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Mastering CBAM: Balancing efficiency and sustainability with Celonis Process Intelligence
The Carbon Border Adjustment Mechanism (CBAM) is not the first environmental policy measure to tackle the environmental impact of energy-intensive goods. In fact, it follows a line of carbon pricing mechanisms, such as the EU Emissions Trading System (ETS) introduced in 2005.
CBAM applies a carbon price on specific goods imported into the EU from countries with less strict climate policies. Importers must purchase CBAM certificates equal to the carbon price they would pay had the goods been produced in the EU. The cost for importers could be reduced if the exporting country has a carbon pricing mechanism.
CBAM will initially apply to imported goods from a specific set of target sectors in the EU, listed in terms of their share size (from 2022 WTO trade data and Celonis’s own calculations):
Iron and steel (56.9% of CBAM imported goods)
Aluminum (23.5%)
Electricity (16.2%)
Fertilizer (2.9%)
Cement (0.5%)
Hydrogen (<0.5%)
2022 WTO Trade data puts the overall volume of these CBAM-affected imports at $137B (US), with projected overall CBAM emissions expected to be 50–100 metric tonnes, leading to direct costs of $4.9-7.2B (US). There’s a lot at stake as companies must disclose emissions on these high-emission materials and begin paying taxes on them in 2026.
Manually mapping emissions for groups of procured materials is difficult, often requiring extensive repetitive manual searches across multiple data sources. Manually mapping on the more granular material level is nearly impossible. Not only does it take a lot of time and effort, but it requires deep expertise in the material and services to map the emission data accurately. The Celonis CBAM App, developed on the Celonis Process Intelligence Platform by Ventum Consulting, enables companies to optimize their carbon footprint and ensure CBAM compliance.
What does CBAM mean for businesses?
As of October 1 2023, until 2025, all CBAM goods imported into the EU must be reported for each quarter. The responsibility for this falls on importing companies, including compiling and validating the data:
For direct and indirect emissions of all relevant goods and their precursors (input materials used to produce a second good)
On the production process and total material consumption
Making things more complicated, if your direct supplier procures CBAM-related precursors, they’re required to send out the full CBAM survey to their partner.
And there’s not much time to get your house in order. From 2026, reported emissions will be taxed on the basis of the price of ETS allowances that permit limited emissions from participating EU companies. So what’s currently a regulation statistics challenge will become a working-capital optimization challenge.
With the CBAM clock ticking, the time to act is now — yet only half of businesses at our recent sustainability webinar have a solution in place. We often hear from our customers how heavily spreadsheet-based and time-consuming CBAM reporting is. Insights are retrospective and not actionable. Business buy-in is limited. Meanwhile those CBAM penalties — not to mention the unfavorable press attention these are likely to attract — get closer by the day.
The Celonis Sustainability Layer
The Celonis Sustainability Layer, infused with Process Intelligence, provides a future-proof platform for sustainability reporting, analytics and improvement. It extracts data from ERP systems, like Oracle and SAP to analyze business processes such as procurement. To enable sustainability use cases, we combine this transactional business process data with ESG data - carbon emission factors, supplier ratings and more.
The Celonis CBAM app is integrated into business processes as part of purchase-to-pay or order-to-cash. Emissions calculations are therefore fast,continuous and accurate so you can track your targets and better inform decisions through simulations of changes.
The CBAM Control Cockpit for Celonis can quickly identify CBAM-related orders and aggregate multiple data sources. It can also automate supplier survey aggregation and result validity checking, as well as XML report generation. It can integrate CBAM logic into existing processes, such as requesting emissions data as part of the supplier selection process. And there is an API connection so you can transfer results to other tools and interfaces.
How to tackle common CBAM challenges with Celonis
Celonis solutions are geared towards the three key obstacles that stand in the way of your organization being future-ready.
1. Inadequate master data
Since Q3 2023, organizations are only allowed to use up to 20% default values (provided by the European Commission) for emissions calculations. This was already the toughest data point, but the stipulation makes it even more important for companies to have detailed, accurate production data from suppliers.
The Celonis CBAM app accurately assesses your data, while the common data model and transformation in Celonis provide higher transparency than spreadsheet exports, so you can then act on gaps. If net weight is missing, for example, users can jump into SAP forms to find the right data point.
2. Low supplier readiness
54% of our sustainability webinar attendees reported lack of supplier acceptance as their biggest CBAM challenge. We’ve made supplier engagement as simple as possible with the CBAM app.
Our guided supplier survey condenses survey fields down to the essentials. It only shows relevant order information to make it easier for suppliers to identify which product it relates to. Short tutorials educate them efficiently, and the interface translates into multiple languages so it’s usable for suppliers who may be based in different countries.
It can also offer “town hall” group supplier support sessions or one-on-one consultations and walkthroughs.
3. Uncertain strategy
Treat CBAM as a process optimization challenge. Why wait for the import date before you send out the supplier survey? With Celonis’s Process Intelligence platform, you can uncover opportunities to bring it forward in the process, such as when you get the purchase requisition or even when nominating suppliers.
Crafting a supplier roadmap for upcoming quarters, up to 2025, of when to request information from suppliers, can also help prevent them being overwhelmed.
Join the leading enterprises who are improving sustainability management
So what tangible sustainability improvements have companies achieved with Celonis’s help? Operationalizing sustainability is all about real-world results, after all.
Efficient reporting — We’ve seen as many as 800k inbound shipments’ emissions quantified for a manufacturer
Adoption at scale — Smart prioritization will rate more than 120k suppliers for a building materials company
Emissions and cost reduction — We’ve generated more than 4.5M kg CO2 shipping emissions reduction potential for an engineering company
Celonis gives you a fully automated, compliant, and auditable CBAM process today, and optimized certification costs for the future. Watch the webinar to see a demo of the app in action and how it can overcome your most pressing CBAM challenges before that all-important deadline.
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