The Carbon Border Adjustment Mechanism’s Impact on Manufacturing Firms: A Single Case Study of a Swedish Manufacturing Company

Abstract

As sustainability-related regulations continue to shape international trade, companies are increasingly facing challenges related to regulatory compliance, supply chain restructuring, and rising operational costs. In early 2026, the European Union will implement the Carbon Border Adjustment Mechanism (CBAM), a policy targeting importers of carbon-intensive products. CBAM requires EU buyers to report the embedded emissions of imported goods, placing new demands on supply chain transparency and supplier collaboration. This study aims to assess the potential impact of CBAM on a major EU-based manufacturer of CBAM-covered products, as well as to explore strategies for mitigating that impact. The research combines three components: (1) qualitative interviews with internal stakeholders to evaluate awareness and preparedness, (2) scenario-based calculations estimating the financial impact of CBAM under different reporting conditions, and (3) a scoping review of existing literature to identify strategic responses to similar regulatory challenges. Key findings suggest that the awareness within the case company is increasing, however, some inconsistencies remain across different departments. Currently, the most critical challenge regards the lack of verified emission data from suppliers. The quantitative scenario analysis revealed that reliance on EU default emission values, when supplier data is missing, could lead to significant increases in import costs after the full launch of CBAM. The scoping review highlights a growing emphasis on supplier engagement, emission data verification, and strategic supply chain restructures as effective responses to carbon-based trade regulations. Based on these insights, the study recommends that companies enhance internal coordination, improve supplier transparency, and explore sustainable, long-term sourcing alternatives to reduce financial risk and ensure regulatory compliance.