If your business imports goods into the EU — even as a small operation — you may have come across CBAM, the Carbon Border Adjustment Mechanism. It's a different regulation from CSRD, with a different purpose and a different set of businesses it affects. Here's what it actually means in plain English.
What Is CBAM?
CBAM is the EU's mechanism for putting a carbon price on certain imported goods, so that products made outside the EU with fewer carbon costs don't undercut EU-made goods that already carry a carbon price under the EU Emissions Trading System. In practice, it requires importers of specific carbon-intensive goods to report the embedded emissions in what they're bringing into the EU, and eventually to purchase certificates covering those emissions.
Who Does CBAM Actually Affect?
Unlike CSRD, which is based on company size, CBAM is based entirely on what you import — regardless of how big or small your business is. It currently targets a specific list of carbon-intensive goods, including:
- Iron and steel
- Cement
- Aluminium
- Fertilisers
- Hydrogen
- Electricity
If your business doesn't import any of these categories, CBAM likely doesn't apply to you directly — but if you're a small manufacturer or distributor sourcing raw materials like steel or aluminium from outside the EU, it's worth checking against the current product list, since even a modest import volume can bring you into scope.
CBAM's product scope and phase-in timeline have been subject to ongoing EU review and simplification proposals since the mechanism was introduced. The categories above reflect the mechanism's core scope, but always confirm current product codes and thresholds against the latest EU Taxation and Customs Union guidance before making a compliance decision.
How Is CBAM Different From CSRD?
| CSRD | CBAM |
|---|---|
| Applies based on company size | Applies based on what goods you import |
| Covers your whole business's emissions | Covers only the embedded emissions of specific imported goods |
| Results in a public sustainability report | Results in import declarations and eventual certificate purchases |
| Administered as part of corporate reporting law | Administered through customs and trade mechanisms |
A business can be affected by one, both, or neither — they're independent regulations that happen to both be part of the EU's broader carbon policy.
What Importers Need to Do
- Check whether any of your imported goods fall under a CBAM product category
- If so, collect embedded emissions data from your suppliers for those specific goods
- Submit the required import reporting through the CBAM declarant process
- Track how the certificate purchase requirements apply as the mechanism phases in
Does CBAM Apply to Small Businesses?
Yes — CBAM has no company-size exemption the way CSRD does. A small importer bringing in even modest volumes of a covered good can be in scope. This is one of the reasons CBAM catches businesses off guard: an SMB that's correctly concluded CSRD doesn't apply to them yet can still have CBAM obligations if importing is part of what they do.
How This Connects to Your Own Carbon Reporting
Even if CBAM applies to only a slice of your operations, it's a good prompt to get your broader carbon data in order — because the same emissions data collection habits (energy use, supplier data, accurate record-keeping) that support CBAM declarations are exactly what you'll need if a customer asks for your own carbon footprint data, or if CSRD eventually reaches your company size. Our free carbon footprint calculator is a good place to start building that baseline, regardless of which regulation brought you here.