Walmart identifies carbon border adjustment mechanisms as a climate transition risk

European Parliament votes to exempt 90% of importers from bloc’s CBAM rules.

Walmart has highlighted the potential impact that carbon border adjustment mechanisms and taxes could have on its suppliers.  

In its latest ESG report, the US retailer identified eight physical climate risks and five transition-related risks.  

In the latter bucket it put the possibility of rising costs as a result of “taxes, fees, and/or cap-and-trade schemes impacting our supply chain”.  

“Walmart’s suppliers, including those involved in manufacturing, packaging, and distribution, could be subjected to direct taxes, carbon border adjustment mechanisms, and higher embedded costs of product inputs,” it explained. 

The firm also reiterated its expectation that it will miss its 2025 and 2030 decarbonisation targets, which are currently set at 35% and 65%, respectively.   

Members of European Parliament agreed to adopt simplifications to the EU’s Carbon Border Adjustment Mechanism in a landslide vote today.  

The changes, which still need to be formally endorsed by the European Council, will exempt 90% of companies while retaining coverage of more than 90% of the bloc’s emissions.   

Chief negotiator Antonio Decaro said European Parliament had “answered calls from companies to simplify and streamline the process”. 

A consultation on a possible extension of CBAM closed last month.