Policy Briefing — October 31, 2025
The final CBAM transitional report for Q3 2025 is due 31 October, demanding mature controls, transition-to-permanent planning, and certificate-readiness evidence.
Executive briefing: The EU Carbon Border Adjustment Mechanism (CBAM) transitional regime requires declarants to submit the third-quarter 2025 report to the Transitional Registry by 31 October 2025. This is the final quarterly report before the permanent system begins on 1 January 2026, when importers must surrender CBAM certificates. Firms therefore need to evidence end-to-end control maturity: reconciled customs and emissions data for July–September imports, supplier attestations covering actual embedded emissions, financial planning for certificate purchases, and integration with corporate sustainability reporting. Boards must demonstrate that lessons from earlier quarters have been embedded, that remediation backlogs are closed, and that transition-to-permanent programmes are fully funded.
Regulatory expectations and transition milestones
The European Commission has reiterated through 2024–2025 CBAM Expert Group meetings that Q3 2025 submissions will inform finalisation of declarant authorisations, certificate allocation rules, and enforcement priorities for 2026. Competent authorities will examine whether declarants:
- Reported actual emissions for at least 80% of imported volumes, with justified use of default values only where suppliers could not provide data despite best efforts.
- Maintained Article 35 record-keeping, data lineage, and audit trails capable of supporting ex-post verification.
- Have established financial and operational processes to purchase and manage CBAM certificates from 2026.
- Aligned transitional reports with CSRD climate disclosures and EU ETS accounting.
Failure to evidence readiness may lead to targeted inspections, administrative penalties up to EUR 50 per tonne for misreporting, and potential delays in receiving declarant authorisation for the permanent phase.
Governance controls to demonstrate
Board stewardship. Provide board or sustainability committee minutes showing review of Q3 data quality metrics, remediation status, supplier engagement, and transition readiness. Include decisions on funding for certificate procurement, IT enhancements, and staffing.
Policy integration. Update carbon management, customs compliance, and procurement policies to incorporate transition criteria, supplier data obligations, and certificate management governance. Ensure policies reference Implementing Regulation (EU) 2023/1773, the Commission’s reporting guidance, and Article 20 authorisation requirements.
Risk management. Maintain a CBAM risk register covering data quality, supplier compliance, price volatility, and regulatory enforcement. Document risk appetite statements and mitigation plans with accountable owners.
Internal audit and assurance. Schedule internal audit reviews of CBAM data processes, supplier assurance, and financial integration. Capture findings, management responses, and closure evidence.
Evidence pack architecture
Structure the Q3 evidence pack with clearly tagged sections:
- Governance documentation. Board packs, committee minutes, policy updates, and organisational charts showing accountability.
- Data lineage and controls. ETL documentation, system logs, reconciliation checklists, and quality assurance reports connecting customs data, ERP records, and emissions calculations.
- Supplier attestations. Annex IV forms, verification statements, and correspondence logs demonstrating escalation of non-compliant suppliers.
- Financial planning. Treasury analyses on certificate cost scenarios, hedging strategies, and budget approvals for 2026 certificate purchases.
- Remediation tracker. Updated logs showing closure of Q1/Q2 data issues, root causes, and effectiveness testing.
- Transition programme artefacts. Project plans, resource allocations, IT development roadmaps, and readiness assessments for permanent-phase processes.
- Regulatory interactions. Records of communications with competent authorities, responses to information requests, and preparation for authorisation applications.
Ensure documents include metadata (period, commodity, owner) and are stored in a controlled repository with access logs.
Reporting workflow
Design the Q3 reporting workflow with focus on accuracy and transition readiness:
- Data extraction (early October). Extract customs and ERP data for July–September. Perform completeness checks, focusing on HS codes, country of origin, and declarant IDs.
- Supplier consolidation. Confirm receipt of updated emission factors from suppliers. Document follow-ups, escalation to procurement, and substitution with default values where necessary.
- Calculation and review. Run emissions allocation in controlled tools. Conduct peer review, automated validation, and sensitivity analysis. Ensure alignment with EU ETS benchmarks.
- Finance integration. Reconcile emissions volumes with financial forecasts for certificate purchases. Update carbon cost provisions and management reporting.
- Governance checks. Compliance or risk functions perform independent review, verifying evidence pack completeness and closure of prior issues.
- Submission and attestation. Declarant submits via the Transitional Registry, attaches management representations, and archives submission receipts.
- Post-submission monitoring. Track regulator acknowledgements, queries, and 30-day correction window actions. Document transition readiness assessments and update the risk register.
Transition-to-permanent readiness
Use the Q3 cycle to confirm readiness for certificate-based compliance:
- Declarant authorisation. Ensure application packages include proof of financial and operational capacity, internal control descriptions, and compliance history.
- Certificate management process. Design workflows for purchasing, holding, and surrendering CBAM certificates. Define segregation of duties, treasury involvement, and reconciliation procedures.
- IT enhancements. Implement systems to interface with the CBAM Registry for certificate transactions. Document cybersecurity measures, backup, and access controls.
- Supplier contracts. Update procurement contracts to include actual emissions delivery, verification requirements, and penalties for non-compliance.
- Scenario analysis. Model certificate cost impacts on pricing, margin, and supply chain strategy. Present results to the board with recommended mitigations (e.g., supplier diversification, product redesign).
Integration with sustainability reporting
Align CBAM reporting with CSRD, EU Taxonomy, and voluntary climate disclosures:
- Ensure emission factors, boundaries, and reduction narratives align across reports.
- Document how CBAM data feeds Scope 3 and product carbon footprint disclosures.
- Coordinate with assurance providers to validate emission calculations and control evidence.
Maintain cross-references between CBAM evidence and sustainability report appendices, enabling external assurance teams to trace data.
Stakeholder engagement
Communicate with internal and external stakeholders:
- Executive updates. Provide monthly briefings to the executive committee summarising progress, risks, and financial impacts.
- Supply chain partners. Share guidance with suppliers on data requirements, verification options, and 2026 obligations.
- Customers. Explain potential pricing adjustments tied to CBAM costs, ensuring transparency and contractual compliance.
- Investors. Integrate CBAM readiness into climate transition plans and investor communications.
Metrics and monitoring
Track KPIs and KRIs aligned to transition readiness:
- Percentage of imports covered by supplier actual emissions vs default values.
- Number of data quality exceptions and average resolution time.
- Compliance status of remediation actions from Q1/Q2.
- Certificate cost scenarios (low/base/high) and budget variances.
- Supplier compliance rate with contractual data obligations.
- Regulatory queries received and response time.
Report metrics to the board and include them in enterprise risk dashboards.
Pre-31 October 2025 checklist
- Complete a dry run of certificate management processes, including purchase simulations and ledger postings.
- Validate data integration between customs, ERP, and carbon accounting tools with reconciliation sign-offs.
- Confirm closure of all outstanding remediation actions from prior CBAM reports.
- Update supplier engagement plans and contractual clauses for the permanent phase.
- Prepare regulator briefing packs summarising readiness, risk mitigation, and financial planning.
- Align CBAM reporting timelines with CSRD data collection and assurance schedules.
Zeph Tech helps CBAM declarants lock down Q3 2025 reporting while pivoting to certificate-based compliance, unifying customs data, supplier assurance, and financial planning ahead of the permanent regime.
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