What is your approach concerning CBAM - Carbon Border Adjustment Mechanism? What kind of templates do you use? Which function is in the lead?
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Sustainable Supply Chain Adviser in Healthcare and Biotech8 months ago
My main concern with the process is still data security and that CBAM doesn't cover truly the complete value chain to the first steps upstream (raw materials). The EU states that the database is secure, but it is quite a lot of specific information that a declarant needs to share about their full value chain. I hope that it is really safe and secure as they claim and the data segregation and anonymization is really truly in place.Alas, time will tell in the first 12-24 months.
They are fortunate enough (and big enough) that they have a function working on different reporting requirements only, they report to the COO office, so they are leading CBAM as well, BUT with very heavy involvement from both SCM and FIN heads and teams, especially on the side of governance and data collection (e.g. the reporting team compiles the report and provides insight into what they see, but then SCM & FIN reviews and then has the final internal approval - at least that's the first round of ways-of-working now, let's see how this evolves).
Just additional insight that they created that reporting function as they, as a global company, have a number of reporting requirements from all authorities. They set it up in a good way though: it is grouped around the different reporting areas (e.g. GRI/ESG or even just other local regulatory report types, now they opened the CBAM team 2 people so far who had earlier background from ETS and got now fully trained on the CBAM reqs).
I was supporting data input processes on SCM side as it impacted many of the processes in place, so that we got covered well as a first attempt. We tried to not add too many additional internal reporting templates, but get as much data as possible into the system-led transactional work & existing templates. Then push these into the final reporting templates of the EU (there are still a lot of manual work involved atm - to be true and fair).
As for the reporting options: new way or based on equivalent national systems or reference values. They opted for setting up the new way, but they are in communication with EU officials and local authorities for those data sets, where they are unable to get more than reference data (this was one of the biggest challenges for them, the other one was managing these with the suppliers who had limited capabilities to do the new requirements).
These are also just the first steps and there were a lot of follow up actions identified on how to optimise the reporting process itself, the transition from data that aren't fully reliable, the overall emissions and costs related to these - so that will be a lot to work on for all functional teams from now.
Before I forget, legal/regulatory functions are supporting the work of course, but they aren't leading in this case and they aren't the ones doing the bulk of the work either.
Setting this reporting up is no different from setting up any other regulatory or other reporting requirements earlier.
If the existing data sets are messy or non-existent, then it is a real hurdle, as the main task will become not the reporting itself, but the actual data generation and cleaning (which is a pre-requisite).
I hope this helps. I don't say this is a foolproof way or the best way and just one company, but they had to go with it as they also wanted to know as early as possible what will hit them from 2026 and have the opportunity to iron issues out still in the transition phase, where there is no big monetary impact yet.
On another note: if a company doesn't have resources, they can set this up with external parties but they remain financially and legally liable for the process. That is also a good solution.
Disclaimer: I'm not a specialised CBAM expert, so I'd advise you to get direct info from the EUs tax/customs advisors.