CBAM is often presented as a new European cost that will affect only large producers of steel, cement or aluminium. Such an interpretation overlooks the way modern supply chains operate.
Direct obligations are indeed linked to the import of certain products into the European Union. However, data requirements, pressure on prices and the need to verify emissions may also extend to smaller manufacturers, suppliers, processors and transport companies.
A small or medium-sized enterprise from Bosnia and Herzegovina may not pay CBAM directly, but it may do business with a customer that does.
What Is CBAM?
CBAM stands for the Carbon Border Adjustment Mechanism.
Its purpose is to apply a carbon price to certain goods imported into the European Union that is comparable to the cost borne by EU producers covered by the European Emissions Trading System.
Without such a mechanism, European producers that pay a price for their emissions could be placed at a disadvantage compared with competitors from countries with less stringent climate regulations.
CBAM initially had a transitional period during which importers were primarily required to report emissions. The definitive regime began on 1 January 2026 and links imports of covered goods to the purchase and surrender of CBAM certificates.
Which Products Are Covered?
CBAM currently covers six main sectors:
- iron and steel;
- aluminium;
- cement;
- fertilisers;
- electricity;
- hydrogen.
Coverage is determined not only by the name of the product but also by its customs tariff code. This means that, in certain cases, products made by processing basic materials may also be covered, including some products made of iron, steel or aluminium.
A company should therefore not conclude that it is unaffected simply because it is not a large steelworks or cement plant. It is necessary to check the customs tariff codes of products exported to the EU and examine the structure of the supply chain in which the company operates.
Who Is Directly Responsible?
Formal responsibility under the CBAM system rests primarily with the importer in the European Union. The importer must have data on the quantity of embedded emissions in the goods it imports and use this information to fulfil its obligations.
However, the European importer cannot generate these data independently. It must obtain them from the producer or exporter in the country of origin.
A company from Bosnia and Herzegovina may therefore be asked to provide information on:
- electricity and fuel consumption;
- emissions generated during production;
- the origin and quantity of input materials;
- production processes;
- emissions embedded in a particular product;
- any carbon price already paid in the country of production.
If the producer cannot provide the required data, the importer may be required to use prescribed or less favourable default values. This can increase the cost of importing the goods and make the supplier less attractive.
How Does CBAM Reach Smaller Companies?
The impact of CBAM does not end with the company exporting the finished product.
A large manufacturer from Bosnia and Herzegovina may ask its suppliers for data on materials, energy consumption or production processes. A European buyer may begin comparing suppliers based on the emissions associated with their products. A bank or investor may assess the extent to which a company’s business model is exposed to future carbon costs.
In this way, requirements gradually spread throughout the entire supply chain.
A small company may be affected if it:
- manufactures parts for a larger exporter;
- processes steel or aluminium for an EU customer;
- uses materials whose prices are increasing because of CBAM;
- provides services to production activities covered by the mechanism;
- does not have the data requested by its customer;
- depends on a single export market or major customer.
The size of the company is therefore not the only relevant criterion. Its position within the value chain is more important.
A Simple Example
A small enterprise in Bosnia and Herzegovina manufactures metal components that it sells to a larger domestic company. That company assembles the finished product and exports it to a customer in the European Union.
The small enterprise may have no direct relationship with the European importer and no obligation of its own under the CBAM system. Nevertheless, the larger manufacturer may ask it to provide information on the origin of the metal, energy consumption and emissions associated with manufacturing the components.
If the supplier has this information, it can provide it and continue the business relationship without significant difficulty. If it keeps no relevant records, the customer must use estimates, collect the data independently or seek another supplier.
CBAM thus becomes a matter of business capability, not merely regulatory compliance.
What Can an SME Do?
Preparation does not have to begin with the purchase of expensive software or the engagement of a large team of consultants. The first steps can be much simpler:
- Check the customs tariff codes of products exported to the EU
- Determine whether the company participates directly or indirectly in the supply chain of CBAM-covered products.
- Discuss with customers which data they will require.
- Collect bills for electricity, fuel and other energy sources.
- Record the quantities of goods produced and the most important input materials.
- Assign responsibility for the data within the company.
- Document how the data was collected and calculated.
- Analyse where energy consumption and emissions can be reduced.
The initial objective is not to produce a perfect report, but to establish a verifiable data trail that can be improved gradually.
CBAM Is Also a Matter of Competitiveness
Companies with lower emissions and higher-quality data may become more attractive to European buyers. They can respond more accurately to requests from business partners, plan investments more effectively and better assess future costs.
Conversely, a company that does not know how much energy it consumes per unit of output and cannot explain the origin of its data becomes a higher-risk supplier.
CBAM is therefore not merely a new European regulation or an issue that should concern only large exporters. It demonstrates how environmental data is becoming part of product pricing, customer relationships and market competitiveness.
For small and medium-sized enterprises, the key question is no longer only whether they are directly covered by CBAM. It is also whether they do business with someone who is.
More information is available on the European Commission’s official website: CBAM sectors and CBAM information and guidance.
The Sustainable Economic Development and Employment Promotion Programme in Bosnia and Herzegovina (SEDEP), which supports vocational education and training, private sector development, and the digital and green transformation, is jointly funded by the German Federal Ministry for Economic Cooperation and Development (BMZ), the European Union (EU) and the Swiss Agency for Development and Cooperation (SDC).
