CBAM 101: An Introduction to the Carbon Border Adjustment Mechanism

Wesgro emphasises the need to understand the Carbon Border Adjustment Mechanism (CBAM) within a broader context, particularly regarding the EU's Green Deal and climate targets.

CBAM is a specific regulatory tool aimed at carbon-intensive products imported into the EU, designed to level the playing field for local industries by imposing charges on imports from jurisdictions with less stringent carbon regulations. This mechanism is part of a larger toolkit countries are employing to meet their climate goals.

Additionally, there is an increasing clash between international trade regulations and climate measures as countries implement laws to fulfil their commitments under the Paris Agreement. This has created contention over the acceptability of mechanisms like CBAM on a global scale.

Karen also highlights the growing importance of corporate decarbonisation and environmental, social, and governance (ESG) commitments, which are becoming standardised and, in some cases, mandatory.

Companies that fail to decarbonise, particularly in their supply chains (scope 3 emissions), risk losing their competitive edge. This trend signifies broader pressure for decarbonisation that extends beyond the implications of CBAM.