### (12) while the objective of the cbam is to prevent the risk of carbon leakage , this regulation would also encourage the use of more ghg emissions-efficient technologies by producers from third countries , so that less emissions per unit of output are generated. ### (12) while the objective of the cbam is to prevent the risk of carbon leakage , from the internal market , export markets , and investment leakage , this regulation would at the same time encourage the use of more ghg emissions-efficient technologies by producers from third countries , so that less emissions per unit of output are generated. encouraging emission reductions in third countries is the most effective way of avoiding the risk of carbon leakage


### (17) the ghg emissions to be regulated by the cbam should correspond to those ghg emissions covered by annex i to the eu ets in directive 2003/87/ec , namely carbon dioxide (‘co2’) as well as , where relevant , nitrous oxide (‘n2o’) and perfluorocarbons (‘pfcs’). the cbam should initially apply to direct emissions of those ghg from the production of goods up to the time of import into the customs territory of the union , and after the end of a transition period and upon further assessment , as well to indirect emissions , mirroring the scope of the eu ets. ### (17) the ghg emissions to be regulated by the cbam should correspond to those ghg emissions covered by annex i to the eu ets in directive 2003/87/ec , namely carbon dioxide (‘co2’) as well as , where relevant , nitrous oxide (‘n2o’) and perfluorocarbons (‘pfcs’).the cbam should initially apply to direct emissions of those ghg from the production of goods up to the time of import into the customs territory of the union , and after the end of a transitional period and upon further assessment , as well to indirect emissions , mirroring the scope of the eu ets , once the impact on all aspects of carbon leakage for energy-intensive sectors of applying cbam to indirect emissions with eventual withdrawal of indirect eu ets compensation is fully analysed and measures to avoid such leakage are securely in place.


### (17) the ghg emissions to be regulated by the cbam should correspond to those ghg emissions covered by annex i to the eu ets in directive 2003/87/ec , namely carbon dioxide (‘co2’) as well as , where relevant , nitrous oxide (‘n2o’) and perfluorocarbons (‘pfcs’). the cbam should initially apply to direct emissions of those ghg from the production of goods up to the time of import into the customs territory of the union , and after the end of a transition period and upon further assessment , as well to indirect emissions , mirroring the scope of the eu ets. ### (17) the ghg emissions to be regulated by the cbam should correspond to those ghg emissions covered by annex i to the eu ets in directive 2003/87/ec , namely carbon dioxide (‘co2’) as well as , where relevant , nitrous oxide (‘n2o’) and perfluorocarbons (‘pfcs’). the cbam should initially apply to direct emissions of those ghg from the production of goods up to the time of import into the customs territory of the union , and after the end of a transitional period and upon further assessment , as well to indirect emissions , mirroring the scope of the eu ets , once impact on all aspects of carbon leakage for energy-intensive sectors of applying cbam to indirect emissions with eventual withdrawal of indirect eu ets compensation is fully analysed and measures to avoid such leakage are securely in place.


### (28) whilst the ultimate objective of the cbam is a broad product coverage , it would be prudent to start with a selected number of sectors with relatively homogeneous products where there is a risk of carbon leakage. union sectors deemed at risk of carbon leakage are listed in commission delegated decision 2019/70842 . ### (28) whilst the ultimate objective of the cbam is a broad product coverage , it would be prudent to start with a selected number of sectors with relatively homogeneous products where there is a risk of carbon leakage. union sectors deemed at risk of carbon leakage are listed in commission delegated decision 2019/70842 . the commission should set up a review mechanism in order to better assess the broadening of the broad product coverage , including downstream products covered by this regulation.


### (28) whilst the ultimate objective of the cbam is a broad product coverage , it would be prudent to start with a selected number of sectors with relatively homogeneous products where there is a risk of carbon leakage. union sectors deemed at risk of carbon leakage are listed in commission delegated decision 2019/70842 . ### (28) whilst the ultimate objective of the cbam is a broad product coverage , it would be prudent to start with a selected number of sectors where there is a risk of carbon leakage. union sectors deemed at risk of carbon leakage are listed in commission delegated decision 2019/70842 .


### (33) similar technical constraints apply to refinery products , for which it is not possible to unambiguously assign ghg emissions to individual output products. at the same time , the relevant benchmark in the eu ets does not directly relate to specific products , such as gasoline , diesel or kerosene , but to all refinery output. ### (33) similar technical constraints apply to refinery products , for which it is not possible to unambiguously assign ghg emissions to individual output products. at the same time , the relevant benchmark in the eu ets does not directly relate to specific products , such as gasoline , diesel or kerosene , but to all refinery output. due to these constraints , refinery products should be eligible to be included in the scope only if an unambiguous , verifiable and effective methodology is developed in close cooperation with all stakeholders concerned.


### (52) the commission should evaluate the application of this regulation before the end of the transitional period and report to the european parliament and the council. the report of the commission should in particular focus on possibilities to enhance climate actions towards the objective of a climate neutral union by 2050. the commission should , as part of that evaluation , initiate collection of information necessary to possibly extend the scope to indirect emissions , as well as to other goods and services at risk of carbon leakage , and to develop methods of calculating embedded emissions based on the environmental footprint methods47 . ### (52) the commission should evaluate the application of this regulation before the end of the transitional period and report to the european parliament and the council. the report of the commission should in particular focus on possibilities to enhance climate actions towards the objective of a climate neutral union by 2050 whilst preventing distortion of competition in the eu and global markets. the commission should , as part of that evaluation , initiate collection of information necessary to possibly extend the scope to indirect emissions , as well as to other goods and services at risk of carbon leakage , such as downstream products using goods initially covered by this regulation , and to develop methods of calculating embedded emissions based on the environmental footprint methods47 . the report should be based upon a review mechanism that assesses , in particular , the implementation of the regulation vis-à-vis its objectives and the governance system. if appropriate , the report should be accompanied by legislative proposals whose entry into force should be consistent with the start of the implementation of cbam.


### (55) as the cbam aims to encourage cleaner production processes , the eu stands ready to work with low and middle-income countries towards the de-carbonisation of their manufacturing industries. moreover , the union should support less developed countries with the necessary technical assistance in order to facilitate their adaptation to the new obligations established by this regulation. ### (55) as the cbam aims to encourage cleaner production processes , the eu stands ready to work with low and middle-income countries towards the de-carbonisation of their manufacturing industries. moreover , the union should support less developed countries with the necessary technical assistance in order to facilitate their adaptation to the new obligations established by this regulation. the union should make use of the union policies and the union budget to support those action , if appropriate.


### (55) as the cbam aims to encourage cleaner production processes , the eu stands ready to work with low and middle-income countries towards the de-carbonisation of their manufacturing industries. moreover , the union should support less developed countries with the necessary technical assistance in order to facilitate their adaptation to the new obligations established by this regulation. ### (55) as the cbam aims to encourage cleaner production processes , the eu stands ready to work with low and middle-income countries towards the de-carbonisation of their manufacturing industries. moreover , the union , in respect of the unfccc’s principle of “common but differentiated responsibilities and respective capabilities” , should support least developed and lower middle-income countries with particularly important needs and an important lack of resources by providing the necessary technical and financial assistance to adapt to the requirements of the cbam.


### 3. the mechanism will progressively become an alternative to the mechanisms established under directive 2003/87/ec to prevent the risk of carbon leakage , notably the allocation of allowances free of charge in accordance with article 10a of that directive. ### 3. the cbam can complement the mechanisms established under directive 2003/87/ec to prevent the risk of carbon leakage.


### 3. the mechanism will progressively become an alternative to the mechanisms established under directive 2003/87/ec to prevent the risk of carbon leakage , notably the allocation of allowances free of charge in accordance with article 10a of that directive. ### 3. the mechanism progressively replaces the mechanisms established under directive 2003/87/ec to prevent the risk of carbon leakage , notably the allocation of allowances free of charge in accordance with article 10a of that directive.


### 3. the mechanism will progressively become an alternative to the mechanisms established under directive 2003/87/ec to prevent the risk of carbon leakage , notably the allocation of allowances free of charge in accordance with article 10a of that directive. ### 3. the mechanism will progressively replace the mechanisms established under directive 2003/87/ec to prevent the risk of carbon leakage before their phasing out at least in 2036 , notably the allocation of allowances free of charge in accordance with article 10a of that directive.


### 6. the commission is empowered to adopt implementing acts concerning detailed rules regarding the elements of the calculation methods set out in annex iii , including determining system boundaries of production processes , emission factors , installation-specific values of actual emissions and default values and their respective application to individual goods as well as laying down methods to ensure the reliability of data on the basis of which the default values shall be determined , including the level of detail and the verification of the data. where necessary , those acts shall provide that the default values can be adapted to particular areas , regions or countries to take into account specific objective factors such as geography , natural resources , market conditions , prevailing energy sources , or industrial processes. the implementing acts shall build upon existing legislation for the verification of emissions and activity data for installations covered by directive 2003/87/ec , in particular implementing regulation (eu) no 2018/2067. ### 6. the commission shall adopt implementing acts concerning detailed rules regarding the elements of the calculation methods set out in annex iii , including determining system boundaries of production processes , emission factors , installation-specific values of actual emissions and country-specific default values for individual goods in annex i as well as laying down methods to ensure the reliability of data on the basis of which the actual emissions and default values shall be determined , including the level of detail and the verification of the data. adoption of the implementing acts shall be preceded by public consultations with exporters , importers , third country governments , and other relevant stakeholders. where necessary , those acts shall provide that the default values can be adapted to particular areas , regions or countries to take into account specific objective factors such as geography , natural resources , market conditions , prevailing energy sources , or industrial processes. the implementing acts shall build upon existing legislation for the verification of emissions and activity data for installations covered by directive 2003/87/ec , in particular implementing regulation (eu) no 2018/2067.


### 2. member states shall require that competent authorities exchange any information that is essential or relevant to the exercise of their functions and duties. ### 2. member states shall require that competent authorities exchange any information that is essential or relevant to the exercise of their functions and duties , either automatically via the central registry database , or upon request and within a delay of 3 months , when another competent authority or the commission issues such request for specific information related to the calculation of the cbam certificates.


### 1. the commission shall collect the information necessary with a view to extending the scope of this regulation to indirect emissions and goods other than those listed in annex i , and develop methods of calculating embedded emissions based on environmental footprint methods. ### 1. the commission shall collect the information necessary with a view to extending the scope of this regulation to indirect emissions and goods other than those listed in annex i , such as downstream products using goods covered by this regulation , notably taking into consideration both environmental risks and the necessity to maintain a sustainable level playing field , and develop methods of calculating embedded emissions based on environmental footprint methods. particular attention should be given to goods such as organic basic chemicals , hydrogen and polymers.


### 2. before the end of the transitional period , the commission shall present a report to the european parliament and the council on the application of this regulation. the report shall contain , in particular , the assessment of the possibilities to further extend the scope of embedded emissions to indirect emissions and to other goods at risk of carbon leakage than those already covered by this regulation , as well as an assessment of the governance system. it shall also contain the assessment of the possibility to further extend the scope to embedded emissions of transportation services as well as to goods further down the value chain and services that may be subject to the risk of carbon leakage in the future. ### 2. before the end of the transitional period , the commission shall present a report to the european parliament and the council on the application of this regulation. the report shall contain , in particular , an in-depth assessment - developed in close cooperation with the stakeholders concerned , of the possibilities to further extend the scope of embedded emissions to indirect emissions and to other goods at risk of carbon leakage than those already covered by this regulation , as well as an assessment of the governance system. it shall also contain the assessment of the possibility to further extend the scope to embedded emissions of transportation services as well as to goods further down the value chain and services that may be subject to the risk of carbon leakage in the future.


### 2. before the end of the transitional period , the commission shall present a report to the european parliament and the council on the application of this regulation. the report shall contain , in particular , the assessment of the possibilities to further extend the scope of embedded emissions to indirect emissions and to other goods at risk of carbon leakage than those already covered by this regulation , as well as an assessment of the governance system. it shall also contain the assessment of the possibility to further extend the scope to embedded emissions of transportation services as well as to goods further down the value chain and services that may be subject to the risk of carbon leakage in the future. ### 2. before the end of the transitional period and every five years after that , the commission shall present a report to the european parliament and the council on the application of this regulation. the report shall contain , in particular , the assessment of the possibilities to further extend the scope of embedded emissions to indirect emissions and to other goods at risk of carbon leakage than those already covered by this regulation , as well as an assessment of the state of implementation of the regulation , including how it is fulfilling its objectives , and its governance system. it shall also contain the assessment of the possibility to further extend the scope to embedded emissions of transportation services as well as to consider goods further down the value chain and services that may be subject to the risk of carbon leakage in the future. the commission can use the confidential information of the central database if relevant , but any report should ensure such data is anonymised.


### 4. if the authorised declarant has ceased its economic activity or its authorisation was revoked , the competent authority shall close the account of that declarant. ### 4. if the authorised declarant has ceased its economic activity or its authorisation was revoked , the competent authority shall close the account of that declarant after 2 years.


### the declarant has not been involved in a serious infringement or repeated infringements of customs legislation , taxation rules and market abuse rules and has no record of serious criminal offences relating to its economic activity during the five years preceding the application; ### the declarant has not been involved in a serious infringement or repeated infringements of customs legislation , taxation rules and market abuse rules and has no record of serious criminal offences relating to its economic activity during the five years preceding the application; the declarant is not resident for tax purposes in , or incorporated under the laws of , jurisdictions that feature on the eu list of non-cooperative jurisdictions;


### 3. the commission is empowered to adopt delegated acts in accordance with article 28 for the accreditation referred to in paragraph 2 , specifying conditions for the control and oversight of accredited verifiers , for the withdrawal of accreditation and for mutual recognition and peer evaluation of the accreditation bodies. ### 3. the commission is empowered to adopt delegated acts in accordance with article 28 for the accreditation referred to in paragraph 2 , specifying conditions for the control and oversight of accredited verifiers , for the withdrawal of accreditation and for mutual recognition and peer evaluation of the accreditation bodies. the commission is empowered to adopt delegated acts specifying conditions for verifiers to be able to comply with article 21 , 32 and 34 of the implementing regulation (eu) no 2018/2067 related to on site visits when the site is located in a third country.


### 1. the competent authority of each member state shall , on request by a declarant authorised in that member state , re-purchase the excess of cbam certificates remaining on the account of the declarant in the national registry after the certificates have been surrendered in accordance with article 22. the request to re-purchase shall be submitted by 30 june of each year when cbam certificates were surrendered. ### 1. the competent authority of each member state shall , on request by a declarant authorised in that member state , re-purchase the excess of cbam certificates remaining on the account of the declarant in the national registry after the certificates have been surrendered in accordance with article 22. the request to re-purchase shall be submitted by 30 june of each year when cbam certificates were surrendered. the competent authority shall immediately inform the commission of the request through the central registry database.


### 2. practices of circumvention include situations where a change in the pattern of trade in relation to goods included in the scope of this regulation has insufficient due cause or economic justification other than avoiding obligations as laid down in this regulation and consist in replacing those goods with slightly modified products , which are not included in the list of goods in annex i but belong to a sector included in the scope of this regulation. ### 2. practices of circumvention include situations where a change in the pattern of trade in relation to goods included in the scope of this regulation has insufficient due cause or economic justification other than avoiding obligations as laid down in this regulation and consist , inter alia , in replacing those goods with slightly modified products , which are not included in the list of goods in annex i but belong to a sector included in the scope of this regulation or practices of resource shuffling.


### 3. a member state or any party affected or benefitted by the situations described in paragraph 2 may notify the commission if it is confronted , over a two-month period compared with the same period in the preceding year with a significant decrease in the volume of imported goods included in the scope of this regulation and an increase of volume of imports of slightly modified products , which are not included in the list of goods in annex i. the commission shall continually monitor any significant change of pattern of trade of goods and slightly modified products at union level. ### 3. a member state or any party affected or benefitted by the situations described in paragraph 2 may notify the commission if it is confronted , over a two-month period compared with the same period in the preceding year with a significant decrease in the volume of imported goods included in the scope of this regulation and an increase of volume of imports of slightly modified products , which are not included in the list of goods in annex i. the commission shall continually monitor any significant change of pattern of trade of goods , resource shuffling and slightly modified products at union level.


### 5. where the commission , taking into account the relevant data , reports and statistics , including when provided by the customs authorities of member states , has sufficient reasons to believe that the circumstances referred to in paragraph 3 are occurring in one or more member states , it is empowered to adopt delegated acts in accordance with article 28 to supplement the scope of this regulation in order to include slightly modified products for anti-circumvention purposes. ### 5. where the commission , taking into account the relevant data , reports and statistics , including when provided by the customs authorities of member states , has sufficient reasons to believe that the circumstances referred to in paragraph 3 are occurring in one or more member states , it is empowered to adopt delegated acts in accordance with article 28 to supplement the scope of this regulation in order to include slightly modified products or practices of resource shuffling for anti-circumvention purposes.


### 3. the report by the commission shall , if appropriate , be accompanied by a legislative proposal. ### 3. the report by the commission shall , if appropriate , be accompanied by further legislative proposals.


### 2. the commission is empowered to adopt implementing acts laying down a calculation methodology for the reduction referred to in paragraph 1. those implementing acts shall be adopted in accordance with the examination procedure referred to in article 29(2). ### 2. the commission is empowered to adopt delegated acts laying down a calculation methodology for the reduction referred to in paragraph 1. those implementing acts shall be adopted in accordance with the examination procedure referred to in article 29(2).


### the carbon price due in a country of origin for the embedded emissions in the imported goods , which is not subject to an export rebate or other form of compensation on exportation. ### the carbon price due in a country of origin for the embedded emissions in the imported goods , which is not subject to an export rebate or other form of compensation.


### 3. the competent authority shall communicate the information referred to in paragraph 2 to the commission at the latest two months after the end of the quarter covered by a report. ### 3. the competent authority shall communicate the information referred to in paragraph 2 to the commission at the latest two months after the end of the quarter covered by a report and the information shall be available in the central registry database.


### (15) in order to exclude from the cbam third countries or territories fully integrated into , or linked , to the eu ets in the event of future agreements , the power to adopt acts in accordance with article 290 of tfeu should be delegated to the commission in respect of amending the list of countries in annex ii. conversely , those third countries or territories should be excluded from the list in annex ii and be subject to cbam whereby they do not effectively charge the ets price on goods exported to the union. ### (15) in order to exclude from the cbam third countries or territories fully integrated into , or linked , to the eu ets and where the carbon costs are equivalent to the ones under the eu ets , in the event of future agreements , the power to adopt acts in accordance with article 290 of tfeu should be delegated to the commission in respect of amending the list of countries in annex ii. conversely , those third countries or territories should be excluded from the list in annex ii and be subject to cbam whereby they do not effectively charge the ets price on goods exported to the union.


### (24) in terms of sanctions , member states should apply penalties to infringements of this regulation and ensure that they are implemented. the amount of those penalties should be identical to penalties currently applied within the union in case of infringement of eu ets according to article 16(3) and (4) of directive 2003/87/ec. ### (24) in terms of sanctions , member states should apply penalties to infringements of this regulation and ensure that they are implemented. the amount of those penalties should be identical to penalties currently applied within the union in case of infringement of eu ets according to article 16(3) and (4) of directive 2003/87/ec. penalties to infringements of this regulation , including for attempts at circumvention , should be dissuasive.


### (42) the system should allow operators of production installations in third countries to register in a central database and to make their verified embedded ghg emissions from production of goods available to authorised declarants. an operator should be able to choose not to have its name , address and contact details in the central database made accessible to the public. ### (42) the system should allow operators of production installations in third countries to register in a central database and to make their verified embedded ghg emissions from production of goods available to authorised declarants.


### (44) in order to give the authorised declarants flexibility in complying with their cbam obligations and allow them to benefit from fluctuations in the price of eu ets allowances , the cbam certificates should be valid for a period of two years from the date of purchase. the authorised declarant should be allowed to re-sell to the national authority a portion of the certificates bought in excess. the authorised declarant should build up during the year the amount of certificates required at the time of surrendering , with thresholds set at the end of each quarter. ### (44) in order to give the authorised declarants flexibility in complying with their cbam obligations and allow them to benefit from fluctuations in the price of eu ets allowances , the cbam certificates should be valid for a period of two years from the date of purchase. the authorised declarant should be allowed to re-sell to the european commission a portion of the certificates bought in excess. the authorised declarant should build up during the year the amount of certificates required at the time of surrendering , with thresholds set at the end of each quarter.


### (54) the commission should strive to engage in an even handed manner and in line with the international obligations of the eu , with the third countries whose trade to the eu is affected by this regulation , to explore possibilities for dialogue and cooperation with regard to the implementation of specific elements of the mechanism set out this regulation and related implementing acts. it should also explore possibilities for concluding agreements to take into account their carbon pricing mechanism. ### (54) the commission should strive to engage in an even handed manner and in line with the international obligations of the eu , with the third countries whose trade to the eu is affected by this regulation , to explore possibilities for dialogue and cooperation with regard to the implementation of specific elements of the mechanism set out this regulation and related implementing acts. it should also explore possibilities for concluding agreements to take into account their carbon pricing mechanism and their decarbonisation policies.


### (54) the commission should strive to engage in an even handed manner and in line with the international obligations of the eu , with the third countries whose trade to the eu is affected by this regulation , to explore possibilities for dialogue and cooperation with regard to the implementation of specific elements of the mechanism set out this regulation and related implementing acts. it should also explore possibilities for concluding agreements to take into account their carbon pricing mechanism. ### (54) the commission should strive to engage in an even handed manner and in line with the international obligations of the eu , with the third countries whose trade to the eu is affected by this regulation , to explore possibilities for dialogue and cooperation with regard to the implementation of specific elements of the mechanism set out this regulation and related implementing acts. it should also explore possibilities for concluding agreements to take into account their carbon pricing mechanism. in the case of least developed countries and lower middle-income countries especially affected by the costs of adaptation to the provisions of the cbam and lacking adequate resources , technical and financial assistance should also be provided.


### (59) it is of particular importance that the commission carry out appropriate consultations during its preparatory work , including at expert level , and that those consultations be conducted in accordance with the principles laid down in the interinstitutional agreement on better law-making of 13 april 201651 . in particular , to ensure equal participation in the preparation of delegated acts , the european parliament and the council receive all documents at the same time as member states' experts , and their experts systematically have access to meetings of commission expert groups dealing with the preparation of delegated acts. ### (59) it is of particular importance that the commission carry out appropriate consultations during its preparatory work , including at expert level , and that those consultations be conducted in accordance with the principles laid down in the interinstitutional agreement on better law-making of 13 april 201651 , and also guarantee the participation of local civil society organisations , governments and other stakeholders in developing countries. in particular , to ensure equal participation in the preparation of delegated acts , the european parliament and the council receive all documents at the same time as member states' experts , and their experts systematically have access to meetings of commission expert groups dealing with the preparation of delegated acts.


### 1. this regulation establishes a carbon border adjustment mechanism (the ‘cbam’) for addressing greenhouse gas emissions embedded in the goods referred to in annex i , upon their importation into the customs territory of the union , in order to prevent the risk of carbon leakage. ### 1. this regulation establishes a carbon border adjustment mechanism (the ‘cbam’) for addressing greenhouse gas emissions embedded in the goods referred to in annex i , upon their importation into the customs territory of the union , in order to prevent the risk of carbon leakage and safeguard fair and undistorted competition , ensuring a sustainable level playing field for all.


### 1. this regulation applies to goods as listed in annex i , originating in a third country , when those goods , or processed products from those goods as resulting from the inward processing procedure referred to in article 256 of regulation (eu) no 952/2013 of the european parliament and of the council53 , are imported into the customs territory of the union. ### 1. this regulation applies to goods as listed in annex i , originating in a third country , when those goods , or processed products from those goods as resulting from the inward processing procedure referred to in article 256 of regulation (eu) no 952/2013 of the european parliament and of the council53 , are imported into the customs territory of the union. annex i shall be regularly assessed and potentially revised to take into account the establishment of a fair level playing field as referred in article 30.


### (11) ‘competent authority’ means the authority , designated by each member state in accordance with article 11 of this regulation; ### (11) ‘competent authority’ means the authority , designated or established by the european commission in accordance with article 11 of this regulation;


### (18) ‘cbam certificate’ means a certificate in electronic format corresponding to one tonne of embedded emissions in goods; ### (18) ‘cbam certificate’ means a certificate , common to all members states , in electronic format corresponding to one tonne of embedded emissions in goods;


### 6. the commission is empowered to adopt implementing acts , concerning the standard format of the application and the delays and procedure to be followed by the competent authority when processing applications for authorisation in accordance with paragraph 1 and the rules for identification by the competent authority of the declarants for the importation of electricity. those implementing acts shall be adopted in accordance with the examination procedure referred to in article 29(2). ### 6. the commission is empowered to adopt implementing acts , concerning the single standard format of the application and the delays and procedure to be followed by the competent authority when processing applications for authorisation in accordance with paragraph 1 and the rules for identification by the competent authority of the declarants for the importation of electricity. the format of the application shall allow for machine readability in order to ease the exchange of information across member states. those implementing acts shall be adopted in accordance with the examination procedure referred to in article 29(2).


### 3. the commission is empowered to adopt implementing acts concerning the principles of verification referred to in paragraph 1 as regards the possibility to waive the obligation for the verifier to visit the installation where relevant goods are produced and the obligation to set thresholds for deciding whether misstatements or non-conformities are material and concerning the supporting documentation needed for the verification report. ### 3. the commission is empowered to adopt implementing acts concerning the principles of verification referred to in paragraph 1 as regards the accuracy of the information in the cbam declaration , the obligation for the verifier to visit the installation where relevant goods are produced and the obligation to set thresholds for deciding whether misstatements or non-conformities are material and concerning the supporting documentation needed for the verification report.


### 2. the authorised declarant shall keep records of the documentation , certified by an independent person , required to demonstrate that the declared embedded emissions were subject to a carbon price in the country of origin of the goods and keep evidence of the proof of the actual payment for that carbon price which should not have been subject to an export rebate or any other form of compensation on exportation. ### 2. the authorised declarant shall keep records of the documentation , certified by an accredited verifier , required to demonstrate that the declared embedded emissions were subject to a carbon price in the country of origin of the goods and keep evidence of the proof of the actual payment for that carbon price which should not have been subject to an export rebate or any other form of compensation.


### 1. the commission shall , upon request by an operator of an installation located in a third country , register the information on that operator and on its installation in a central database referred to in article 14(4). ### 1. the commission shall , upon request by an operator of an installation located in a third country , register the information on that operator and on its installation in a central registry database referred to in article 14(4) accessible by national competent authorities.


### 6. the records referred to in paragraph 5 , point (c) , shall be sufficiently detailed to enable the verification in accordance with paragraph 5 , point (b) , and to enable any competent authority to review , in accordance with article 19(1) , the cbam declaration made by an authorised declarant to whom the relevant information was disclosed in accordance with paragraph 8. ### 6. the records referred to in paragraph 5 , point (c) , shall be sufficiently detailed to enable the verification in accordance with paragraph 5 , point (b) , and to enable any competent authority to verify and review , in accordance with article 19(1) , the cbam declaration made by an authorised declarant to whom the relevant information was disclosed in accordance with paragraph 8.


### national registries and central database ### national registries and eu central registry database


### 1. the competent authority of each member state shall establish a national registry of declarants authorised in that member state in the form of a standardised electronic database containing the data regarding the cbam certificates of those declarants , and to provide for confidentiality in accordance with the conditions set out in article 13. ### 1. the competent authority of each member state shall establish a national registry of declarants authorised in that member state in the form of a standardised electronic database containing the data regarding the cbam certificates of those declarants , and to provide for confidentiality in accordance with the conditions set out in article 13. such a standardised electronic database shall be built to be compatible with the eu central database built by the commission , meaning the data can be automatically uploaded into the central database.


### 3. the information in the database referred to in paragraph 2 shall be confidential. ### 3. the commission shall establish a central database that would automatically collect the information referred to in paragraph 2 which shall be automatically accessible to competent authorities of each member states. the information in the database referred to in paragraph 2 shall be confidential unless specified otherwise in paragraph 4.


### 4. the commission shall establish a central database accessible to the public containing the names , addresses and contact details of the operators and the location of installations in third countries in accordance with article 10(2). an operator may choose not to have its name , address and contact details accessible to the public. ### 4. the commission shall make the information of the central database regarding the names , addresses and contact details of the operators and the location of installations in third countries in accordance with article 10(2) accessible to the public.


### 3. if irregularities are identified as a result of the controls carried out under paragraph 2 , the commission shall inform the member state or member states concerned for further investigation in order to correct the identified irregularities. ### 3. if irregularities are identified as a result of the controls carried out under paragraph 2 , the commission shall inform the member state or member states concerned for further investigation in order to correct the identified irregularities within 3 months.


### (30) the use of the first criterion allows listing the following industrial sector in terms of cumulated emissions: iron and steel , refineries , cement , organic basic chemicals , and fertilisers. ### (30) the use of the first criterion allows listing the following industrial sector in terms of cumulated emissions: iron and steel , refineries , cement , organic basic chemicals , pesticides and fertilisers.


### (41) the embedded declared emissions should be verified by a person accredited by a national accreditation body appointed in accordance with article 4(1) of regulation no 765/2008 of the european parliament and of the council43 or pursuant to commission implementing regulation (eu) 2018/206744 . ### (41) the embedded declared emissions should be verified by a person accredited by a european accreditation body appointed by the european commission in accordance with the european parliament and the council


### 1. welcomes the update of the industrial strategy; stresses that for the green deal to be a true growth strategy , reduce dependencies and maintain a level playing field for european industry during the transition , it needs to be accompanied by ambitious industrial policy; ### 1. welcomes the update of the industrial strategy; stresses that for the green deal to be a true growth strategy , reduce dependencies and maintain a level playing field for european industry during the transition , an ambitious industrial policy is absolutely essential;


### a. whereas it is crucial to enable industry to implement the energy and digital transitions while preserving jobs , competitiveness and its ability to develop and produce clean products; ### a. whereas it is important to enable industry to implement the energy and digital transitions while preserving jobs , competitiveness and its ability to develop and produce and innovate;


### 2. underlines that the eu cannot be dependent on non-eu countries for products and technologies that are essential to our economy and for our society of the future; stresses that the eu needs to regain a strong position in crucial global value chains and secure the supply of critical materials in times of crisis; ### 2. underlines that the eu should , as far as possible , seek to increase its own autonomy from non-eu countries for products and technologies that are essential to our economy and for our society of the future; stresses that the eu needs to regain a strong position in crucial global value chains and secure the supply of critical materials in times of crisis;


### 3. calls on the commission to support smes and micro-businesses (including artisans) in the tourism sector , by fostering innovative initiatives , simplifying bureaucracy and encouraging education and training (mainly on new digital skills) , to stimulate new tourism offerings in terms of destinations and experiences; ### 3. calls on the commission to support smes and micro-businesses (including artisans) in the tourism sector , by fostering innovative initiatives , simplifying bureaucracy and encouraging education and training (mainly on new digital skills) , to stimulate new tourism offerings in terms of destinations and experiences; welcomes the commission’s initiative to set up an online guide for tourism funds and calls on it to continue to simplify smes’ access to funds;


### 3. calls on the commission to present clear transition pathways for the industrial ecosystem as soon as possible , including by identifying the needs for a successful transition in terms of infrastructure , technologies and skills; calls on the commission to ensure consistency and coordination across all initiatives , objectives , funding and regulatory instruments that will support industry through the transitions; calls for annual monitoring and reporting on the competitiveness and resilience of our industrial ecosystems and on the progress made on the transition pathways , so that instruments can be adapted swiftly when needed; ### 3. calls on the commission to present effective pathways as soon as possible for a viable transition in terms of infrastructure , technologies and skills; calls on the commission to ensure consistency and coordination across all initiatives , objectives , funding and regulatory instruments that will support industry through the transitions; calls for annual monitoring and reporting on the competitiveness and resilience of our industrial ecosystems and on the progress made on the transition pathways , so that instruments can be adapted swiftly when needed;


### 4. notes that the eu is outperformed by other economic powers in research and development (r&d) expenditures as a percentage of gdp; reiterates the importance of an ambitious level of investment in r&d regrets that the target of 3 % of gdp investments in r&d has still not been achieved in the vast majority of member states; ### 4. notes that the eu is outperformed by other economic powers in research and development (r&d) expenditures as a percentage of gdp; reiterates the importance of an ambitious level of investment in r&d notes with regret that the target of 3 % of gdp investments in r&d has still not been achieved in the vast majority of member states;


### 5. calls on the commission to close the investment gap with global competitors for key enabling technologies; welcomes , in this regard , the commission’s proposal for a european chips act10and the establishment of the european alliance for industrial data , edge and cloud; calls on the commission to extend these initiatives to key enabling technologies , such as photonics and quantum; ### 5. calls on the commission to close the investment gap with global competitors for key enabling technologies; takes note , in this regard , of the commission’s proposal for a european chips act10 and the establishment of the european alliance for industrial data , edge and cloud; calls on the commission to extend these initiatives to key enabling technologies , such as photonics and quantum;


### 6. stresses the need to strengthen ‘made in eu’ and accelerate the adoption of industry 4.0 technologies , particularly by small and medium-sized enterprises (smes); calls on the commission to embed the ‘made in europe’ partnership strongly in the horizon europe programme; ### 6. stresses the need to strengthen ‘made in eu’ and accelerate the adoption of industry 4.0 technologies , particularly by small and medium-sized enterprises (smes); calls on the commission to embed the ‘made in europe’ partnership strongly in the horizon europe programme and by fostering smes cooperation with universities and research and technology organisations;


### 9. underlines that smes and start-ups are playing a central role in the digitalisation of the eu and are a critical source of innovation; stresses the need to improve their access to financing; ### 9. underlines that smes and start-ups are playing a central role in the industrial strategy of the eu and are a critical source of innovation; stresses the need to improve and simplify their access to financing;


### 10. stresses the need for regulatory stability and predictability; calls on the commission to include roadmaps in the transition pathways to reduce administrative burdens for european businesses , especially smes , by at least 30 %; stresses the ‘one in , one out’ principle; ### 10. stresses the need for regulatory stability and predictability; calls on the commission to include roadmaps in the transition pathways to reduce administrative burdens for european businesses , especially smes , by at least 30 %; believes the 'one in , one out' principle does not go far enough to truly and significantly reduce these burdens for european businesses;


### 16. calls on the commission to broaden the scope of the observatory of critical technologies to include continuously monitoring , evaluating and reporting on resilience indicators for eu industries , such as mutual dependencies in key technologies , strategic dependencies and foreign subsidies in strategic sectors; ### 16. calls on the commission to broaden the scope of the observatory of critical technologies to include continuously monitoring , evaluating and reporting on resilience indicators for eu industries , such as mutual dependencies in key technologies , strategic dependencies and a detailed , transparent analysis of foreign subsidies in strategic sectors;


### 17. is strongly concerned about unfair competition , investments and takeovers by non-eu state-financed companies on the single market , especially in strategic sectors; calls on the commission to analyse and prevent this interference; ### 17. is strongly concerned about unfair competition , investments and takeovers by non-eu companies on the single market , especially in strategic sectors; calls on the commission to analyse and prevent this interference;


### 20. highlights the conclusions of the european court of auditors -report on delays in implementing 5g networks and the risks associated with non-eu vendors11; calls on the commission to stimulate a coordinated 5g roll-out in the eu and reduce dependencies and interference risks in 5g and next generation communication technology; ### deleted


### (5) the modern interconnected world economy creates an increased risk of , and opportunity for , economic coercion , as it provides countries with enhanced , including hybrid , means to deploy such coercion. it is desirable that the union contribute to the creation , development and clarification of international frameworks for the prevention and elimination of situations of economic coercion. ### (5) the modern interconnected world economy creates an increased risk of , and opportunity for , economic coercion , as it provides countries with enhanced , including hybrid , means to deploy such coercion. it is desirable that the union contribute to the creation , development and clarification of international frameworks for the prevention , correction and elimination of situations of economic coercion.


### (6) whilst always acting within the framework of international law , it is essential that the union possess an appropriate instrument to deter and counteract economic coercion by third countries in order to safeguard its rights and interests and those of its member states. this is particularly the case where third countries take measures affecting trade or investment that interfere in the legitimate sovereign choices of the union or a member state by seeking to prevent or obtain the cessation , modification or adoption of a particular act by the union or a member state. such measures affecting trade or investment may include not only actions taken on , and having effects within , the territory of the third country , but also actions taken by the third country , including through entities controlled or directed by the third country and present in the union , that cause harm to economic activities in the union. ### (6) whilst always acting within the framework of international law , it is essential that the union possess an appropriate instrument to deter and counteract economic coercion by third countries in order to safeguard its rights and interests and those of its member states. this is particularly the case where third countries take measures affecting trade or investment that interfere in the legitimate sovereign choices of the union or a member state by seeking to prevent or obtain the cessation , modification or adoption of a particular act by the union or a member state. such measures affecting trade or investment may include not only actions taken on , and having effects within , the territory of the third country , but also actions taken by the third country , including through entities directly or indirectly controlled or managed by the third country and physically or virtually present in the union , that cause harm to economic activities in the union.


### (8) the objectives of this regulation , in particular counteracting third countries’ economic coercion of the union or a member state , cannot be sufficiently achieved by member states acting on their own. this is because member states as distinct actors under international law may not be entitled under international law to respond to economic coercion directed against the union. additionally , because of the exclusive competence conferred on the union by article 207 of the treaty on the functioning of the european union , member states are prevented from taking common commercial policy measures as a response to economic coercion. therefore , those objectives can be achieved with greater effectiveness at union level. ### (8) the objectives of this regulation , in particular counteracting third countries’ economic coercion of the union or a member state , cannot be sufficiently achieved by member states acting on their own. this is because member states as distinct actors under international law may not be entitled under international law to respond to economic coercion directed against the union. additionally , because of the exclusive competence conferred on the union by article 207 of the treaty on the functioning of the european union , member states are prevented from taking common commercial policy measures as a response to economic coercion. therefore , those objectives can be achieved with greater effectiveness at union level. this must not , however , have a restrictive effect on the scope of measures that may be imposed by member states in other policy areas.


### (13) the commission should examine whether third-country measures are coercive , on its own initiative or following information received from any source , including legal and natural persons or a member state. following this examination , the commission should determine in a decision whether the third-country measure is coercive. the commission should communicate any affirmative determination to the third country concerned , together with a request that the economic coercion cease and a request , where appropriate , that any injury be repaired. ### (13) the commission should examine whether third-country measures are coercive , on its own initiative or following information received from any source , including legal and natural persons or a member state or the european parliament. following this examination , the commission should determine in a decision whether the third-country measure is coercive. the commission should communicate any affirmative determination to the third country concerned , together with a request that the economic coercion cease and a request , where appropriate , that any injury be repaired.


### (18) in pursuing the objective of obtaining the cessation of the measure of economic coercion , union response measures consisting of restrictions on foreign direct investment or on trade in services should only apply with regard to services supplied , or direct investments made , within the union by one or more legal persons established in the union which are owned or controlled by persons of the third country concerned where necessary to ensure the effectiveness of union response measures and in particular to prevent their avoidance. the decision to impose any such restrictions will be duly justified in implementing acts adopted pursuant to this regulation in the light of the criteria specified in this regulation. ### (18) in pursuing the objective of obtaining the cessation of the measure of economic coercion , union response measures consisting of restrictions on foreign direct investment or on trade in services should only apply with regard to services supplied , or direct investments made , within the union by one or more legal persons established in the union which are owned or directly or indirectly controlled by persons of the third country concerned where necessary to ensure the effectiveness of union response measures and in particular to prevent their avoidance. the decision to impose any such restrictions will be duly justified in implementing acts adopted pursuant to this regulation in the light of the criteria specified in this regulation.


### 1. this regulation lays down rules and procedures in order to ensure the effective protection of the interests of the union and its member states where a third country seeks , through measures affecting trade or investment , to coerce the union or a member state into adopting or refraining from adopting a particular act. this regulation provides a framework for the union to respond in such situations with the objective to deter , or have the third country desist from such actions , whilst permitting the union , in the last resort , to counteract such actions. ### 1. this regulation lays down rules and procedures in order to ensure the effective protection of the interests of the union and its member states where a third country seeks , through measures affecting trade or investment , to coerce the union or a member state into adopting or refraining from adopting a particular act. this regulation provides a framework for the union to respond in such situations with the objective to deter , correct or have the third country desist from such actions , whilst permitting the union to counteract such actions.


### 2. any action taken under this regulation shall be consistent with the union’s obligations under international law and conducted in the context of the principles and objectives of the union’s external action. ### 2. any action taken under this regulation shall be consistent with the union’s obligations under international law and conducted in the context of the principles and objectives of the union’s external action aiming at ensuring an effective , efficient and swift union response to economic coercion , including deterrence of economic coercion of the union or a member state and , in the last resort , countermeasures.


### 1. this regulation applies where a third country: ### 1. this regulation only applies in the event of economic coercion of a third country that:


### whether the third country is acting based on a legitimate concern that is internationally recognised; ### whether the third country is acting based on a concern that is recognised as legitimate under international law;


### the commission may publish a notice in the official journal of the european union or through other suitable public communication means with an invitation to submit information within a specified time limit. in that event , the commission shall notify the third country concerned of the initiation of the examination. ### the commission shall always inform the european parliament and the council of any development in the ongoing assessment of measures aimed at third countries and shall publish a notice in the official journal of the european union or through other suitable public communication means with an invitation to submit information within a specified time limit. in that event , the commission shall notify the third country concerned of the initiation of the examination.


### following an examination carried out in accordance with article 3 , the commission shall adopt a decision determining whether the measure of the third country concerned meets the conditions set out in article 2(1). the commission shall act expeditiously. ### following an examination carried out in accordance with article 3 , the commission shall adopt a decision determining whether the measure of the third country concerned meets the conditions set out in article 2(1). the commission shall act expeditiously and shall inform the european parliament and the council , as well as publish that decision in the official journal of the european union and through other suitable public communication means.


### the commission shall enter into consultations or cooperation , on behalf of the union , with any other country affected by the same or similar measures of economic coercion or with any interested third country , with a view to obtaining the cessation of the coercion. this may involve , where appropriate , coordination in relevant international fora and coordination in response to the coercion. ### the commission shall enter into consultations or cooperation , on behalf of the union , with any other country affected by the same or similar measures of economic coercion or with any interested third country , with a view to obtaining the cessation of the coercion. this may involve , where appropriate , coordination in relevant international fora and coordination in the different type of responses to the coercion.


### the implementing act shall be adopted in accordance with the examination procedure referred to in article 15(2). ### the implementing act shall be adopted in accordance with the examination procedure referred to in article 15(2). the commission shall inform the european parliament and the council , as well as publish that decision in the official journal of the european union and through other suitable public communication means.


### 6. on duly justified imperative grounds of urgency to avoid irreparable damage to the union or its member states by the measures of economic coercion the commission shall adopt immediately applicable implementing acts imposing union response measures , in accordance with the procedure referred to in article 15(3). the requirements set out in paragraphs 2 to 5 shall apply. those acts shall remain in force for a period not exceeding three months. ### 6. on duly justified imperative grounds of urgency to avoid irreparable damage to the union or its member states by the measures of economic coercion the commission shall adopt immediately applicable implementing acts imposing union response measures , in accordance with the procedure referred to in article 15(3). the requirements set out in paragraphs 2 to 5 shall apply. those acts shall remain in force for a period not exceeding three months. the commission shall inform the european parliament and the council , as well as publish that decision in the official journal of the european union and through other suitable public communication means.


### 1. the commission shall evaluate any union response measure adopted pursuant to article 7 six months after its termination , taking into account stakeholder input and any other relevant information. the evaluation report shall examine the effectiveness and operation of the union response measure , and draw possible conclusions for future measures. ### 1. the commission shall evaluate any union response measure adopted pursuant to article 7 six months after its termination , taking into account stakeholder input and any other relevant information. the evaluation report shall examine the effectiveness and operation of the union response measure , and draw possible conclusions for future measures. the evaluation report shall have the opinion of the european parliament into consideration.


### 2. no later than three years after the adoption of the first implementing act under this regulation or six years after the entry into force of this regulation , whichever is earlier , the commission shall review this regulation and its implementation and shall report to the european parliament and the council. ### 2. no later than three years after the adoption of the first implementing act under this regulation or six years after the entry into force of this regulation , whichever is earlier , the commission shall review this regulation and its implementation and shall report to the european parliament and the council. notwithstanding these deadlines , the commission shall make a review before three years in case the european parliament demands so.


### (4) the behaviour of companies across all sectors of the economy is key to success in the union’s sustainability objectives as union companies , especially large ones , rely on global value chains. it is also in the interest of companies to protect human rights and the environment , in particular given the rising concern of consumers and investors regarding these topics. several initiatives fostering enterprises which support value-oriented transformation already exist on union77 , as well as national78 level. ### (4) the behaviour of companies across all sectors of the economy is key to success in the union’s sustainability objectives as union companies , especially large ones , rely on global supply chains. it is also in the interest of companies to protect human rights and the environment , in particular given the rising concern of consumers and investors regarding these topics. several initiatives fostering enterprises which support value-oriented transformation already exist on union77 , as well as national78 level.


### (4) the behaviour of companies across all sectors of the economy is key to success in the union’s sustainability objectives as union companies , especially large ones , rely on global value chains. it is also in the interest of companies to protect human rights and the environment , in particular given the rising concern of consumers and investors regarding these topics. several initiatives fostering enterprises which support value-oriented transformation already exist on union77 , as well as national78 level. ### (4) the behaviour of companies across all sectors of the economy is key to success in the union’s sustainability objectives as union companies , especially large ones , rely on global value chains. it is also in the interest of companies to protect human rights , labour rights and the environment , in particular given the rising concern of consumers and investors regarding these topics. several initiatives fostering enterprises which support value-oriented transformation already exist on union77 , as well as national78 level.


### (4) the behaviour of companies across all sectors of the economy is key to success in the union’s sustainability objectives as union companies , especially large ones , rely on global value chains. it is also in the interest of companies to protect human rights and the environment , in particular given the rising concern of consumers and investors regarding these topics. several initiatives fostering enterprises which support value-oriented transformation already exist on union77 , as well as national78 level. ### (4) the behaviour of companies across all sectors of the economy is key to success in the union’s sustainability objectives as union companies , especially large ones , rely on global supply chains. it is also in the interest of companies to protect human rights and the environment , in particular given the rising concern of consumers and investors regarding these topics. several initiatives fostering enterprises which support value-oriented transformation already exist on union77 , as well as national78level.


### (5) existing international standards on responsible business conduct specify that companies should protect human rights and set out how they should address the protection of the environment across their operations and value chains. the united nations guiding principles on business and human rights79 recognise the responsibility of companies to exercise human rights due diligence by identifying , preventing and mitigating the adverse impacts of their operations on human rights and by accounting for how they address those impacts. those guiding principles state that businesses should avoid infringing human rights and should address adverse human rights impacts that they have caused , contributed to or are linked with in their own operations , subsidiaries and through their direct and indirect business relationships. ### (5) existing international standards on responsible business conduct specify that companies should protect human rights and set out how they should address the protection of the environment across their operations and supply chains. the united nations guiding principles on business and human rights79 recognise the responsibility of companies to exercise human rights due diligence by identifying , preventing and mitigating the adverse impacts of their operations on human rights and by accounting for how they address those impacts. those guiding principles state that businesses should avoid infringing human rights and should address adverse human rights impacts that they have caused , contributed to or are linked with in their own operations , subsidiaries and through their direct and indirect business relationships.


### (5) existing international standards on responsible business conduct specify that companies should protect human rights and set out how they should address the protection of the environment across their operations and value chains. the united nations guiding principles on business and human rights79 recognise the responsibility of companies to exercise human rights due diligence by identifying , preventing and mitigating the adverse impacts of their operations on human rights and by accounting for how they address those impacts. those guiding principles state that businesses should avoid infringing human rights and should address adverse human rights impacts that they have caused , contributed to or are linked with in their own operations , subsidiaries and through their direct and indirect business relationships. ### (5) existing international standards on responsible business conduct specify that companies should protect human rights and set out how they should address the protection of the environment across their operations and value chains. the united nations guiding principles on business and human rights79 recognise the responsibility of companies to exercise human rights due diligence by identifying , preventing and mitigating the adverse impacts of their operations on human rights and by accounting for how they address those impacts. those guiding principles state that businesses should avoid infringing human rights and should address adverse human rights impacts that they have caused , contributed to or are linked with in their own operations , subsidiaries and through their direct and indirect business relationships. the children’s rights and business principles provide a comprehensive set of principles to guide companies on the full range of actions they can take in the workplace , marketplace and community to uphold and promote children’s rights. general comment no. 16 (2013) to the un convention on the rights of the child sets out state obligations regarding the impact of the business sector on children’s rights , which are further specified in general comment no. 25 (2021) as regards the digital environment.


### (5) existing international standards on responsible business conduct specify that companies should protect human rights and set out how they should address the protection of the environment across their operations and value chains. the united nations guiding principles on business and human rights79 recognise the responsibility of companies to exercise human rights due diligence by identifying , preventing and mitigating the adverse impacts of their operations on human rights and by accounting for how they address those impacts. those guiding principles state that businesses should avoid infringing human rights and should address adverse human rights impacts that they have caused , contributed to or are linked with in their own operations , subsidiaries and through their direct and indirect business relationships. ### (5) existing international standards on responsible business conduct specify that companies should protect human rights and set out how they should address the protection of the environment across their operations and supply chains. the united nations guiding principles on business and human rights79recognise the responsibility of companies to exercise human rights due diligence by identifying , preventing and mitigating the adverse impacts of their operations on human rights and by accounting for how they address those impacts. those guiding principles state that businesses should avoid infringing human rights and should address adverse human rights impacts that they have caused , contributed to or are linked with in their own operations , subsidiaries and through their direct and indirect business relationships.


### (14) this directive aims to ensure that companies active in the internal market contribute to sustainable development and the sustainability transition of economies and societies through the identification , prevention and mitigation , bringing to an end and minimisation of potential or actual adverse human rights and environmental impacts connected with companies’ own operations , subsidiaries and value chains. ### (14) this directive aims to ensure that companies active in the internal market contribute to sustainable development and the sustainability transition of economies and societies through the identification , prevention and mitigation , bringing to an end and minimisation of potential or actual adverse human rights and environmental impacts connected with companies’ own operations , subsidiaries and supply chains.


### (14) this directive aims to ensure that companies active in the internal market contribute to sustainable development and the sustainability transition of economies and societies through the identification , prevention and mitigation , bringing to an end and minimisation of potential or actual adverse human rights and environmental impacts connected with companies’ own operations , subsidiaries and value chains. ### (14) this directive aims to ensure that companies active in the internal market contribute to sustainable development and the sustainability transition of economies and societies through the identification , prevention and mitigation , bringing to an end minimisation and , where possible , reparation of potential or actual adverse human rights , adverse labour rights and environmental impacts connected with companies’ own operations , subsidiaries and value chains.


### (14) this directive aims to ensure that companies active in the internal market contribute to sustainable development and the sustainability transition of economies and societies through the identification , prevention and mitigation , bringing to an end and minimisation of potential or actual adverse human rights and environmental impacts connected with companies’ own operations , subsidiaries and value chains. ### (14) this directive aims to ensure that companies active in the internal market contribute to sustainable development and the sustainability transition of economies and societies through the identification , prevention and mitigation , bringing to an end and minimisation of potential or actual adverse human rights and environmental impacts connected with companies’ own operations , subsidiaries and supply chains. (this amendment applies throughout the text and is related to the amendment of the definition in article 3(1) , point (g). adopting it will necessitate corresponding changes throughout.)


### (14) this directive aims to ensure that companies active in the internal market contribute to sustainable development and the sustainability transition of economies and societies through the identification , prevention and mitigation , bringing to an end and minimisation of potential or actual adverse human rights and environmental impacts connected with companies’ own operations , subsidiaries and value chains. ### (14) this directive aims to ensure that companies active in the internal market contribute to sustainable development and the sustainability transition of economies and societies through the identification , prevention and mitigation , bringing to an end minimisation and , where possible , reparation of potential or actual adverse human rights and environmental impacts connected with companies’ own operations , subsidiaries and value chains.


### (14) this directive aims to ensure that companies active in the internal market contribute to sustainable development and the sustainability transition of economies and societies through the identification , prevention and mitigation , bringing to an end and minimisation of potential or actual adverse human rights and environmental impacts connected with companies’ own operations , subsidiaries and value chains. ### (14) this directive aims to ensure that companies active in the internal market contribute to sustainable development and the sustainability transition of economies and societies through the identification , prevention and mitigation , bringing to an end and minimisation of potential or actual adverse human rights , adverse labour rights and environmental impacts connected with companies’ own operations , subsidiaries and value chains.


### (15) companies should take appropriate steps to set up and carry out due diligence measures , with respect to their own operations , their subsidiaries , as well as their established direct and indirect business relationships throughout their value chains in accordance with the provisions of this directive. this directive should not require companies to guarantee , in all circumstances , that adverse impacts will never occur or that they will be stopped. for example with respect to business relationships where the adverse impact results from state intervention , the company might not be in a position to arrive at such results. therefore , the main obligations in this directive should be ‘obligations of means’. the company should take the appropriate measures which can reasonably be expected to result in prevention or minimisation of the adverse impact under the circumstances of the specific case. account should be taken of the specificities of the company’s value chain , sector or geographical area in which its value chain partners operate , the company’s power to influence its direct and indirect business relationships , and whether the company could increase its power of influence. ### (15) companies should take appropriate steps to set up and carry out due diligence measures , with respect to their own operations , their subsidiaries , as well as their direct and indirect business relationships throughout their value chains in accordance with the provisions of this directive. when companies are not in a position to avoid adverse impacts from the value chains , they should be required to terminate the harmful business relationships and to modify the structure of their value chains in order to ensure that that no longer contributes to or can be a cause of the adverse impact. the company should take the appropriate measures which can reasonably be expected to result in prevention or minimisation of the adverse impact under the circumstances of the specific case. account should be taken of the specificities of the company’s value chain , sector or geographical area in which its value chain partners operate , the company’s power to influence its direct and indirect business relationships , and whether the company could increase its power of influence.


### (15) companies should take appropriate steps to set up and carry out due diligence measures , with respect to their own operations , their subsidiaries , as well as their established direct and indirect business relationships throughout their value chains in accordance with the provisions of this directive. this directive should not require companies to guarantee , in all circumstances , that adverse impacts will never occur or that they will be stopped. for example with respect to business relationships where the adverse impact results from state intervention , the company might not be in a position to arrive at such results. therefore , the main obligations in this directive should be ‘obligations of means’. the company should take the appropriate measures which can reasonably be expected to result in prevention or minimisation of the adverse impact under the circumstances of the specific case. account should be taken of the specificities of the company’s value chain , sector or geographical area in which its value chain partners operate , the company’s power to influence its direct and indirect business relationships , and whether the company could increase its power of influence. ### (15) companies should take appropriate steps to set up and carry out due diligence measures , with respect to their own operations , their subsidiaries , as well as their established direct business relationships throughout their supply chains in accordance with the provisions of this directive. this directive should not require companies to guarantee , in all circumstances , that adverse impacts will never occur or that they will be stopped. for example with respect to business relationships where the adverse impact results from state intervention , the company might not be in a position to arrive at such results. therefore , the main obligations in this directive should be ‘obligations of means’. the company should take the appropriate measures which can reasonably be expected to result in prevention or minimisation of the adverse impact under the circumstances of the specific case. account should be taken of the specificities of the company’s supply chain , sector or geographical area in which its supply chain partners operate , the company’s power to influence its direct business relationships , and whether the company could increase its power of influence.


### (15) companies should take appropriate steps to set up and carry out due diligence measures , with respect to their own operations , their subsidiaries , as well as their established direct and indirect business relationships throughout their value chains in accordance with the provisions of this directive. this directive should not require companies to guarantee , in all circumstances , that adverse impacts will never occur or that they will be stopped. for example with respect to business relationships where the adverse impact results from state intervention , the company might not be in a position to arrive at such results. therefore , the main obligations in this directive should be ‘obligations of means’. the company should take the appropriate measures which can reasonably be expected to result in prevention or minimisation of the adverse impact under the circumstances of the specific case. account should be taken of the specificities of the company’s value chain , sector or geographical area in which its value chain partners operate , the company’s power to influence its direct and indirect business relationships , and whether the company could increase its power of influence. ### (15) companies should take appropriate steps to set up and carry out due diligence measures , with respect to their own operations , their subsidiaries , as well as throughout their value chains in accordance with the provisions of this directive. this directive should not require companies to guarantee , in all circumstances , that adverse impacts will never occur or that they will be stopped. for example with respect to business relationships where the adverse impact results from state intervention , the company might not be in a position to arrive at such results. therefore , the main obligations in this directive should be ‘obligations of means’. the company should take the appropriate measures which can reasonably be expected to result in prevention or minimisation of the adverse impact under the circumstances of the specific case. account should be taken of the specificities of the company’s value chain , sector or geographical area in which its value chain partners operate , the company’s power to influence its business relationships , and whether the company could increase its power of influence.


### (15) companies should take appropriate steps to set up and carry out due diligence measures , with respect to their own operations , their subsidiaries , as well as their established direct and indirect business relationships throughout their value chains in accordance with the provisions of this directive. this directive should not require companies to guarantee , in all circumstances , that adverse impacts will never occur or that they will be stopped. for example with respect to business relationships where the adverse impact results from state intervention , the company might not be in a position to arrive at such results. therefore , the main obligations in this directive should be ‘obligations of means’. the company should take the appropriate measures which can reasonably be expected to result in prevention or minimisation of the adverse impact under the circumstances of the specific case. account should be taken of the specificities of the company’s value chain , sector or geographical area in which its value chain partners operate , the company’s power to influence its direct and indirect business relationships , and whether the company could increase its power of influence. ### (15) companies should take appropriate steps to set up and carry out due diligence measures , with respect to their own operations , their subsidiaries , as well as their business relationships throughout their value chains in accordance with the provisions of this directive. this directive should not require companies to guarantee , in all circumstances , that adverse impacts will never occur or that they will be stopped. for example with respect to business relationships where the adverse impact results from state intervention , the company might not be in a position to arrive at such results. therefore , the main obligations in this directive should be ‘obligations of means’. the company should take the appropriate measures which can reasonably be expected to result in prevention or minimisation of the adverse impact under the circumstances of the specific case. account should be taken of the specificities of the company’s value chain , sector or geographical area in which its value chain partners operate , the company’s power to influence its direct and indirect business relationships , and whether the company could increase its power of influence.


### (17) adverse human rights and environmental impact occur in companies’ own operations , subsidiaries , products , and in their value chains , in particular at the level of raw material sourcing , manufacturing , or at the level of product or waste disposal. in order for the due diligence to have a meaningful impact , it should cover human rights and environmental adverse impacts generated throughout the life-cycle of production and use and disposal of product or provision of services , at the level of own operations , subsidiaries and in value chains. ### (17) adverse human rights , labour rights and environmental impact occur in companies’ own operations , subsidiaries , products , and in their value chains , in particular at the level of raw material sourcing , manufacturing , or at the level of product or waste disposal. in order for the due diligence to have a meaningful impact , it should cover human rights , labour rights and environmental adverse impacts generated throughout the life-cycle of production and use and disposal of product or provision of services , at the level of own operations , subsidiaries and in value chains.


### (18) the value chain should cover activities related to the production of a good or provision of services by a company , including the development of the product or the service and the use and disposal of the product as well as the related activities of established business relationships of the company. it should encompass upstream established direct and indirect business relationships that design , extract , manufacture , transport , store and supply raw material , products , parts of products , or provide services to the company that are necessary to carry out the company’s activities , and also downstream relationships , including established direct and indirect business relationships , that use or receive products , parts of products or services from the company up to the end of life of the product , including inter alia the distribution of the product to retailers , the transport and storage of the product , dismantling of the product , its recycling , composting or landfilling. ### (18) the value chain should cover activities related to the production , distribution and sale of a good or provision of services by a company , and any of its directly and indirectly-owned subsidiaries and branches including inter alia the development of the product or the service and the use and disposal of the product as well as the related activities of business relationships of the company. it should encompass upstream direct and indirect business relationships that design , extract , manufacture , transport , store and supply raw material , products , parts of products , or provide services to the company and any of its directly and indirectly-owned subsidiaries and branches that are necessary to carry out the company’s activities , and also downstream relationships , including direct and indirect business relationships , that use or receive products , parts of products or services from the company and any of its directly- and indirectly-owned subsidiaries and branches up to the end of life of the product , including inter alia the distribution of the product to retailers , the sale of products or provisions of services to consumers whatever the means (e.g. franchising , licensing) , the transport and storage of the product , dismantling of the product , its recycling , composting or landfilling. as pointed out in the oecd guidelines for multinational enterprises , the value chain should cover the various structures that the company and any of its directly and indirectly-owned subsidiaries and branches use to operate including inter alia franchising , licensing and subcontracting.


### (18) the value chain should cover activities related to the production of a good or provision of services by a company , including the development of the product or the service and the use and disposal of the product as well as the related activities of established business relationships of the company. it should encompass upstream established direct and indirect business relationships that design , extract , manufacture , transport , store and supply raw material , products , parts of products , or provide services to the company that are necessary to carry out the company’s activities , and also downstream relationships , including established direct and indirect business relationships , that use or receive products , parts of products or services from the company up to the end of life of the product , including inter alia the distribution of the product to retailers , the transport and storage of the product , dismantling of the product , its recycling , composting or landfilling. ### (18) the supply chain should cover activities related to the production of a good or provision of services by a company , including the development of the product or the service as well as the related activities of established business relationships of the company. it should encompass upstream established direct business relationships that extract , manufacture , transport , store and supply raw material , products , parts of products , or provide services to the company that are necessary to carry out the company’s activities.


### (18) the value chain should cover activities related to the production of a good or provision of services by a company , including the development of the product or the service and the use and disposal of the product as well as the related activities of established business relationships of the company. it should encompass upstream established direct and indirect business relationships that design , extract , manufacture , transport , store and supply raw material , products , parts of products , or provide services to the company that are necessary to carry out the company’s activities , and also downstream relationships , including established direct and indirect business relationships , that use or receive products , parts of products or services from the company up to the end of life of the product , including inter alia the distribution of the product to retailers , the transport and storage of the product , dismantling of the product , its recycling , composting or landfilling. ### (18) the value chain should cover activities related to the production of a good or provision of services by a company , including the development of the product or the service and the use and disposal of the product as well as the related activities in the value chain of the company. it should encompass upstream business relationships that design , extract , manufacture , transport , store and supply raw material , products , parts of products , or provide services to the company that are necessary to carry out the company’s activities , and also downstream relationships , including direct and indirect business relationships , that use or receive products , parts of products or services from the company up to the end of life of the product , including inter alia the distribution of the product to retailers , the transport and storage of the product , dismantling of the product , its recycling , composting or landfilling.


### (19) as regards regulated financial undertakings providing loan , credit , or other financial services , “value chain” with respect to the provision of such services should be limited to the activities of the clients receiving such services , and the subsidiaries thereof whose activities are linked to the contract in question. clients that are households and natural persons not acting in a professional or business capacity , as well as small and medium sized undertakings , should not be considered to be part of the value chain. the activities of the companies or other legal entities that are included in the value chain of that client should not be covered. ### (19) as regards regulated financial undertakings providing loan , credit , or other financial services , “value chain” with respect to the provision of such services should be limited to the activities of the clients receiving such services , and the subsidiaries thereof whose activities are linked to the contract in question.


### (20) in order to allow companies to properly identify the adverse impacts in their value chain and to make it possible for them to exercise appropriate leverage , the due diligence obligations should be limited in this directive to established business relationships. for the purpose of this directive , established business relationships should mean such direct and indirect business relationships which are , or which are expected to be lasting , in view of their intensity and duration and which do not represent a negligible or ancillary part of the value chain. the nature of business relationships as “established” should be reassessed periodically , and at least every 12 months. if the direct business relationship of a company is established , then all linked indirect business relationships should also be considered as established regarding that company. ### (20) in order to allow companies to properly identify the adverse impacts in their value chain and to make it possible for them to exercise appropriate leverage , the due diligence obligations should cover all business relationships. for the purpose of this directive , business relationships should mean direct and indirect business relationships.


### (20) in order to allow companies to properly identify the adverse impacts in their value chain and to make it possible for them to exercise appropriate leverage , the due diligence obligations should be limited in this directive to established business relationships. for the purpose of this directive , established business relationships should mean such direct and indirect business relationships which are , or which are expected to be lasting , in view of their intensity and duration and which do not represent a negligible or ancillary part of the value chain. the nature of business relationships as “established” should be reassessed periodically , and at least every 12 months. if the direct business relationship of a company is established , then all linked indirect business relationships should also be considered as established regarding that company. ### (20) in order to allow companies to properly identify the adverse impacts in their value chain and to make it possible for them to exercise appropriate leverage , the due diligence obligations should be limited in this directive to established business relationships. for the purpose of this directive , established business relationships should mean such direct business relationships which are , in view of their intensity and duration and which do not represent a negligible or ancillary part of the supply chain. the nature of business relationships as “established” should be reassessed periodically , and at least every 12 months.