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Paper short abstract

This paper examines how SMEs in the Global South navigate digital, institutional, and financial barriers to comply with the EU Carbon Border Adjustment Mechanism. The paper will be highlighting agency, inequality, and justice implications in global carbon governance.

Paper long abstract

The EU Carbon Border Adjustment Mechanism (CBAM) aims to prevent carbon leakage by requiring imports to comply with carbon pricing standards. While designed to enhance carbon accountability, CBAM presents significant challenges for Small and Medium-sized Enterprises (SMEs) in the Global South, which face digital, institutional, and financial barriers to compliance. Limited access to monitoring, reporting, and verification (MRV) systems, weak domestic carbon governance, and constrained green finance exacerbate the difficulty of meeting EU standards.

This proposed paper investigates how SMEs navigate these barriers, focusing on their adaptive strategies, including reliance on intermediaries, proxy reporting, process adjustments, and selective participation in export markets. Drawing on political economy and global value chain perspectives, the research examines the interplay between SME agency, structural constraints, and inclusion in global carbon governance. Case studies and secondary data from Africa, Asia, and Latin America will be analyzed to identify patterns of compliance adaptation and the resulting justice and equity implications.

The study anticipates that CBAM, while promoting environmental accountability, may unintentionally create procedural exclusion and uneven burden-sharing among smaller producers. By documenting SME experiences and adaptive responses, the research aims to provide policy-relevant insights, including technical assistance, digital MRV support, and access to climate finance, that enhance SME agency and reduce inequities.

The paper contributes to debates on power, agency, and justice in emerging carbon governance frameworks and offers guidance for designing inclusive policies that support both climate goals and equitable market participation.