Policy Briefing — July 3, 2025
EU CBAM declarants must submit the Q2 2025 transitional report by 31 July with verified emissions factors, third-country plant data, and governance evidence ahead of the 2026 certificate regime.
Executive briefing: The Carbon Border Adjustment Mechanism (CBAM) transitional phase obliges EU importers of cement, aluminium, fertilisers, iron and steel, hydrogen, and electricity to file their second-quarter 2025 emissions report in the Transitional Registry by 31 July 2025. Declarants must quantify embedded direct and indirect emissions for every customs declaration lodged between April and June, attach supplier attestations, and reconcile any default values applied under Article 7 of Implementing Regulation (EU) 2023/1773. Boards should be able to evidence a single governance framework covering customs, sustainability, and finance functions so that emissions data feeding the Registry submission matches what is used in carbon pricing forecasts, procurement decisions, and environmental disclosures.
Regulatory expectations and supervision
The European Commission has made clear through the CBAM Expert Group minutes and the March 2024 reporting guidance that competent authorities will escalate repeated data quality deficiencies starting with the Q2 reporting cycle. National authorities can impose penalties of up to EUR 50 per tonne of unreported emissions or misstatements under Article 16 of the CBAM Regulation. Importers should therefore document how they meet the Article 35 record-keeping obligation, the 30-day correction window, and the requirement to maintain auditable links between customs declarations, product nomenclature codes, and installation emission factors supplied by non-EU producers.
Governance teams must also prepare for the permanent system commencing 1 January 2026. The Q2 2025 report will be scrutinised by sustainability assurance providers and internal audit as the baseline for establishing actual certificate surrender obligations. Supervisors in Germany, France, and Italy have already issued letters asking large declarants to outline their transition-to-permanent programmes, including carbon cost forecasting, legal entity scope, and integration with EU Emissions Trading System (ETS) compliance teams. Firms that cannot produce an end-to-end process map showing control ownership, technology systems, and escalation triggers risk being placed on enhanced monitoring lists.
Governance controls to evidence
Board oversight. The board sustainability or risk committee should receive a CBAM dashboard highlighting quarterly emission trends, supplier coverage, use of default values, and correction backlog. Minutes must show that directors challenge the provenance of supplier declarations and confirm that accountability for each commodity line is anchored in approved policy documents.
Policy framework. Update the carbon pricing and trade compliance policies to embed the CBAM control standard. Policies should reference ISO 14064 methodologies, International Sustainability Standards Board (ISSB) Scope 3 guidance, and EU ETS data management requirements so there is a common lexicon when reviewing evidence.
Control testing. Second line functions need to operate quarterly sample testing of customs entries, ensuring the harmonised system (HS) codes align with goods categories subject to CBAM and that declared quantities match warehouse management and purchase order records. Documented walkthroughs should prove that finance reconciliations covering customs duties, carbon cost accruals, and supplier payments are linked.
Change management. Establish a formal change control board to log updates to emission calculation methodologies, supplier onboarding questionnaires, or Transitional Registry user access. Evidence should include risk assessments, segregation-of-duties matrices, and approvals for each change ticket.
Evidence pack architecture
Design the evidence pack as a structured repository, preferably within a governance, risk, and compliance (GRC) platform or secured SharePoint site. Core folders should include:
- Governance artefacts. Board papers, committee minutes, and policy documents with version control, cross-referenced to CBAM articles.
- Process documentation. End-to-end process maps, RACI matrices, and system architecture diagrams covering customs, sustainability reporting, enterprise resource planning (ERP), and data warehouse components.
- Data lineage evidence. Data dictionaries, extract-transform-load (ETL) job logs, and reconciliation sign-offs proving how raw emissions data from suppliers, life-cycle assessment databases, or internal measurements feeds the reporting template.
- Supplier attestations. Signed CBAM Annex IV templates, independent verification statements, and escalation correspondence for non-responsive suppliers.
- Control testing results. Quality assurance checklists, issue logs, root cause analyses, and remediation plans with assigned owners and due dates.
- Registry submissions. PDF exports of the Transitional Registry report, evidence of the digital signature, and any acknowledgements or queries received from competent authorities.
Each document should carry metadata covering reporting period, responsible owner, approval date, and linkage to specific control objectives. Maintain a retention schedule aligned with Article 35’s minimum four-year requirement and national customs laws, with automated reminders before destruction dates.
Reporting workflow design
Break the reporting workflow into clearly defined stages with control gates:
- Data acquisition. Procurement teams collect supplier-specific emission factors at least monthly. Automate reminders and include contractual clauses mandating provision of ISO- or verified data. When default values are used, log the reason, responsible approver, and plan to migrate to actual values by Q3.
- Data validation. The sustainability analytics team runs completeness and reasonableness checks, comparing emission intensities to benchmarks published by the Commission. Outliers trigger corrective action requests via the supplier portal.
- Calculation and allocation. Use a controlled calculation engine—ideally an auditable spreadsheet or specialised carbon accounting tool—to allocate emissions to customs declarations. Maintain change logs, peer reviews, and automated unit checks.
- Finance integration. Finance controllers reconcile carbon cost accruals with treasury hedging strategies and ensure monetary impacts appear in management accounts. Document how carbon price assumptions feed into transfer pricing and budgeting.
- Governance review. Risk or compliance officers perform a pre-submission review, confirming that all evidence items are in place and that remediation items from prior quarters are closed or extended with rationale.
- Submission and attestation. The appointed CBAM declarant submits via the Transitional Registry, attaching the formal management representation letter, and files the final package in the evidence library.
- Post-submission monitoring. Establish a 30-day monitoring period to capture corrections, regulator queries, and supplier restatements. Minutes should show escalation to the board committee if material discrepancies arise.
Cross-functional operating model
High-performing CBAM programmes map clear roles:
- Board sponsor. Often the Chief Sustainability Officer or Chief Financial Officer, accountable for ensuring CBAM readiness is integrated into enterprise risk management and climate transition plans.
- CBAM controller. A central lead in the tax or trade compliance function owning Registry access, submission calendars, and regulatory correspondence.
- Data stewards. Operational teams in procurement, supply chain, and plant operations responsible for maintaining master data and capturing activity metrics such as tonne-kilometres, electricity consumption, and scrap rates.
- Internal audit liaison. Coordinates assurance testing, prepares walkthroughs, and verifies closure of audit issues related to carbon accounting or customs compliance.
- Technology owner. Manages integration between ERP, customs brokers, life-cycle assessment tools, and business intelligence platforms. Oversees user access, backup routines, and incident response.
Set measurable objectives—percentage of imports covered by supplier actual data, average days to resolve data quality exceptions, and share of emissions backed by third-party verification. Link these metrics to executive scorecards and the remuneration policy to demonstrate alignment with Article 8 of the Corporate Sustainability Reporting Directive (CSRD) governance expectations.
Technology and data considerations
Invest in a data model that harmonises customs and sustainability datasets. Use consistent product identifiers across import declarations, product lifecycle management systems, and supplier portals. Apply master data governance controls, including weekly change reports reviewed by the CBAM controller. Implement automated interfaces to pull customs clearance data from brokers and to push validated emissions into enterprise analytics dashboards.
Cybersecurity and access management are critical. Restrict Transitional Registry accounts to named individuals with multifactor authentication. Maintain logs of all uploads and edits, review them quarterly, and integrate with security information and event management (SIEM) systems. Document backup and disaster recovery arrangements for both the Registry credentials and internal carbon accounting systems.
Scenario planning is another technology use case. Build sensitivity models showing how different carbon price paths, supplier performance, and product mix affect certificate costs from 2026. Present these scenarios to the board to support investment decisions, supplier diversification, and customer pricing strategies.
Integration with external reporting
Align the CBAM evidence pack with CSRD climate disclosures, EU Taxonomy reporting, and voluntary sustainability reports. Ensure that emission factors, boundary definitions, and mitigation plans match across filings. Finance should reconcile CBAM data with IFRS sustainability disclosure requirements, documenting how carbon cost provisions appear in financial statements.
Engage external auditors early. Provide them with system descriptions, control matrices, and sample documentation to test the reliability of emission data. Capture management responses to audit findings and integrate them into the remediation tracker.
Action checklist before 31 July 2025
- Run a full dress rehearsal by 30 June covering data extraction, calculation, governance sign-off, and mock submission.
- Update supplier contracts to codify CBAM data delivery timelines, quality standards, and verification responsibilities.
- Refresh training for customs brokers, procurement leads, and finance controllers on CBAM obligations and escalation routes.
- Review the incident log from Q1 2025, confirm that root causes were addressed, and close outstanding corrective actions.
- Prepare a regulator engagement pack with narrative explanations, trend charts, and supporting documents that can be provided within 48 hours of a supervisory request.
- Document how CBAM readiness features in the 2025 climate transition plan and risk appetite statement.
Zeph Tech supports declarants in building federated CBAM control frameworks, integrating supplier data, customs workflows, and finance planning so that Q2 2025 submissions withstand regulator scrutiny and feed the permanent-phase operating model.
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