Avoiding Carbon Leakage and meeting the requirements of the European Emissions Trading System (EU ETS)
The Carbon Border Adjustment Mechanism (CBAM) is part of the European Union’s ‘Fit for 55’ package and provides for the gradual introduction of a price on certain emission-intensive goods imported into the EU from third countries. Companies in the EU that import iron, steel, cement, aluminium, electricity, fertilisers or hydrogen in pure or processed form from non-EU countries will have to report separately on all imports on a quarterly basis from 1 October 2023. Pricing will be based on the purchase of so-called CBAM certificates and is intended to compensate for possible competitive disadvantages of goods produced in the EU.
Transitional Phase and Reporting Requirements
In a transitional phase from October 2023 to the end of 2025, no certificates will have to be purchased. However, EU companies will have to report on their imported CBAM goods and their direct and indirect emissions from 2024, starting in the fourth quarter of 2023.
Sustainable corporate governance is the ultimate goal
With the Green Deal, the EU has launched an initiative to establish sustainable corporate governance as a European standard. Special attention is given to human rights and environmental protection. A key element of these measures is to promote transparency in the supply chains and value chains of European companies through regulation.
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