What Is CBAM?
The Carbon Border Adjustment Mechanism (CBAM) is an EU regulation — Regulation (EU) 2023/956 — that requires EU importers to pay for the embedded carbon emissions in certain goods they import from outside the EU. It functions like a carbon tax on imports.
The purpose of CBAM is to prevent "carbon leakage" — the risk that EU companies move production to countries with less stringent carbon rules to avoid the EU Emissions Trading System (ETS) carbon price. By applying a carbon cost to imports, CBAM creates a level playing field between EU-produced goods (which face the ETS carbon price) and imported goods.
Which Goods Does CBAM Currently Cover?
As of 2026, CBAM covers six sectors in its initial scope:
- Cement
- Steel and iron
- Aluminium
- Fertilisers
- Electricity
- Hydrogen
Textiles and garments are not yet in CBAM's mandatory scope. However, the regulation includes a review mechanism requiring the European Commission to assess expanding CBAM to additional sectors — including textiles and other manufactured goods — in subsequent phases.
How Does CBAM Work in Practice?
CBAM works through a system of CBAM certificates purchased by EU importers. Here's the process:
- An EU company imports goods covered by CBAM from a non-EU country
- The EU importer (your buyer) must declare the quantity and embedded carbon emissions of the goods imported
- They purchase CBAM certificates equal to the declared embedded emissions
- The CBAM certificate price tracks the EU ETS carbon price (currently €40–€80 per tonne of CO₂)
The critical step is declaring embedded carbon emissions. The Phase 1 importer can use one of two values:
- Default values set by the EU (conservative, typically much higher than actual factory emissions)
- Actual values from a verified carbon report provided by the non-EU producer
For Phase 1 sectors (cement, steel, aluminium, fertilisers, electricity, hydrogen), the gap between default and actual values translates directly into CBAM certificate cost for the importer. Textile goods are not in Phase 1, so this fee mechanism does not currently apply to your buyer when importing fabric or garments from you.
What Carbon Data Does Your Buyer Actually Need from You?
For textile suppliers in 2026, the relevant pressure is CSRD Scope 3 supplier reporting, not CBAM. EU buyers in scope of CSRD must include supply-chain emissions in their own corporate sustainability reports, and they are asking suppliers for that data now.
What they typically request:
- Scope 1 emissions — your factory's direct emissions (boilers, generators, on-site combustion)
- Scope 2 emissions — your factory's purchased electricity emissions
- Selected Scope 3 categories — purchased goods, fuel and energy upstream, waste, business travel, transportation
- Per-unit emission intensity — kgCO₂e per kg of product, so the buyer can multiply by their order volume
If textiles ever enter a future CBAM phase (not confirmed legislation as of 2026), the same Scope 1 + Scope 2 per-tonne data is what would be needed. So preparing CSRD-ready data today also prepares you for any future CBAM expansion.
| Data Required | Used For (textile exporters) | Scope |
|---|---|---|
| Per-unit emission intensity (kgCO₂e/kg) | Buyer CSRD Scope 3 calculation; future CBAM-readiness | Scope 1 + Scope 2 |
| Full GHG inventory (tCO₂e/year) | CSRD supply chain disclosure (ESRS E1) | Scope 1, 2 & selected 3 |
| Emission intensity per unit produced | Buyer sustainability scorecard, Higg FEM | Scope 1 & 2 |
| Year-over-year emission trend | Buyer decarbonisation programs (e.g. SBTi) | All scopes |
The Timeline: CBAM Phase-In
CBAM has been phasing in gradually since 2023:
- October 2023 – December 2025: Transitional period. EU importers reported embedded emissions quarterly but did not yet pay for CBAM certificates. This was a data collection and capacity-building phase.
- January 2026: Full financial obligation begins. EU importers must purchase CBAM certificates for embedded emissions in covered sectors.
- 2027–2034: CBAM scope expected to expand. Review of additional sectors including textiles is scheduled under the regulation.
How to Prepare Your Factory for EU Buyer Carbon Data Requests
The most effective preparation is to have a verified carbon report ready before your buyer's next CSRD Scope 3 data request deadline. Here's what to do:
- Calculate your Scope 1 & 2 emissions — at minimum, your factory's direct energy and electricity emissions in tCO₂e and per kg of product
- Get verification evidence — collect your utility bills, fuel purchase records, and production data
- Generate a GHG Protocol-aligned report — structured to ISO 14064-1, with emission factor citations your buyer's auditors can verify
- Share the report proactively — don't wait for your buyer to ask. Sending a verified carbon report ahead of their next CSRD data window positions you as a higher-tier supplier
Summary: Key Facts About CBAM for Textile Exporters
- CBAM applies a carbon cost to imports of cement, steel, aluminium, fertilisers, electricity and hydrogen — not textiles in Phase 1
- Full CBAM financial obligations began January 2026 for those Phase 1 sectors only
- For textile exporters, the actual EU regulation driving buyer requests is CSRD Scope 3 supplier reporting, not CBAM
- EU brands legally required under CSRD to report supply-chain emissions are already asking textile suppliers for verified carbon data; suppliers who can't provide it risk being delisted
- CBAM expansion to additional sectors (potentially including textiles) is under review per the regulation, but no firm legislation has been adopted as of 2026
- A verified ISO 14064-1 aligned carbon report gives your buyer the supplier data they need for their CSRD disclosure today, and is structured to be re-usable should textiles ever enter a future CBAM phase