The European Union’s Carbon Border Adjustment Mechanism (CBAM) is a carbon pricing system designed for imported goods, aiming to prevent carbon leakage and ensure that imported products bear the same carbon cost as those produced within the EU. According to the regulations, importers must purchase CBAM certificates based on the actual carbon emissions of their products, thereby reflecting the environmental cost of their carbon footprint.
Although there is talk of a possible delay in the implementation of CBAM, companies cannot overlook the compliance pressure and systemic transformation it represents. Export-oriented industries, in particular, will face rising customs and tax reporting costs if their supply chain carbon data and accounting systems are not yet aligned—and they may lose their competitive edge in international markets. This article outlines five CBAM response strategies, starting from common business risks and financial system challenges. These recommendations aim to help Taiwanese companies proactively build verifiable carbon data systems and accounting classifications, strengthening their capacity for compliant disclosure.
Although there is talk of a possible delay in the implementation of CBAM, companies cannot overlook the compliance pressure and systemic transformation it represents. Export-oriented industries, in particular, will face rising customs and tax reporting costs if their supply chain carbon data and accounting systems are not yet aligned—and they may lose their competitive edge in international markets. This article outlines five CBAM response strategies, starting from common business risks and financial system challenges. These recommendations aim to help Taiwanese companies proactively build verifiable carbon data systems and accounting classifications, strengthening their capacity for compliant disclosure.
1. CBAM Tax Is Delayed, But Disclosure Pressure Remains
1.1 “Transitional Disclosure” Requirements Before 2026 Must Not Be Overlooked
While the EU’s CBAM is not expected to begin taxation until 2026, since October 2023, products exported to the EU are already required to submit quarterly carbon emissions reports. These reports must be signed by authorized verification bodies and must be traceable and verifiable. Companies that fail to provide complete data may face filing failures, report rejections, or even be flagged as high-risk entities.
1.2 Lack of Integration with Financial Systems Becomes an Audit Weakness
Currently, most companies treat carbon emission data as part of CSR or EHS (Environment, Health, and Safety) operations, without integrating it into their financial systems. This leads to disorganized accounting classifications and inconsistencies with export pricing and tax reporting. If CBAM certificate pricing is enforced in the future, such misalignment may trigger EU audit concerns or tax-related disputes.
Image source: FREEPIK
2. Common Gaps in Taiwanese Companies’ CBAM Response
2.1 Insufficient Grasp of Carbon Data Across the Supply Chain
Some companies are unable to trace the sources of their suppliers’ carbon data and can only obtain estimates, lacking verification based on ISO 14064/14067 standards. This results in poor-quality disclosures.
2.2 No Correspondence Between Carbon Data and Financial Reports
Even when companies have internal carbon inventory data, they often lack a structured linkage to accounting items or ERP systems, making it difficult to reflect the associated costs and processing logic in financial statements.
2.3 No Clear Carbon Tax Classification or Internal Accountability
Many companies have yet to coordinate with their finance teams on how to classify future carbon taxes, carbon fees, or CBAM certificates. They also have not designated a data integration or disclosure contact point, leading to unclear internal responsibilities.
Image source: FREEPIK
3. Five-Point Financial System Preparation Checklist
To help companies ensure audit consistency and improve integration between carbon data and financial reports, Hall Chadwick Taiwan recommends the following five system-level approaches:
- Map Carbon Data to Accounting Items
Assign accounting codes and ERP tagging rules to carbon-related items such as energy expenses and process depreciation, making audits and cross-checks more efficient. - Integrate Supply Chain Reporting Mechanisms
Establish a carbon data reporting process with both direct and indirect suppliers, confirming data sources, calculation methods, and record retention to avoid relying on estimated values. - Predefine Export-Related Carbon Tax Classification Logic
Work with accountants in advance to clarify: Should carbon taxes be treated as costs? How should CBAM certificates be accounted for? Will this affect customer pricing and cost pass-through? - Create a Cross-Department Carbon Data Responsibility Framework
Design a collaborative update and review workflow involving finance, engineering, and EHS teams to ensure clear responsibility and version control for each disclosure. - Simulate Tax Impact and Product Line Risk
Use projected EU carbon prices (e.g., €85 per ton) to estimate the potential cost impact on each product line, supporting future price negotiations or product mix adjustments.
Image source: FREEPIK
4. Conclusion: Institutional Readiness Is Better Than Waiting for Policy Revisions
The CBAM framework is already entering the stage of practical implementation. Even if the taxation timeline remains uncertain in the short term, companies that fail to prepare proactively will miss the golden opportunity to develop institutional capacity. Especially for export-oriented industries, carbon data is no longer just an add-on for environmental reporting—it is now a key variable that determines customs clearance speed, product cost, and long-term market presence.
Entering the CBAM regime without proper preparation can lead to disclosure errors, reporting discrepancies, and even cost disputes, trust issues, or client attrition during audits or transactions. Instead of passively “waiting for the policy,” companies should actively align their carbon data with their financial systems—so that carbon data, like financial statements, is backed by audit logic, clear classifications, and review workflows.
Hall Chadwick Taiwan reminds businesses: CBAM is not merely about tariffs—it is a test of institutional transparency.
Entering the CBAM regime without proper preparation can lead to disclosure errors, reporting discrepancies, and even cost disputes, trust issues, or client attrition during audits or transactions. Instead of passively “waiting for the policy,” companies should actively align their carbon data with their financial systems—so that carbon data, like financial statements, is backed by audit logic, clear classifications, and review workflows.
Hall Chadwick Taiwan reminds businesses: CBAM is not merely about tariffs—it is a test of institutional transparency.
Is your company ready to meet the new ESG challenges?
Hall Chadwick Taiwan has extensive experience in ESG financial consulting and can assist your company in building a sustainability reporting framework that aligns with the latest regulatory requirements.
If you have any questions regarding the 2025 ESG financial disclosure requirements, feel free to contact us.
If you have any questions regarding the 2025 ESG financial disclosure requirements, feel free to contact us.