By Sam Thake, Customs Consultancy Manager, Denholm Good Logistics
The UK’s Carbon Border Adjustment Mechanism (CBAM) is still several months away from implementation, but from the conversations I’m having with importers across a range of sectors, many businesses are underestimating the amount of preparation that will be required.
While CBAM officially comes into force on 1 January 2027, it is not just another customs compliance requirement that can be addressed at the last minute. For many importers, it will introduce entirely new reporting obligations, new supplier data requirements, and potentially significant additional costs that could affect procurement and pricing decisions.
What is changing?
CBAM will introduce a carbon cost on certain emissions-intensive goods imported into the UK. The objective is to ensure imported products face a comparable carbon price to goods produced domestically, helping to address carbon leakage and create a more level playing field for UK manufacturers.
Initially, CBAM will apply to specified goods within the:
- Aluminium sector
- Cement sector
- Fertiliser sector
- Hydrogen sector
- Iron and steel sector
For businesses importing these goods, CBAM will create new obligations around emissions reporting, record keeping and tax accounting.
Why businesses should be paying attention now
In my experience, the biggest challenge for most importers won’t be understanding the legislation itself—it will be obtaining reliable emissions data from suppliers.
Under the UK CBAM framework, the quality of emissions data will directly influence the amount of tax payable. Businesses that cannot obtain verified emissions information will need to rely on government default values, which will be conservative and will increase overall CBAM liability.
This means CBAM has the potential to influence:
- Supplier selection
- Procurement strategies
- Product pricing
- Internal reporting processes
- Contract negotiations
For many organisations, customs, procurement, finance and sustainability teams will need to work closely together to effectively manage CBAM as a business.
Who will be affected?
Businesses importing more than £50,000 of in-scope CBAM goods within a 12-month period will need to register and account for CBAM.
Importantly, liability sits with the importer.
Even businesses that are currently unsure whether they exceed the threshold should begin reviewing historical import data and commodity codes to understand their exposure.
The questions businesses should be asking now
Over the coming months, I would encourage importers to focus on five key questions:
1. Are any of our imports within CBAM scope?
The first step is identifying whether any imported products fall within the affected commodity codes.
2. What could our future CBAM liability look like?
Understanding potential exposure early allows businesses to assess the impact on margins, pricing and sourcing strategies.
3. Can our suppliers provide verified emissions data?
This will become one of the most important factors in reducing future CBAM costs.
4. Do we have the internal processes to capture the required information?
CBAM reporting will require accurate and auditable records across multiple business functions.
5. Who owns CBAM within the organisation?
Successful compliance will require coordination between customs, procurement, finance and sustainability teams.
Preparation today reduces risk tomorrow
Although CBAM may feel like a future issue, the businesses that start planning now will be in a much stronger position when reporting requirements begin.
The organisations that engage suppliers early, understand their exposure and establish robust reporting processes are likely to be better placed to manage costs and avoid compliance challenges.
Download our comprehensive CBAM guide
This article provides a high-level overview of what businesses should be considering ahead of CBAM implementation.
For a more detailed explanation covering registration requirements, emissions reporting, carbon price relief, record keeping obligations, liability calculations and practical preparation steps, download our guide:
Understanding CBAM: A Practical Guide for UK Importers
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