The Carbon Border Adjustment Mechanism (CBAM) is a cornerstone of the EU's climate policy, designed to prevent carbon leakage by requiring importers to purchase certificates corresponding to the carbon price that would have been paid had the goods been produced under the EU's carbon pricing rules.
Implementing CBAM presents significant challenges for both regulatory authorities and businesses due to its complex requirements for emissions calculation, certificate management, and customs integration. SOVERN was tasked with transforming this complex regulation into executable digital workflows that would streamline compliance while ensuring accuracy and transparency.
Calculation accuracy
Reduction in processing time
Regulatory traceability
Implementing CBAM presented several significant challenges that needed to be addressed
CBAM requires importers to calculate embedded emissions for imported goods using methodologies specified in Annex III of the regulation, with different approaches for different product categories and special provisions for certain countries.
CBAM requires a complex system for issuing, trading, and surrendering certificates, with specific rules for pricing, validity periods, and reconciliation with actual emissions.
CBAM requires integration with customs systems to verify that importers have sufficient certificates for their imports, with specific procedures for declaration and verification.
CBAM requires detailed quarterly and annual reporting, with specific requirements for data collection, verification, and submission to regulatory authorities.
How we applied our methodology to transform CBAM into executable workflows
Our legal experts analyzed the CBAM regulation to identify all requirements, obligations, and compliance pathways, breaking down the complex legal text into structured components.
We mapped CBAM requirements to data structures and logical relationships, creating a formal representation of the regulation that preserves its intent while making it machine-readable.
We implemented the formal representation as executable code and deployed it as digital workflows, with full traceability back to the source regulation and comprehensive testing.
Implements all CBAM calculation methodologies with support for default values and verification adjustments
Handles certificate issuance, trading, and surrender with secure, tamper-proof records
Integrates with customs systems for real-time verification of certificate availability
How our solution transformed the CBAM compliance landscape
"SOVERN's CBAM solution has transformed our compliance process from a complex, resource-intensive burden to a streamlined, automated workflow. We've reduced our compliance costs by over 60% while improving accuracy and reducing risk."
— Compliance Director, Major EU Steel Importer
"SOVERN's approach to implementing CBAM has significantly enhanced our ability to monitor and enforce compliance. The transparency and traceability built into the system have been invaluable for ensuring the integrity of the CBAM mechanism."
— Senior Official, EU Regulatory Authority
Regulatory requirements implemented
Distinct calculation methods
Integration points
Test coverage
Learn how SOVERN can help your organization transform complex regulations into efficient digital workflows.