The European Union is entering a new era of sustainability regulation, and this shift is beginning to reshape global trade relationships. Two powerful policies, the Corporate Sustainability Reporting Directive (CSRD) and the Carbon Border Adjustment Mechanism (CBAM) are at the center of this transformation. While these regulations are designed for EU companies and importers, they will inevitably change expectations for their global suppliers, including thousands of Indian exporters.
For Indian businesses, this isn’t just another compliance requirement. It is becoming a core competitive factor. Verified ESG data especially accurate, third party-checked carbon emissions will soon influence whether Indian exporters retain their EU customers, pay higher CBAM costs, or miss out on new opportunities.
CSRD expands sustainability reporting obligations for companies operating in Europe. Although its thresholds may shift under the latest 2025 proposals, the direction is unmistakable: EU firms must disclose supply-chain ESG information more rigorously. To do that, they will rely heavily on their suppliers. Indian exporters, therefore, will increasingly be asked for credible, auditable, and verified ESG data not voluntary numbers or estimates, but structured information aligned with EU reporting standards.
CBAM adds another layer of urgency. From the proposed date of 2027, importers will need to surrender CBAM certificates based on the embedded emissions of goods they buy. This makes emissions data a financial issue. If an Indian exporter cannot provide verified emissions numbers, EU importers will be forced to use default values which are purposefully high. That means higher costs, potential loss of price advantages, and a growing reluctance among buyers to source from suppliers who lack proper data systems.
This shift is already visible. European buyers are becoming cautious about relying on suppliers without measurable sustainability performance. Their own risk in terms of CBAM exposure, greenwashing scrutiny, and CSRD compliance is pushing them to demand far more transparency. Verified ESG data isn’t just useful to them; it protects them from penalties, reputational damage, and unnecessary carbon costs.
For Indian exporters, this change brings risks but also meaningful opportunities. Those who lag behind in carbon accounting, data management, and third-party verification may see their competitiveness decline. MSMEs, in particular, face the challenge of building capacities they never needed before. But companies that act early can differentiate themselves as low-carbon, transparent, and reliable partners qualities that EU buyers increasingly prioritize. Measuring emissions also uncovers inefficiencies, creates cost-saving opportunities, and positions exporters to tap into upcoming Indian carbon markets.
The path forward is clear. Indian exporters must begin assessing their sustainability gaps, building carbon accounting systems aligned with global standards, and working closely with EU buyers to understand their data expectations. Strengthening ESG reporting even voluntarily can boost confidence and demonstrate readiness for the evolving European landscape. Equally important is investing in real emissions reduction, which not only lowers future CBAM costs but also enhances brand value.
CSRD and CBAM are not temporary hurdles. They signal a long-term shift in how international trade will work. Verified ESG data is becoming a passport for doing business with Europe. For Indian exporters, acting now is not just a matter of compliance it is a strategic investment in market access, reputation, and long-term growth.
This blog reflects our ongoing commitment to sharing insights on Sustainabaility. We look forward to your feedback at info@kbscertification.com.
Founded in 2005, KBS is a globally recognized third-party assessment body, accredited to ISO 14065 by NABCB. With expertise in climate change, sustainability assurance, ESG, CBAM, Net Zero, and product certifications, we’ve validated and verified over 2500 projects worldwide under CDM, Verra (VCS), Gold Standard, and ISO 14064 standards. For more detail visit our website www.kbscertification.com
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