It is increasingly necessary for import/export customs teams to work closely together on CBAM, bridging trade compliance and sustainability in a new regulatory era.
The introduction of the Carbon Border Adjustment Mechanism (CBAM) marks one of the most significant shifts in global trade compliance in recent years. Designed by the European Union to support decarbonisation and prevent carbon leakage, CBAM fundamentally changes the way in which the supply chain and ESG teams need to work together to correctly declare, monitor, and report imported goods.
For businesses involved in international trade, CBAM is no longer just an environmental issue, it is now a customs and commercial issue as well. This means that successful CBAM compliance cannot sit solely within an ESG or sustainability department. Equally, customs teams cannot manage CBAM independently without access to carbon emissions data, supplier engagement, and sustainability expertise.
The organisations best positioned for success will be those where import/export customs teams and ESG teams work together closely, sharing data, processes, and strategic objectives.
UK CBAM is set to take effect on 1 January 2027. Unlike the EU CBAM, the UK currently does not have a transitional reporting phase and will start applying a charge on carbon emissions embedded in specific imported goods from the outset.
Understanding CBAM
CBAM applies to imports of certain carbon-intensive goods in sectors:
- Iron and steel
- Aluminium
- Cement
- Fertilisers
- Electricity
- Hydrogen
Importers must report the carbon emissions embedded in these imported products and, in future phases, may need to purchase CBAM certificates corresponding to those emissions.
The mechanism is intended to ensure that imported goods face a comparable carbon cost to products manufactured in country where they would be subject to local Emissions Trading Systems (ETS).
Although CBAM is driven by climate policy, the operational responsibility for compliance often directly corresponds with the import of the product.
Why customs team play a critical role
Import/export customs teams already manage the declaration of goods to the local customs authority for cross border movements. CBAM introduces additional layers of responsibility that naturally fall within customs operations, including:
- Correct commodity classification
- Country of manufacture verification
- Identification of CBAM-applicable goods
- Management of importer obligations
- Collection of supplier documentation
- Maintenance of import records
Customs teams are also responsible for ensuring data accuracy during import declarations. As this is a legal responsibility, any errors in classification or reporting could result in financial penalties, shipment delays, reputational damage, or increased regulatory scrutiny. Currently, however, customs teams typically do not own the emissions data required for CBAM reporting. This is where collaboration with ESG teams becomes essential.
Why ESG teams are equally important
ESG teams possess the expertise needed to understand and interpret environmental data, carbon accounting methodologies, and sustainability reporting standards.
Under CBAM, businesses must gather detailed information about:
- Embedded carbon emissions
- Production methodologies
- Direct and indirect emissions
- Supplier sustainability performance
- Verification standards
This information often comes from manufacturers and suppliers across complex global supply chains.
ESG teams are typically better equipped to:
- Engage suppliers and manufacturers on emissions reporting
- Validate environmental data quality
- Understand carbon calculation methodologies
- Align reporting with sustainability frameworks
- Interpret evolving environmental regulations
Without ESG involvement, customs teams may struggle to verify whether emissions data is credible, complete, or compliant with requirements.
The importance of cross-functional collaboration
CBAM creates a unique overlap between trade compliance and sustainability governance. Neither department can manage the regulation effectively in isolation.
1. Accurate product classification and emissions mapping
Customs teams identify which goods fall within CBAM scope using tariff classifications. ESG teams then help determine the associated emissions data.
If these two datasets are not aligned, businesses risk:
- Underreporting emissions
- Reporting incorrect product categories
- Missing CBAM obligations entirely
Joint working ensures that customs classifications and sustainability metrics are connected accurately.
2. Supplier engagement and data collection
Obtaining emissions data from overseas suppliers is one of the biggest CBAM challenges. Customs teams may already maintain operational relationships with suppliers regarding shipping documentation and origin requirements. ESG teams, meanwhile, understand what environmental data is needed and how to assess its quality.
Together, they can develop:
- Standard supplier questionnaires
- Emissions data collection processes
- Verification procedures
- Escalation paths for missing information
This collaboration reduces the risk of inconsistent or incomplete reporting.
3. Risk management and compliance assurance
CBAM introduces both regulatory and financial risk. Potential risks include:
- Financial penalties
- Customs audits
- Reputational damage
- Increased import costs
- Supply chain disruption
Customs teams understand border compliance risk, while ESG teams understand sustainability and disclosure risk. A combined governance approach allows organisations to create stronger internal controls and compliance frameworks.
4. Better strategic decision-making
CBAM is likely to influence sourcing decisions, supplier selection, and long-term procurement strategy.
By working together, customs and ESG teams can help businesses:
- Identify high-carbon supply chains
- Assess future CBAM cost exposure
- Evaluate alternative sourcing options
- Improve supplier sustainability performance
- Support decarbonisation initiatives
This turns CBAM from a purely regulatory burden into a strategic business opportunity.
Establishing shared ownership
CBAM should not be owned solely by one department. Shared accountability encourages better collaboration and more accurate reporting.
Creating integrated data systems
Businesses need systems capable of connecting:
- Customs import data
- Commodity classifications
- Supplier records
- Emissions calculations
- ESG reporting metrics
Integrated technology solutions reduce manual errors and improve audit readiness.
Training and awareness
Customs teams need greater awareness of sustainability reporting, while ESG teams require understanding of customs processes and import regulations. Cross-training helps create a common language and stronger collaboration.
Monitoring regulatory developments
CBAM requirements continue to evolve. Customs and ESG teams should jointly monitor updates and ensure processes remain compliant.
CBAM as a catalyst for organisational change?
Beyond compliance, CBAM is driving a broader transformation in how organisations manage global trade and sustainability. Historically, customs compliance and ESG reporting operated in separate silos. CBAM forces these functions together because carbon emissions are now directly linked to import activity. This convergence represents a major shift in corporate governance. Businesses that embrace integrated working practices early are likely to gain advantages through:
- Stronger compliance controls
- Better supply chain visibility
- Improved sustainability performance
- Reduced financial exposure
- Enhanced stakeholder confidence
Conclusion
CBAM is more than a new environmental regulation it is a fundamental change in the relationship between international trade and sustainability.
Import/export customs teams bring expertise in customs declarations, commodity classification, and border compliance. ESG teams contribute knowledge of carbon accounting, sustainability reporting, and supplier environmental performance.
Neither function can succeed alone.
Organisations that encourage close collaboration between customs and ESG teams will be far better prepared to manage CBAM requirements, reduce compliance risks, and adapt to the future of sustainable global trade.
As carbon regulation becomes increasingly embedded within international commerce, cross-functional cooperation will no longer be optional, it will be essential.
How can Menzies help?
At Menzies we can offer a full service; we have already brought together our customs and international trade and ESG teams.
If you need help to identify any products that made attract CBAM liabilities not only can we identify them, but we can help you negotiate obtaining the emissions data or calculating the emissions ready to report in the required timeframes.
If you would like to explore your CBAM or any other ESG regulatory obligations, please contact us.
