Although the regulation is yet to be approved and implemented, some proactive steps can help businesses to prepare in advance:
Evaluate whether CBAM impacts on operations
Examine the purchase data, bill of material, transactional model to ascertain the applicability of CBAM. Please note that even if a company is not directly importing the specified products, the price from its EU suppliers importing such goods could still increase.
Quantify the exposure
Review the import data to quantify the value and number of transactions with specified goods. Quantify the impact of CBAM cost and compliance.
Identify alternative sources available
Identical goods originating from the EU or other countries with nil/lower CBAM impact or, alternatively, accept the cost impact of sourcing from countries subject to CBAM charges.
Review global value chain and footprint
They relate to EU region and CBAM implications. For example, serve the EU market from a location within the EU, local-for-local production and consumption.
Summary
The EU Green Deal and similar initiatives are gradually taking shape in regulations which will make tangible impact on reducing carbon emissions. The impact is not limited to the EU but it is rather spreading across the global sourcing and distribution footprint of the businesses covered by the CBAM proposal. These measures give businesses an excellent opportunity to meet their Environmental, Social and Governance (ESG) responsibility criteria. Swiss companies doing business in the EU and globally should proactively embrace the changes and prepare to align their business model to the new carbon emission regulations. |