Measuring Product Carbon Footprint A Must for Modern Manufacturing
In today’s world, sustainability is no longer optional. Manufacturing companies face a pivotal challenge: how to grow responsibly while minimizing their environmental impact. One of the most effective tools to achieve this balance is the Product Carbon Footprint (PCF)—a metric that quantifies the total greenhouse gas emissions associated with a product throughout its lifecycle. Every product has a hidden environmental cost, from raw material extraction to disposal. Without visibility into these emissions, companies risk falling behind in regulatory compliance, losing customer trust, and missing opportunities for efficiency improvements. The absence of PCF measurement makes it difficult for organizations to identify emission hotspots, communicate transparently, and adapt to the growing pressures of climate-conscious markets. The answer lies in systematically measuring the Product Carbon Footprint (PCF). PCF accounts for carbon emissions at every stage of a product’s life, including: By adopting standardized frameworks like ISO 14067 or the GHG Protocol Product Standard, leveraging digital lifecycle analysis tools, and collaborating with suppliers to gather accurate upstream data, companies can measure their PCF effectively. Setting reduction targets and monitoring progress ensures continuous improvement. Measuring PCF delivers multiple strategic advantages: Measuring PCF isn’t just a sustainability initiative—it’s a strategic transformation in how products are made, marketed, and managed. For manufacturing companies, it aligns environmental responsibility with long-term business growth. At ComplianceXL, we help organizations navigate this journey by offering expertise in PCF reporting, regulatory compliance, and lifecycle emissions analysis. Partnering with us ensures that your business not only meets global sustainability standards but also builds resilience, trust, and a competitive edge in today’s evolving marketplace.
A Comprehensive Overview of the Carbon Border Adjustment Mechanism
The Carbon Border Adjustment Mechanism (CBAM) is an EU initiative designed to impose a fair price on carbon emissions generated during the production of carbon-intensive goods imported into the EU. Its objective is twofold: to prevent carbon leakage by aligning the carbon costs of imports with those of domestically produced goods and to encourage cleaner industrial production in non-EU countries. Under CBAM, businesses must pay for the embedded carbon emissions associated with specific imported products, ensuring that foreign manufacturers adhere to similar environmental standards as their EU counterparts. This mechanism prevents unfair competition and discourages industries from lowering environmental regulations to gain a market advantage. By fostering cleaner production methods globally, CBAM enables businesses to invest in low-carbon technologies and sustainable practices while reinforcing the EU Emissions Trading System (ETS). Currently, CBAM applies to high-carbon goods such as cement, iron and steel, aluminium, fertilisers, electricity, and hydrogen, which are particularly vulnerable to carbon leakage. However, its scope may expand to include additional products in the future. The mechanism significantly impacts export industries, urging them to align with global sustainability standards. CBAM Reporting and Compliance The CBAM Communication Template is a standardized reporting tool that helps economic operators accurately submit their data. CBAM plays a crucial role in reducing carbon leakage and encouraging investments in cleaner technologies. Certain exemptions apply, including goods with a total value below EUR 150 and imports from countries participating in the EU Emissions Trading System (ETS). ComplianceXL offers expert consulting services to help companies navigate CBAM regulations. Our comprehensive compliance management platform ensures businesses stay updated with evolving requirements through due diligence, supplier engagement, and compliance documentation. FAQs: 1.How does CBAM impact European manufacturers? CBAM requires businesses to pay for the embedded carbon emissions in their imported goods, aligning their carbon costs with EU-produced alternatives. This prevents imported products from undermining EU environmental regulations. 2.Which goods fall under CBAM, and who is affected? CBAM currently applies to cement, iron and steel, aluminium, fertilisers, electricity, and hydrogen. However, additional goods may be included in the future as the policy evolves.
EU’s Carbon Border Adjustment Mechanism (CBAM) : What you need to know
Climate change is a global emergency that needs to be addressed by all regions across the globe. The European Union, the leader in climate protection and the driving force of the world’s environmental agenda, aims to become the world’s first climate continent by 2050. The Carbon Border Adjustment Mechanism is the EU’s instrument to put a fair price on carbon emitted during production of carbon intensive goods entering the EU and promote strict rules among non-EU countries. CBAM will ensure that the carbon price of imports is equal to the carbon price of domestic production, this prevents carbon leakage. Carbon leakage occurs when companies based in the EU move the production of carbon intensive products outside the EU where the less stringent climate policies are in place. The CBAM is designed to be compatible with the WTO guidelines and ensures the EU’s objectives are not undermined. CBAM will be implemented from 2026 while the current transitional phase lasts between 2023 to 2025. This measured implementation is made to be aligned with the phase-out of the allocations of free allowances under EU’s Emissions Trading System (ETS) to support decarbonization of EU industry. CBAM Transitional Phase (2023-2025) CBAM entered its transitional phase on October 1, 2023, with the first reporting period for importers ending on January 1, 2024. This measured approach allows both EU and non-EU businesses to systematically plan their transition. CBAM’s initial application will be on the import of goods and selected precursors whose production is highly carbon intensive and at the most significant risk of carbon leaking: cement, iron and steel, aluminum, fertilizers, electricity, and hydrogen. When fully phased out- CBAM will cover over 50% of the emissions in ETS covered sectors. This transitional phase will serve as a pilot and learning periods for all importers, producers and authorities and collect all the relevant information required to identify all the shortcomings and refine the methodology. This transitional period will require firms importing goods under the scope of the new rules to only report Greenhouse Gas Emissions (GHG) embedded into their imports (direct and indirect), without the need to buy or surrender certificates. Indirect emissions for some sectors (cement and fertilizers) will be included after the transition period, based on the methodology outlined in the Implementing Regulation published on 17th August 2023. The Implementing Regulation on reporting requirements and methodology provides for some flexibility when it comes to the values used to calculate embedded emissions on imports during the transitional phase. Until the end of 2024, companies will have the choice of reporting in three ways: (a) full reporting according to the new methodology (EU method); (b) reporting based on an equivalent method (three options); and (c) reporting based on default reference values (only until July 2024). As of 1 January 2025, only the EU method will be accepted, and estimates (including default values) can only be used for complex goods if these estimations represent less than 20% of the total embedded emissions. CBAM Regime from 2026: ComplianceXL offers expert guidance to businesses navigating regulatory landscapes like CBAM, ensuring seamless compliance and operational continuity. Contact us today to identify areas in your operations needing attention for CBAM compliance, safeguarding your business from disruptions and enhancing sustainability efforts.Â
4 Eco-Milestones: Keeping Up with New EU Environmental Regulations in 2024!
A series of important environmental regulations that cover everything from water quality to carbon emissions and biodiversity preservation are on their way of implementation. The European Union is proactively taking steps towards these regulations that are most likely to be implemented in 2024. This makes businesses operating from within or exporting to the EU market to be more aware of and prepare for these changes to ensure continued compliance. The European Union’s Carbon Border Adjustment Mechanism commonly referred to as CBAM is designed to prevent carbon leakage into the environment by imposing a carbon price on imports of certain goods from outside Europe. CBAM initially targets a certain set of industrial sectors that are more deemed at risk of carbon leakage. These include cement, aluminium, iron and steel, fertilizer, hydrogen, and electricity. CBAM requires businesses to purchase carbon certificates or pay a carbon price based on the emissions associated with their products. Though full implementation is expected by 2026, the initial transitional phase of reporting requirements already started on Oct 21st, 2023. Impact on businesses and industries: All businesses, particularly those exporting carbon-intensive products to the EU market, should take steps to reduce their carbon emissions, re-evaluate and adjust their supply chains to meet EU standards, and enhance transparency in reporting their carbon data. Adapting to this new mechanism is crucial for ensuring continued market access and leveraging opportunities within the EU market. The Drinking Water Directive adopted in December 2020 and fully implemented as of January 2023 is aimed at protecting public health by improving water quality standards. Now this directive expands its scope and sets new safety standards to ensure the quality of all water, whether in its original state or after treatment. The key goal of this directive focuses on preventive measures against pollution caused by endocrine disruptors, PFAS and microplastics by introducing a Drinking water watch list. From December 31st, 2026, only materials and products that comply with EU drinking water safety standards will be eligible for EU declarations of conformity and unrestricted sales across the EU market. Impact on businesses and industries: All businesses, particularly those involved in water supply and treatment, the food industry, and manufacturing of products that come into contact with drinking water should take proactive measures to meet the revised directive’s standards. They must also stay informed about the directive’s reporting requirements, updates on water quality, risk assessments and measures to improve water access. The new Packaging Reduction Regulation is going to significantly influence the packaging industry as the European Union takes drastic measures to reduce packaging waste. The aim of this regulation is to ensure that all products sold within the EU meet the same environmental standards, contributing to the reduction of packaging waste and the promotion of recycling. The key goals of this policy are to enhance the recycling rate of packaging by setting certain clear criteria, a ban on PFAS in food packaging and restrictions on plastic carrier bags. Encouragement of bio-based plastics is also part of this policy’s goals. Targets set for waste reduction in plastic packaging are 10% by 2030, 15% by 2035, and 20% by 2040. By the end of 2025, targets and criteria will be set for bio-based plastics and by 2029, EU countries are expected to ensure that 90% of materials contained in packaging are collected separately. Impact on businesses and industries: As this regulation applies to all packaging that enters the EU market, companies should closely monitor the progress of this regulation and prepare for these changes by reviewing and adjusting their packaging strategies. Businesses that operate outside of the EU will need to comply with the new Packaging Reduction Regulation to sell their products within the EU. Early preparation and adaptation can help ensure compliance and minimize disruption to business operations. The European Union’s Biodiversity Strategy for 2030 is an effort to reduce alarming trends in biodiversity loss and ecosystem degradation. This strategy is part of the European Green Deal and takes active steps to ensure ongoing global conversation around safeguarding biodiversity and the eco system. The key initiatives in the strategy include expansion of the EU-wide network of protected areas, implementation of EU nature restoration plan that prevents degradation of ecosystems and restores specific habitats and species. Businesses should stay alert about the development and implementation of related laws and guidelines that may arise from the strategy, as these could directly or indirectly impose new compliance and monitoring requirements. Impact on businesses and industries: Businesses should stay alert about the development and implementation of related laws and guidelines that may arise from the strategy for 2030, as these could directly or indirectly impose new compliance and monitoring requirements. Compliance XL provides sustainability consulting services to companies. We also help customers to stay compliant with new regulations. We share knowledge and experience to provide the highest quality service to our clients to ensure they are up to date as part of their compliance and data management strategy.
Mastering CBAM Reporting : Your Guide to the Transitional Phase
The Carbon Border Adjustment Mechanism (CBAM) is a significant tool employed by the European Union (EU) to combat carbon leakage and establish a fair price for carbon emissions associated with the production of carbon-intensive goods entering the EU. It also aims to encourage cleaner industrial production practices in non-EU countries. On August 17, 2023, the European Commission introduced the rules governing the implementation of the Carbon Border Adjustment Mechanism (CBAM) during its transitional phase, scheduled to begin on October 1, 2023, and run until the end of 2025. CBAM reporting obligations are set to commence from October 1, 2023. Regulation (EU) 2023/956 outlines the reporting requirements for the Carbon Border Adjustment Mechanism during this transitional period. The primary goal of this transitional phase is to act as a pilot and a learning period for all stakeholders, including importers and producers, to gather valuable information about the embedded greenhouse gas emissions in their products. It is essential to note that CBAM is designed to be in compliance with WTO rules. For companies and importers of CBAM goods operating in the EU, staying well-informed about regulatory developments is of utmost importance. It is vital to start evaluating the overall impact of these regulations on their business activities, as it can significantly influence their sourcing and supply chain operations. The initial phase of CBAM will encompass sectors such as Cement, Iron & Steel products, Aluminium products, Fertilizers, Electricity, and Hydrogen. Once the permanent CBAM system is enacted on January 1, 2026, importers will be required to declare the quantity of goods imported into the EU for the previous year and disclose their embedded Green House Gas emissions annually. They will then need to surrender the corresponding number of CBAM certificates, which will be traded on a common central platform established by the European Commission. At ComplianceXL, we offer consulting services to companies navigating the complex landscape of CBAM Regulation. We assist in gathering the necessary data for CBAM goods to proactively comply with the proposed regulations. Our services also help customers meet regulatory milestones and ensure they remain up-to-date as part of their compliance data management strategy. FAQs: 1. What is CBAM? Carbon Border Adjustment Mechanism regulates greenhouse gas emissions embedded in certain goods, upon their importation into the customs territory of the European Union (EU), with the purpose of preventing the risk of carbon leakage. 2. What is the obligation of EU importer under CBAM? EU importer of goods covered by CBAM declares the emissions embedded in its imported goods and surrenders corresponding numbers of CBAM certificate each year.