I’ve been working in the world of ProcureTech for 27 years. I’ve seen many trends come and go, heard many promises, and yes, I’ve made enough mistakes myself to learn from them. And if there’s one thing I’ve been seeing over and over again lately, it’s this: companies that are truly well-positioned—with experienced procurement teams, solid processes, and good systems—are now realizing that the numbers have been speaking for themselves for quite some time.
The problem: the clock’s been ticking for years.
Nothing changes until it hurts
This is not a criticism; it’s simply human nature. CPOs are driven by cost pressures, security of supply, and quality. For a long time, carbon was something that belonged in the sustainability report rather than the budget. It had no direct cost impact and carried little sense of urgency. So it was delegated, deferred, or passed on to suppliers in the form of an ESG questionnaire.
The challenge: CBAM and ETS fundamentally change this logic. For the first time, carbon is creating direct, measurable costs—on the purchase invoice, in the income statement, and in the margin. Suddenly, it’s no longer a sustainability issue. It’s a procurement issue.
According to a recent Deloitte analysis, the additional costs for imported steel resulting solely from CBAM will amount to approximately 550 euros per metric ton in 2026. For a typical manufacturing company with 5 billion euros in revenue, this already represents an eight-figure CBAM exposure—and that’s just CBAM. If you also factor in the effects of other ETS mechanisms worldwide—China, Brazil, and other markets—the figures quickly reach nine- or ten-figure ranges starting in 2027.
I’m not talking scenarios here. I’m talking facts.
Why this is not a sustainability issue
Until now, many companies have simply tucked carbon away in their sustainability departments. ESG report, check, done. That might have been acceptable three years ago. Not anymore.
CBAM and ETS are direct cost factors. They end up on the income statement. Not at some point in the future, but right now.
What’s happening exactly? Your Tier 1 suppliers are paying more because their raw materials are getting more expensive. They’re passing those costs on. Your Tier 2 and Tier 3 suppliers are doing the same. Step by step, the costs move through the entire supply chain and ultimately end up with you, eating into your product margin.
To anyone who is still thinking about tackling this next year, I say this from experience: the cost of inaction is significantly greater than the cost of taking action.
The real problem: no one knows the figures
What surprises me most during customer meetings isn’t the extent of the exposure. It’s that virtually no one knows their own figures.
When it comes to direct procurement, we’re soon talking about 500,000 to 700,000 individual part numbers, 10,000 to 30,000 suppliers, and hundreds of locations worldwide. Who’s supposed to keep track of which part has which carbon footprint, where the supplier sources its steel, and what that costs at the current ETS price?
The honest answer: today, hardly anyone does. It’s too much data processing, too many systems, too many assumptions. The result is guesswork instead of knowledge. And no CFO can establish provisions based on guesswork, nor can any CPO make informed sourcing decisions.
That is precisely why we at JAGGAER have seen a clear demand over the past 12 to 18 months: manufacturing companies that want to understand what their carbon costs really are—at the part level and at the supplier level, in real time.
My wish for procurement teams
After so many years in procurement, I have a clear opinion: procurement must take an active role in addressing carbon costs. Don’t delegate it, and don’t wait and see.
In practice, this means:
First: ensure transparency. Which materials, which suppliers, and which regions are most at risk? Without this data, everything else is mere speculation.
Second: integrate carbon into the sourcing process. CO₂ costs belong in the cost breakdown, in the total value of ownership calculation, and in supplier evaluations—not as a required field, but as a genuine decision-making factor.
Third: seek dialogue with the CFO. Procurement teams that discuss carbon provisions with their CFO on a monthly basis are no longer the exception—they are the pioneers. The others will have to follow suit.
Fourth: consolidate and clean up data. Before you can calculate carbon costs, you need to know exactly what you’re purchasing—accurately, completely, and across all systems. Material master data, bills of materials, supplier data, and purchasing history: all of these must align. JAGGAER has all the tools for this, from master data consolidation to supplier classification. It’s not a glamorous task. But it’s the prerequisite for everything else.
All of this requires reliable data at the part and supplier levels, not just estimates. That’s exactly why we partner with carbmee: not as a supplement to the procurement process, but as its foundation.
Conclusion
Carbon costs are not a future threat. They are today’s reality, and they will accelerate dramatically over the next two to three years.
The question isn’t whether they’re coming. The question is whether your company is prepared.
I’ve tackled many things too late in my career. I wouldn’t want to add this one to the list.
Want to take a deeper dive?
In a joint webinar with carbmee, we show you exactly how companies are already making their carbon exposure transparent.
