What senior leaders need to know about CBAM and the future of global trade
As CBAM moves from its transitional reporting phase into full enforcement by 2026, it will begin to reshape the cost base of global production. European Union (EU) importers will pay a carbon price on emissions embedded in imported goods. Exporters outside the EU must account for and disclose their carbon intensity with increasing precision. It’s clear: carbon efficiency is no longer a differentiator—it’s a requirement.
The global implications of local policy
CBAM addresses carbon leakage and the risk that emitters simply move offshore to jurisdictions without carbon pricing. But its reach extends further, and the scope includes cement, fertilizers, aluminum, steel, hydrogen, and electricity—industries at the heart of infrastructure and energy.
Throughout the transitional phase, exporters must report the embedded emissions of their goods and beginning in 2026, EU importers will bear a financial obligation. Accuracy in reporting is paramount, as emissions declarations must be verified.
Senior leaders in carbon-intensive sectors—metals, mining, energy, and manufacturing—face a new layer of complexity. Under CBAM, emissions data becomes a compliance asset or liability, and the absence of it can block access to critical markets. Reporting alone won’t be enough; data must be verified, gaps must be closed, and emissions must be actively reduced.
This goes beyond compliance. CBAM will affect contract negotiations, capital allocation, and customer relationships. EU clients will increasingly seek out partners who not only provide high-quality products, but who can offer low-carbon alternatives with verified emissions data. Companies that can’t meet this bar risk losing business even if their operations are otherwise competitive.
The global trade landscape is splintering
CBAM fractures global trade along new lines: those who can price carbon and those who can’t. This introduces real risk to companies operating in carbon-intensive grids or jurisdictions without climate policy frameworks. Nations with slow-moving decarbonization agendas may find their industrial base less attractive to EU customers or be priced out altogether.
This evolving regulatory landscape introduces a kind of “carbon protectionism” that could spread. If other trade blocs implement similar policies—and signals suggest they will—companies will face a patchwork of carbon regulations and compliance expectations. The risks are compounded for multinationals that operate across diverse geographies and markets.
Operational challenges now drive strategic risk
CBAM’s methodology demands more than emissions estimates. It requires rigorous, site-level accounting: measuring mass inputs, carbon content of exhaust gases, and electricity sourcing. This level of granularity may be routine in the lab but for many operations it’s a significant step-change in measurement, verification, and reporting.
The transitional phase allows for partial use of default emissions factors but by mid-2024, 80% of reported emissions must reflect actual, verifiable data. For operations without robust data systems, this introduces material risk to EU sales and exposes importers to penalties. The time to act is now.
What senior leaders should be asking:
- Are our operations prepared to produce CBAM-compliant emissions reports, verified by qualified third parties?
- How exposed are we to high-carbon grids, particularly for electricity-intensive processes like smelting and refining?
- Do we understand the carbon footprint of our products by facility, by process, by input?
- How will CBAM affect our competitiveness, our pricing models, and our customer relationships in the EU?
- Have we begun decarbonizing our supply chain in a way that’s measurable and verifiable?
The strategic play is clear: Prepare, partner, decarbonize
CBAM should not be viewed as an administrative burden—it’s a forcing function for operational transformation. Companies that treat it as a compliance checklist will fall behind. Those that treat it as a strategic catalyst by investing in carbon data, improving emissions performance, and communicating transparently with customers will lead.
At Hatch, we’re already helping clients navigate this shift. We support exporters with life cycle assessments, environmental product declarations, and with meeting EU reporting expectations. We partner with EU importers to assess their CBAM exposure and optimize their supply chains, and we’ve built decarbonization roadmaps for more than 300 industrial sites, delivering from concept to execution.
The future of trade is carbon accountable. For global industry, the next advantage won’t come from scaling—it will come from demonstrating carbon intelligence, market transparency, and emissions leadership.
About the author
Dian van Wyk
Process Engineer, Climate Change
During Dian’s time at Hatch, he has worked on decarbonization projects for various mining, mineral processing, hydrometallurgy, energy, and port operations across the world. His focus area is on preparing decarbonization strategies for clients which includes GHG emissions baselining, opportunity identification and quantification, and decarbonization pathway development. Dian is knowledgeable on various regions’ climate change standards and regulations as well as carbon markets to incorporate these levers into a company’s decarbonization strategy.