CBAM and JSE-Listed Companies: Disclosure and Liability

CBAM as a Material Financial Risk for JSE Companies

For JSE-listed companies with significant EU export exposure in CBAM-covered sectors, the Carbon Border Adjustment Mechanism represents a material financial risk that requires board-level attention, financial quantification, and public disclosure.

The JSE Sustainability and Climate Disclosure Guidance, aligned with the Task Force on Climate-related Financial Disclosures (TCFD), requires listed companies to identify and disclose material climate-related financial risks. CBAM is precisely such a risk for companies in the steel, aluminium, ferrochrome, manganese, cement, and fertiliser sectors.

The Disclosure Obligation

JSE-listed companies should consider CBAM disclosure in the following contexts:

Integrated Annual Report: CBAM should be identified as a material risk in the risk register for companies with significant EU export exposure. The risk description should include the regulatory mechanism, the financial quantification methodology, and the company's mitigation strategy.

TCFD Disclosure: Under the 'Risks and Opportunities' section of TCFD disclosure, CBAM is a transition risk — a policy-driven financial risk arising from the transition to a lower-carbon economy. The financial impact should be quantified under multiple carbon price scenarios.

King IV Governance: King IV requires boards to consider the long-term sustainability of the company. CBAM represents a structural change in the economics of EU exports that boards must understand and address.

Quantifying CBAM Liability for Disclosure

JSE companies should develop a CBAM financial model that includes:

1. ▸Current EU export volumes by product and CN code
2. ▸Embedded carbon intensity (tCO₂/tonne) by product — actual or estimated
3. ▸Gross CBAM liability at current and scenario ETS prices
4. ▸SA carbon tax credit based on actual carbon tax payments
5. ▸Net CBAM liability (gross minus credit)
6. ▸Commercial impact — how CBAM affects pricing competitiveness vs. EU producers and other non-EU suppliers

The Investor Perspective

Institutional investors — particularly those with ESG mandates — are increasingly scrutinising CBAM exposure in their SA equity portfolios. Companies that can demonstrate:

• ▸Accurate quantification of CBAM liability
• ▸A credible decarbonisation pathway that reduces future CBAM exposure
• ▸Registration on the Digital Product Passport Registry for verified carbon data

...are better positioned with ESG-focused investors than companies that treat CBAM as an unquantified future risk.

For a complete CBAM compliance registration pathway, visit the Digital Product Passport Registry.