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How a digital-first approach streamlines CBAM compliance reporting

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3 minute read 05 Feb 2025
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Forensic & Integrity Services

By leveraging technology and cross-functional teams, companies can provide efficient data gathering and reporting for CBAM compliance.

In brief

  • Honeywell collaborated with an EY team to streamline compliance with the EU’s CBAM.
  • The digital solution manages the end-to-end process, from emissions data gathering to submission, enhancing efficiency and precision.

Welcome to a multi-part series where we explore practical considerations for enabling Legal and Compliance functions to efficiently respond to forthcoming compliance obligations, such as the European Union (EU)’s Carbon Border Adjustment Mechanism (CBAM).

The implementation of the European Union Carbon Border Adjustment Mechanism (CBAM) is rapidly ushering in a new chapter in the nexus of global trade and sustainability. CBAM imposes a carbon price on imports of certain goods imported from non-European Union countries. Through December 2025, CBAM is within its Transitional Phase, an initial stage where importers are required to report quarterly on the embedded emissions of their imports.

In 2026, CBAM ramps up and will require more detailed reporting including financial obligations.

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The evolving landscape

Honeywell International, with its diverse portfolio of products and services, saw an opportunity to utilize technology to drive efficiency, maintain accuracy, and manage engagement with its suppliers. What makes CBAM notable is that emissions data rather than monetary values are reported. In addition, with a large and dynamic ecosystem of suppliers, the scope of Honeywell’s filing requirements evolves each quarter. Honeywell, like many other multinational companies, faced an increased level of complexity in gathering, processing, calculating and reporting its suppliers’ emissions data.

 

Transforming policy into results

Recognizing a desire for efficiency and precision, Honeywell engaged with EY to create a comprehensive digital solution that addressed the need to not only manage the end-to-end process from emissions data gathering to submission, but also to capture and develop institutional knowledge relating to requirements set forth by the EU.

 

“Complying with CBAM necessitates a cross-functional team that can move quickly to turn regulatory policy into tangible procedures and deliverables. We are seeing precedent form on an ongoing basis,” notes Sergio Fontenelle, EY US Global Trade Leader.

Responding to EU legislation with a tailored approach

Honeywell and EY formulated an approach to rapidly:

number one

Mobilize a cross-functional steering committee, consisting of leaders from Trade Compliance, General Counsel, Data Management, and Procurement

number two


Design a strategy and policy to engage with vendors

number three


Methodically collect, consolidate and submit required filings and exhibits

number four


Data and AI-enabled processes to facilitate interactions with vendors and customers

Digital-first approach

Honeywell and EY committed to a digital-first approach, working together to enable the efficient data gathering and analysis of supplier-provided data. Honeywell stakeholders and suppliers provided hundreds of thousands of data points which were then validated to adhere to the CBAM XML submission formatting. Collaborating between Honeywell’s ESG compliance managers, engineers, data analysts, EY designed a workflow that included guided questionnaires and training sessions for suppliers, along with bird’s eye view reporting to track progress.

Innovative solutions for sustainable progress

We are turning a regulatory obligation into a competitive advantage by emphasizing innovation in our response to CBAM

Matthijs Alberts

Assistant General Counsel at Honeywell International

“Having the ability to collaborate with our suppliers has been fundamental in driving a higher level of precision. We are not only positioned to comply in a far more efficient manner, but we have been able to elevate the dialogue with our suppliers towards education to achieve our collective sustainability goals. By fostering strong partnerships and leveraging innovative solutions, we aim to continually enhance our compliance processes and drive sustainable progress for all stakeholders. That’s an all-around win,” notes Alberts.

Eugene Kim, Sergio Fontenelle and Mark Beluk also contributed to this article.

Summary

An EY team helped Honeywell address the EU’s CBAM through a digital solution. This innovative approach not only meets CBAM requirements but also drives sustainable progress and enhances overall compliance processes.

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Forensic & Integrity Services

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