Reporting Recommendations and Requirements for the EU CBAM

The CBAM’s reporting requirements, introduced through the Implementing Regulation, constitute one of the most extensive sets of greenhouse gas (GHG) emissions reporting requirements ever implemented. In practical terms, these requirements are expected to have significant implications for information exchange within supply chains and the data that businesses will need to request from their suppliers. Additionally, the importation of CBAM-covered products into the EU will necessitate a sophisticated GHG monitoring, calculation, and reporting framework.

To effectively navigate this landscape, businesses should consider the following actions:

  1. Gain a comprehensive understanding of the obligations set to take effect on October 1, 2023, and throughout the transitional period, including the specific data required for reporting purposes.
  2. Assess how the CBAM’s requirements specifically pertain to your business. This entails answering key questions such as:
    1.  Which of your products fall under CBAM coverage?
    2. What GHG emissions reporting requirements are applicable to each product category, and what production pathway should be followed?
    3. If your business has multiple entities serving as Importer of Record (IoR) within the same market, contemplate the adoption of a centralized CBAM structure.
    4. Consider streamlining your importation structure, potentially designating one entity responsible for all CBAM-related matters, including calculations and reporting.
  3. Evaluate whether minor adjustments to your supply chain can reduce the number of entities subject to CBAM, allowing for a single central entity to manage Group obligations.
  4. Depending on your supply chain, explore existing mitigation or exemption strategies. CBAM is a consumption tax imposed on goods imported or consumed within the EU. Investigate supply chain alternatives that may alleviate CBAM burdens for goods stored or further processed within the EU before re-export.
  5. In terms of procurement:
    1. – Determine how these reporting requirements translate into new information requests from suppliers.
    2. Identify ways to leverage existing supply contracts to obtain the necessary information.
    3. Consider revising information-related clauses in supply contracts, if necessary.
    4. Explore the possibility of repurposing or leveraging existing ESG data for CBAM reporting.
    5. Understand which taxes, charges, and levies qualify as a carbon price and how they should be reported.
  6. Establish a reporting system that complies with CBAM rules.
  7. Carefully assess the compliance costs associated with CBAM’s taxation and reporting obligations.
  8. Develop and implement a cost-minimization strategy, taking into account both legal and technical aspects.
  9. Stay vigilant about regulatory developments, particularly concerning carbon pricing, in relevant jurisdictions to ensure adaptability with foresight.

Given the complexity of the implementing regulation, consider seeking assistance to ensure that you fully understand the requirements for the timely and accurate filing of reports. Schedule a call with Redshaw Advisors’ CBAM Experts