The Carbon Border Adjustment Mechanism moves from its transitional reporting phase into the definitive regime, and with it the evidentiary standard changes. Where a good-faith estimate was previously tolerated, importers of iron and steel, aluminium, cement, fertilisers, hydrogen, and electricity are now expected to substantiate declared embedded emissions with records traceable to the production installation.
What auditors will ask for
In our experience with supplier audits over the past year, three gaps recur:
- Installation-level boundaries. Emissions are reported for the plant that made the goods, not for the corporate group. Mills operating multiple lines routinely report a blended figure that cannot be reconciled to a specific heat or batch.
- Precursor accounting. Embedded emissions of purchased precursors must be carried through. Where a supplier buys billet or clinker on the spot market, the chain of documentation usually breaks at the first tier.
- Monitoring methodology. Calculation-based and measurement-based approaches produce different numbers. The method must be stated, applied consistently, and supported by the underlying meter or invoice data.
Verification on site
A document review alone rarely closes these gaps. Our inspectors attend the production site to sample the primary records — energy invoices, production logs, weighbridge tickets — and reconcile them against the emissions figure the supplier has declared. Where the reconciliation fails, the finding is reported with the specific record that could not be substantiated, so the importer can raise it with the supplier before the declaration is filed.
Importers carrying exposure in these commodity groups should be running verification now, on a sample of their highest-volume suppliers, rather than at the point of declaration.