A few years ago, if a company had poor carbon data, the worst-case outcome was often embarrassment.

A weak ESG report.
A few awkward investor questions.
Maybe a raised eyebrow from procurement.
A consultant hired. A dashboard built. A target announced. Everyone went home feeling faintly virtuous.

That world is ending.

Increasingly, poor climate data will not just make a company look bad. It may make products harder to sell, harder to insure, harder to finance, harder to import, and harder to defend in front of regulators, customers, and investors.

This was the line that stayed with me from my recent Climate Confident conversation with Stephen Jamieson, Chief Marketing Officer for SAP Sustainability. Stephen made a deceptively simple point: if companies cannot meet emerging carbon data and product compliance conditions, they may simply not be able to put certain products on the market. He was talking about digital product passports, product carbon footprints, CBAM, metals, fashion, and the rising granularity of carbon data needed just to do business.

That is the shift.

Carbon data is moving from reporting obligation to commercial operating condition.

And for senior leaders, that changes everything.

The data says…

Let’s start with the policy stack, because this is not about one regulation, one disclosure framework, or one enthusiastic sustainability team trying to get procurement to return its calls.

The EU Carbon Border Adjustment Mechanism, or CBAM, entered its definitive regime on 1 January 2026. EU importers of covered goods now need to declare embedded emissions and surrender the corresponding number of CBAM certificates each year, with authorised declarant status becoming central to compliance.

Translation: carbon is becoming part of the cost of crossing a border.

Then there is the Ecodesign for Sustainable Products Regulation, or ESPR. The European Commission’s 2025-2030 working plan prioritises steel and aluminium, textiles, furniture, tyres, mattresses, and energy-related products for future ecodesign and energy labelling measures. Digital Product Passports sit inside this agenda, turning product sustainability from a nice brochure into structured, exchangeable product data. The QR code is not the strategy. The data behind it is.

Batteries show where this is heading. The EU Batteries Regulation takes a full life-cycle approach, covering sourcing, manufacturing, use, and recycling. From 2025, it gradually introduces carbon footprint declarations, performance classes, and maximum carbon footprint limits for electric vehicle batteries, light means of transport batteries, and rechargeable industrial batteries. It also provides for QR-code access to a digital battery passport with detailed product information.

Packaging is joining the queue too. The Packaging and Packaging Waste Regulation entered into force in February 2025and will generally apply from August 2026. It covers all packaging and packaging waste, regardless of material or origin, and aims to make all packaging on the EU market recyclable in an economically viable way by 2030.

And this is broader than carbon. The EU Deforestation Regulation applies from 30 December 2026 for large and medium operators, requiring covered products to be deforestation-free. The EU Forced Labour Regulation will ban products made with forced labour from being sold in the EU market from 14 December 2027, applying to imports, EU-made products, and exports.

Different rules. Same direction.

Prove it.

At the same time, finance is tightening the lens. IFRS S2, effective for annual reporting periods beginning on or after 1 January 2024, requires companies to disclose climate-related risks and opportunities that could affect cash flows, access to finance, or cost of capital over the short, medium, or long term.

This is where the neat old boundary between “sustainability” and “business” collapses. Bad climate data is no longer just a disclosure gap. It is a pricing gap. A risk gap. A market-access gap.

The same pressure is visible in the voluntary and industry-led space. WBCSD’s Partnership for Carbon Transparency, or PACT, says supply chains cannot decarbonise without accurate and comparable product-level data, and its methodology is built around supplier-specific primary data for product carbon footprints.

Averages got us started.

They will not get us through this next phase.

The implications…

The implications are enormous, and not in the abstract “ESG is important” way that makes executives reach for their phones.

This is about product viability.

A company may still be able to manufacture a product. It may still have demand. It may still have a strong brand, loyal customers, and a procurement team that thinks it has things under control. But if the company cannot provide credible data on embedded carbon, recycled content, deforestation risk, packaging compliance, forced labour exposure, or product-level sustainability attributes, its commercial freedom narrows.

That is a different conversation.

It means sustainability data becomes part of revenue protection.

Procurement will need to know it.
Finance will need to trust it.
Operations will need to act on it.
Product teams will need to design with it.
AI systems will need to optimise around it.

This last point is crucial.

Stephen made a point in the episode that should make every AI-happy boardroom pause. Businesses are very good at measuring cost, revenue, utilisation, and finance. So AI will optimise for those high-quality inputs. If carbon, water, recycled content, resilience, and wider sustainability factors are not in the same decision environment, they risk becoming secondary, or worse, optimised against.

That is the danger.

AI will not wake up one morning with a conscience. It will optimise for what the system tells it to value.

So if sustainability data lives in a side platform, updated annually, disconnected from ERP, procurement, product lifecycle management, finance, and supply chain planning, then we should not be surprised when automated decisions accelerate the wrong outcomes.

Efficient nonsense is still nonsense.

There is an affordability angle here too. Clean technology is already pulling capital at scale. According to the IEA’s World Energy Investment 2025 report, global energy investment was set to reach USD 3.3 trillion in 2025, with around USD 2.2 trillion going to renewables, nuclear, grids, storage, low-emissions fuels, efficiency, and electrification, twice the USD 1.1 trillion going to oil, gas, and coal.

Capital is moving.

But capital follows confidence. And confidence follows data.

If a company can prove that its product has lower embedded emissions, lower exposure to carbon-intensive inputs, stronger traceability, and better compliance readiness, that is no longer just a sustainability claim. It is commercial differentiation.

The strategies…

So what should leaders do?

First, stop treating climate data as an annual reporting project. That model is too slow, too blunt, and too disconnected from the decisions that matter.

Start with a product exposure map. Which products rely on CBAM-covered materials? Which products fall into ESPR priority sectors? Which use packaging exposed to PPWR? Which contain batteries? Which touch commodities covered by deforestation rules? Which depend on suppliers in high-risk labour regions?

This is not box-ticking. It is revenue risk analysis.

Second, build what I would call a climate-data bill of materials. For priority products, companies need to know the materials, suppliers, production sites, energy inputs, packaging, recycled content, logistics, emissions factors, primary data availability, and evidence gaps.

Boring? Maybe.

Vital? Absolutely.

Third, put procurement in the middle of this. Supplier climate data cannot remain a favour requested politely by sustainability teams once a year. It needs to be built into supplier onboarding, contracts, scorecards, renewal criteria, and preferred supplier decisions.

Fourth, connect the systems.

This is where many organisations will struggle. Product carbon data needs to move across ERP, procurement, finance, product lifecycle management, compliance, supplier platforms, and digital product passport infrastructure. If the data cannot move, it cannot matter.

Fifth, be careful with AI. AI agents can help scale product carbon footprinting, compliance checks, emissions factor mapping, and documentation. Stephen described how AI capabilities could move companies from manually managing handfuls of emissions factors to scaling across tens of thousands of products. That is powerful.

But humans remain accountable. Stephen was clear on this too: AI agents can assist, but they cannot be accountable for decisions.

The strategy is not “let AI solve sustainability.”

The strategy is: give AI decision-grade sustainability data, strong governance, clear constraints, and human accountability.

The signal of change…

The transition is already happening.

CBAM is live. Product passports are being built. Battery rules are moving from aspiration to evidence. Packaging is becoming a compliance system. Deforestation-free proof is becoming a market requirement. Forced labour rules will put human rights evidence into product eligibility.

This is not a far-off future. It is a staggered rollout of commercial reality.

The signal of change is also visible in how business leaders now talk about climate. Stephen noted that climate has moved from a niche sustainability-team topic, through an era of ambition, into a phase focused on the economics of carbon, risk exposure, and investor relevance.

That tracks with what I am seeing too.

The serious conversations are no longer about whether sustainability matters. They are about how to make it operational. How to measure it properly. How to use it in procurement. How to price risk. How to make product-level carbon data trustworthy enough for investors, customers, regulators, and AI systems.

This is the real story.

Sustainability is leaving the PDF.

It is entering the transaction.

And that is good news, even if it feels uncomfortable. Because once climate data becomes part of how products are designed, sourced, financed, priced, and sold, it stops being a communications exercise and starts becoming a lever for emissions reduction.

Back to where we started.

A few years ago, bad carbon data meant a weak report.

Increasingly, bad carbon data may mean a weaker product, a weaker supplier position, a weaker investment case, or a blocked market opportunity.

That should concentrate minds.

But it should also energise us. Because the companies that get this right will not just comply better. They will compete better. They will build cleaner supply chains, more resilient products, more credible claims, and smarter operating systems.

And that is exactly the kind of climate action we need now.

Practical.
Measurable.
Commercially real.

If you want to understand where this is heading, listen to my Climate Confident conversation with Stephen Jamieson of SAP Sustainability. It is one of those episodes that reframes the issue: carbon data is no longer just about reporting what happened.

It is becoming part of whether you get to sell what comes next.

By Tom Raftery

Keywords: Risk Management, Supply Chain, Sustainability

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