Insight

By Gabriel Rozenberg, co-founder & CEO, CBAMBOO

Prior to Fastener Fair Global my team thought that our stand might be too big, if anything, it turned out to be too small. During the show in March we were rushed off our feet as dozens of companies from across the fastener industry came looking for answers about the hottest topic of the day – CBAM.

By now, most industry participants know the Carbon Border Adjustment Mechanism (CBAM) regulation very well. They understand that all fasteners of iron, steel or aluminium will be taxed as they enter the European Union in proportion to the level of carbon emissions that went into their production system. They are well aware that CBAM represents the start of a profound shift in the economics of global trade. They also know that this system starts next January – meaning many purchases made in the next few months will be subject to CBAM once the ship arrives in the EU. 

So, the business leaders who visited our stand came with their sleeves rolled up. They know that it’s time to act. In this article, I’ll outline the structure of the CBAM regulation, the specific risks and challenges for fastener companies, as well as the steps required to ensure compliance ahead of the 2026 enforcement deadline. I will also explore how software tools such as the CBAMBOO Platform are helping companies take control of their carbon liabilities and gain an early strategic advantage.

From reporting to taxation: Understanding the CBAM timeline

CBAM is a two stage policy. The first phase, which began in October 2023, is the transitional period. During this time, importers must submit quarterly reports detailing the embedded carbon emissions in their goods. These reports do not currently carry financial consequences. The purpose is to familiarise companies with the requirements and to give regulators a baseline understanding of supply chain emissions.

As it turns out, the transitional period has been a bit of a phoney war, marked with confusion that has gradually reduced over time. Low quality compliance has been pervasive; meanwhile the fines that in theory apply for non-compliance have remained essentially unused. In recent months, the European Commission took a fresh look at CBAM and other carbon policies and proposed a sensible change. CBAM would only apply to businesses that import more than 50 tonnes of CBAM materials a year. This removes more than 90% of firms from CBAM obligations while still capturing the vast majority of embedded carbon. That adjustment to the rules is working its way through the European system right now and is proving widely popular. Another change that the Commission announced relates to the timing of CBAM certificate purchases, which I cover later in this article. However, the core CBAM obligations remain pretty much the same. 

The second stage of CBAM – the definitive period, or ‘CBAM proper’, begins on 1^st  January 2026. From this date, importers will be required to pay a carbon price to match the embedded emissions of their imported goods, using a system of so-called CBAM certificates. These certificates will be priced in-line with the EU Emissions Trading System (ETS), which has fluctuated between €60 to €100 per tonne of CO₂e in recent years. For example, a company importing 1,000 tonnes of fasteners, at 2 tonnes of CO₂e per tonne of goods, and a €100 carbon price, would have to pay €200,000.

Companies that fail to prepare will not only be at risk of financial penalties. They could also find themselves unable to complete required declarations and therefore unable to clear goods through customs.

Authorisation, phase in, certificates: The messy details

To enforce this system for customs management, the EU has set-up a system of CBAM authorisation. This is a one time process, and relatively straightforward, but every importing company in the sector must go through it by September this year. Without authorisation, it will be impossible for you to import fasteners into the EU from 1^st January. 

CBAMBOO recently held a webinar explaining the authorisation system. If you missed it, feel free to email me directly (gabriel@cbamboo.com) and we can walk you through what you need to do. 

The next complexity to mention is that CBAM charges will not apply all at once. Instead, they are phased in over a nine year period from 2026 onwards. A substantial proportion of the charge will apply in the first year – the exact proportion depending on the extent to which imported goods have higher emissions than a set of EU-wide ‘benchmarks’. Frustratingly, these benchmarks have yet to be published. However, CBAMBOO clients can get automated estimates of their likely cost exposure on our software platform. 

When it comes to the CBAM certificates, there is a final challenge. These certificates are intended to fluctuate in-line with the ETS price, but for 2026 the timing is delayed. Certificates must be purchased only in 2027 for 2026 imports – at rates set in-line with the average ETS prices in the quarter of 2026 in which the goods were imported. So, if you import goods in Quarter One of 2026, you’ll be accruing a CBAM charge in that quarter, but the cash impact is deferred for a year. A major problem with this system is that it is going to be hard to know what the exact CBAM cost will be until well after the goods have been purchased. We are working with our clients to advise them on what kind of charge to expect. As CBAM matures, these challenges will hopefully be ironed out, but the uncertainty is frankly unhelpful.

Why fasteners are squarely in the CBAM spotlight

Fasteners may be small and low value per unit, but they are often manufactured using carbon intensive techniques and materials and are typically shipped in large volumes. The result is a high aggregate carbon footprint. As CBAM is applied to weight, not value, the sector is disproportionately exposed.

At Fastener Fair Global we met one company that imports 70,000 tonnes of products annually. On our model, we estimate that this company will be paying more than €2 million in CBAM charges every three months from next January. Over the coming decade, we expect that number to triple, as CBAM is phased in. 

Yet most companies in the sector do not yet have visibility into this data. That’s because they have international supply chains with suppliers in Turkey, China, India or south-east Asia – regions where emissions reporting is still nascent and where data may not be available in formats that comply with EU reporting standards. Importers are expected to obtain emissions data at the product level and to send the data to their end customer. If no verified data is available, a default value can be applied, but that will be set deliberately high – it’s not a cost free option by any means.

Practical barriers to readiness

To become CBAM compliant, companies must map their supply chains and identify all relevant products. They must then engage with suppliers, many of whom may be unfamiliar with the regulation, and begin collecting data on embedded emissions. This data must be standardised and submitted in the appropriate XML format required by the Commission.

Beyond data collection, importers must implement internal workflows that span procurement, finance, sustainability and logistics. Who will request data from suppliers? Who will validate the responses? Who will handle certificate acquisition, pricing, budgeting and financial planning? In most cases, this will require a coordinated, cross functional effort.

This complexity is one of the reasons why CBAM compliance is already becoming a topic of interest in boardrooms. Unlike other Environmental, Social and Governance (ESG) related reporting requirements, CBAM has direct financial consequences. It affects gross margins, pricing decisions and supplier relationships.

How the CBAMBOO Platform can help

At CBAMBOO, we’ve built a software platform designed specifically to help companies comply with CBAM and turn compliance into advantage. It was built with the fastener industry in mind, recognising the scale of supply chain complexity and the urgency of the timeline.

The CBAMBOO Platform focuses on three core aspects of CBAM:

1. Supplier engagement: We help companies to invite, onboard and support their suppliers to report emissions data in a compliant format. We have developed supplier side tools to make this process simple and efficient. These tools are free to use for any company in the global supply chain.

2. Data processing: CBAMBOO ingests raw supplier data and automatically converts it into the required structure for EU submission. This includes checking for gaps, applying emission factor libraries and ensuring consistency across formats.

3. Forecasting and optimisation: Once data is collected, we allow companies to simulate their future tax liabilities based on different sourcing scenarios and carbon price assumptions. This enables better budgeting and supplier selection.

We have already onboarded more than 200 suppliers across Europe and Asia to the CBAMBOO Platform. So, if you work with us, there is a high chance that some of your supply chain data is already on our system. We can accelerate your compliance journey from ‘day one’.

Now is the time to act

Remember, extended shipping times mean that CBAM will be charged on goods that are purchased from this summer onwards. By moving swiftly, businesses can gain a clearer understanding of their exposure, identify cost saving opportunities, and build trust with suppliers. Those who delay may find themselves reliant on poor quality data and facing unwelcome financial surprises.

The challenge is real, but with the right tools and the right approach, compliance is entirely achievable and the rewards of financial predictability, operational efficiency and reputational leadership are significant.

To sign up for a free trial of the CBAMBOO Platform, go to cbamboo.com or email gabriel@cbamboo.com.