The European Union Carbon Border Adjustment Mechanism (“EU CBAM”), established under Regulation (EU) 2023/956, will enter its definitive phase on 1 January 2026, introducing substantial compliance obligations for EU importers of goods within its scope. Initially implemented on 1 October 2023 with transitional reporting requirements, the mechanism aims to mitigate carbon leakage and promote decarbonisation by imposing a system of carbon certificates corresponding to the embedded greenhouse gas emissions of imported goods.
From 2026 onwards, only entities authorised as CBAM declarants will be permitted to import covered goods, and such entities will be required to submit an annual CBAM declaration and surrender CBAM certificates by 31 May of each year. The declaration must detail quantities, embedded emissions, and verification reports issued by accredited verifiers. Failure to comply may result in significant monetary penalties.
The Regulation places liability on the authorised CBAM declarant—typically the importer—while recognising the critical role of upstream suppliers in providing accurate emissions data. Consequently, importers are advised to implement robust operational controls and contractual safeguards to mitigate risks arising from supplier non-compliance or inaccuracies. Recommended measures include comprehensive monitoring procedures, verification protocols, and contractual clauses ensuring supplier accountability for regulatory breaches and associated financial losses.
This alert provides an overview of the new obligations and practical implications for supply chain management, emphasising best practices to ensure compliance and limit exposure to legal and financial risks under the EU CBAM framework.

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