional phase, companies were required to submit quarterly reports, but many treated this as a low-risk administrative exercise. From 2026 onwards, that approach no longer works.
EU importers must now purchase CBAM certificates reflecting the embedded emissions of their imports. These certificates are priced in line with the EU Emissions Trading System, which in recent years has traded largely in the range of €70 to €100 per tonne of CO₂. For carbon-intensive goods such as steel, cement, aluminium, or fertilizers, this can translate into material cost increases, especially where emissions data is incomplete or relies on default values.
For exporters, the implications are just as significant. Although exporters are not legally obliged under EU law, they effectively control the emissions data. If an exporter cannot provide reliable, verifiable emissions information, the importer must use conservative default values, which increase certificate costs. In practice, this makes high-quality data a commercial requirement, not a regulatory nicety. Exporters who cannot meet these expectations risk losing EU customers altogether.
Many non-EU exporters still believe CBAM is only an EU importer issue. Why is this such a persistent and risky misconception?
This misconception stems from a legal reading of the regulation without understanding its commercial reality. Legally, CBAM obligations sit with EU importers. Commercially, however, the burden is shared across the supply chain.
Let me give a simple example. An EU importer sourcing steel from two suppliers, one able to provide verified emissions data and another unable to do so, will naturally prefer the supplier with reliable data. Default emissions values under CBAM are intentionally conservative and can significantly inflate the cost of certificates. Over time, this difference affects pricing, margins, and supplier selection.
We are already seeing EU buyers insert CBAM-related clauses into contracts, requiring emissions data disclosure and reserving the right to renegotiate prices or terminate contracts if data is not provided. Exporters who ignore CBAM are therefore not just facing regulatory risk by proxy, but very real commercial exclusion. In that sense, CBAM is reshaping trade relationships, not just compliance checklists.
What are the biggest risks companies face now that CBAM is in the definitive phase?
The risks fall into three broad categories. First, financial risk. CBAM introduces a recurring and potentially volatile cost, linked to carbon prices. Companies that rely on default values or poor-quality data may face higher costs than necessary, eroding competitiveness.
Second, legal and compliance risk. Authorities can impose penalties for incorrect reporting, insufficient documentation, or failure to surrender certificates. As enforcement matures, we expect inspections and audits to become more systematic, particularly for high-volume importers.
Third, reputational and strategic risk. Companies perceived as unprepared or opaque on emissions data may struggle to maintain trust with EU customers, investors, and partners. CBAM also interacts with ESG reporting and climate commitments, so inconsistencies can quickly undermine credibility.
What is critical is that CBAM is not a one-off obligation. It requires sustained governance, internal controls, and coordination across finance, procurement, sustainability, and legal teams. Treating CBAM as a short-term compliance task is one of the biggest mistakes businesses can make.
Is there evidence that CBAM can also create opportunities for businesses, rather than just costs?
Yes, and this is often overlooked. CBAM effectively rewards transparency and lower emissions intensity. Exporters who invest in cleaner production processes and credible emissions accounting can differentiate themselves in the EU market. Over time, this can translate into preferred supplier status, longer-term contracts, and stronger commercial relationships.
From a strategic perspective, CBAM accelerates trends that were already emerging. According to EU estimates, CBAM initially covers sectors responsible for roughly 50 percent of emissions under the EU ETS. That sends a strong signal to global markets. Companies that align early with this direction are better positioned not only in Europe, but also in other jurisdictions considering similar measures.
For importers, working proactively with suppliers to reduce emissions can also help manage certificate costs over time. CBAM therefore becomes a driver of supply chain optimisation and decarbonisation, not just a regulatory burden.
What should importers and exporters prioritise right now to remain compliant and competitive?
The first priority is data readiness. Companies need to understand exactly where their emissions data comes from, whether it aligns with CBAM methodologies, and how it can be verified. This applies to both direct emissions and, where relevant, indirect emissions.
The second priority is governance and internal controls. Clear roles, documented processes, and audit trails are essential. CBAM touches multiple functions, so coordination is critical.
The third priority is engagement across the supply chain. Importers must work closely with exporters, and exporters must understand the expectations of EU customers. CBAM compliance cannot be achieved in isolation.
Finally, companies should integrate CBAM into their broader ESG and climate strategies. CBAM interacts with carbon pricing, sustainability reporting, and long-term decarbonisation plans. Treating it as part of a wider strategic framework is the only sustainable approach.
How do you expect CBAM enforcement and supervision to evolve over the next two to three years, and what signals should importers and exporters watch closely?
We should expect a clear progression from guidance-driven supervision to more structured and consistent enforcement. In the first year of the definitive phase, authorities are likely to focus on identifying systemic weaknesses, such as repeated use of default values, inconsistent emissions data, or missing documentation. Over time, this will evolve into more targeted inspections and audits, particularly for high-volume importers and carbon-intensive sectors.
One key signal to watch is the publication of additional implementing acts, clarifications, and enforcement statistics by the European Commission and national authorities. Another is how frequently penalties are applied and for what types of non-compliance. This will indicate enforcement priorities. For exporters, increased contractual scrutiny from EU buyers is an early warning sign that CBAM expectations are tightening across supply chains.
What are the most common internal capability gaps you are seeing among companies affected by CBAM, and how should organizations prioritize closing them?
The most common gap is not technical knowledge, but coordination. CBAM sits at the intersection of sustainability, finance, procurement, legal, and trade compliance, yet many organizations still treat it as a sustainability-only issue. This leads to fragmented data, unclear responsibilities, and weak internal controls.
Another major gap is emissions data governance. Many companies rely on spreadsheets, estimates, or supplier declarations that are not audit-ready. This is risky in a regulatory environment where verification and enforcement are increasing.
Organizations should prioritize three areas. First, establish clear ownership of CBAM across functions. Second, invest in robust data collection and documentation processes aligned with CBAM methodologies. Third, ensure senior management understands the financial and strategic implications, not just the reporting aspects. CBAM is ultimately a business issue, not a technical footnote.
Looking ahead, do you see CBAM as a uniquely European measure, or as a model that could influence carbon border policies in other major trading blocs?
CBAM is very likely a first mover rather than a one-off. The EU has set a precedent by linking trade directly to carbon pricing in a structured and enforceable way. Other jurisdictions are closely observing how CBAM performs in practice, particularly in terms of WTO compatibility and market impact.
We are already seeing discussions in countries such as Canada and the United States around border carbon measures, even if the approaches differ. Over time, CBAM could become a reference point for how climate policy and trade policy interact globally.
For businesses, this means CBAM should not be treated as an isolated EU problem. It is a signal of where global trade regulation is heading. Companies that build strong emissions data systems and decarbonisation strategies now will be better positioned not just in Europe, but in a future where carbon transparency becomes a standard requirement across multiple markets.
What role does The ESG Institute play in supporting businesses affected by CBAM?
Our role is to bridge the gap between regulation and practice. CBAM is technically complex and commercially sensitive, and many organisations lack the internal expertise to address it confidently.
Through training, advisory support, and practical tools, we help importers and exporters understand their obligations, manage risk, and make informed decisions. This is precisely why we developed the Diploma in CBAM Regulation. It is designed for professionals operating under CBAM today, with a strong focus on definitive-phase compliance, financial implications, and real-world application.
Finally, what is your key message to businesses trading with the EU today?
My message is clear: CBAM is no longer optional or theoretical. It is now a defining feature of trade with the EU. Companies that ignore it will face higher costs, commercial pressure, or loss of market access.
At the same time, those who understand the rules, invest in data and systems, and engage proactively with their partners can turn CBAM into a strategic advantage. CBAM signals the future direction of global trade, where carbon intensity matters. Being prepared is not just about compliance. It is about long-term competitiveness.
At The ESG Institute, we believe that informed organisations are better equipped to thrive in this new landscape. CBAM is challenging, but with the right knowledge and approach, it can also be a catalyst for smarter, more sustainable trade.
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