Introducing the CBAM digital readiness index as a quantitative firm level assessment approach toward confident compliance in emerging economies

Abstract The European Union’s Carbon Border Adjustment Mechanism (CBAM) creates both regulatory pressure and technical demands on exporters in emerging economies. Focusing on Egypt’s fertilizer sector—characterized by high emissions and limited digital capacity—this study introduces the CBAM Digital Readiness Index (CDRI), a firm-level diagnostic for assessing digital maturity for CBAM monitoring, reporting, and verification (MRV). Grounded in institutional theory, the resource-based view, and digital transformation literature, CDRI evaluates five dimensions: emissions monitoring capability, data integration, automation of reporting, data governance, and sector-specific digital competencies. Methods include expert validation with 20 professionals (20% digital governance, 25% MRV, 20% academic digitalization, 35% CBAM), yielding strong perceived usability and relevance (mean approval 4.11/5; SD 0.84). A pilot application to four anonymized firms demonstrated discriminative power and practical interpretability: A1 = 78 and A2 = 41 (Aligned; Transitional), B1 = 30 and B2 = 22 (both Vulnerable). Findings indicate CDRI not only benchmarks readiness but also generates an actionable roadmap for strengthening MRV processes, data governance, and automation. Implications are twofold: firms gain a structured pathway to traceable, auditable emissions reporting, and policymakers obtain a scalable, sector-aware tool for supporting CBAM-aligned digitalization across the Global South.