Client: Lidl & Kaufland Asia Ltd.
Sector: Retail
Location: Hong Kong
Ambition: Assess CBAM data availability across Asian supply-chain, build CBAM-reporting competence, and assess financial exposure on product and supplier level
Services: Supplier Segmentation and Engagement Strategy, CBAM Supplier Training, CBAM Reporting, CBAM Financial Impact Assessment
About the Company
Lidl & Kaufland Asia (LKA) is the sourcing arm of Lidl International, a German-based discount retailer. LKA sources a wide range of food and non-food products from an extensive network of factories across eleven markets
The Challenge
LKA was among the first retailers to recognize the strategic risks posed by the Carbon Border Adjustment Mechanism (CBAM). They identified that failing to gather accurate supplier data for reporting could result in significant financial penalties. While LKA has a clear understanding of which products fall within the CBAM scope, the primary challenge was determining the most efficient way to collect data across a vast supply base while minimizing resource requirements.
RESET’s Approach
To address the challenges faced by LKA, RESET Carbon designed and implemented a strategic supplier training and data-collection program. The initiative focused on identifying high-impact suppliers, training them on accurate emissions reporting, and consolidating an initial dataset to project LKA’S likely financial exposure under CBAM. Leveraging a cross-border team of consultants in China and Hong Kong, the program was executed across four distinct phases.
- Supplier Segmentation
By leveraging purchase volumes and CBAM default data, RESET identified the primary drivers of LKA’s carbon exposure. Our analysis revealed a significant concentration of risk: of all in-scope products, just 10% accounted for over 80% of CBAM-relevant emissions. These were sourced from a targeted group of 14 suppliers. Furthermore, our screening showed that five key suppliers represented 85% of emissions across five quarters, underscoring the strategic importance of prioritized engagement and rigorous data collection with these high-impact partners.
- Supplier Training
RESET provided two distinct training formats for LKA suppliers. For the majority located in China, we conducted on-site training sessions, enabling them to exchange best practices and address common challenges. For the largest supplier located outside of China, we provided a tailored 1:1 webinar to review their specific emissions data in detail.
- Data Collection
Following the training, RESET developed a streamlined data collection template designed to capture factory-level process data and automatically calculate emissions in the specific format required for EU CBAM reporting. To ensure data integrity, we provided all suppliers with on-demand helpdesk support and conducted a final technical review of all submissions to verify full compliance with EU regulatory requirements.
- CBAM Summary Report CBAM
Following the data collection phase, RESET delivered a comprehensive summary report for LKA outlining the availability of primary supplier data versus default values. The report provided a granular breakdown of emissions intensity and financial exposure by both product and supplier. Furthermore, it quantified the cost savings achieved by using actual supplier data rather than EU default values and established a baseline to forecast future exposure based on fluctuating import volumes.
Pilot Outcomes
The project led to the following outcomes:
- Reduced a long list of CBAM relevant products to 10% requiring real data
- Trained suppliers on CBAM data collection
- Collected full onsite data for all relevant Tier 1 production sites for in-scope products
- Produced a consolidated report showing detailed CBAM exposure across LKA products
Looking Ahead
This program has successfully equipped all key suppliers with the expertise for CBAM data reporting, ensuring that LKA is fully prepared to submit legally mandated reports to the EU in the coming quarters. Furthermore, it has provided a comprehensive overview of CBAM exposure, specifically detailing the financial and environmental impact of key product categories and manufacturing partners.
Moving forward, this foundational work enables two critical strategic advantages:
- Strengthened Supplier Partnerships: Facilitating the collaborative collection of ‘precursor’ data for high-impact products with significant upstream emissions.
- Targeted Decarbonization: Providing a clear roadmap for prioritizing supplier engagement and emissions reduction efforts to minimize future CBAM liabilities.
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