The European Parliament has approved a significant update to the Carbon Border Adjustment Mechanism (CBAM), simplifying import rules and providing a major exemption for small and medium-sized enterprises (SMEs). The new rule, passed with a strong 564-20 vote, sets a 50-tonne annual import limit, exempting about 90% of importers while targeting 99% of embedded emissions. This milestone aims to balance emissions responsibility and economic flexibility. The 50-tonne threshold exempts SMEs from the CBAM carbon tax, reducing compliance burdens and promoting sustainable growth. The CBAM focuses on high-emission sectors like steel and cement, aiming to reduce carbon leakage and hold major emitters accountable. By aligning with the EU's climate goals and global trade standards, the updated CBAM is expected to cut emissions by 30% in covered sectors by 2027. While boosting operational efficiency and investment in low-carbon technologies, the CBAM revisions are reshaping supply chains and promoting cleaner alternatives. The regulatory changes are driving competition towards sustainable practices, with a focus on upstream emissions and global carbon accountability. These changes are crucial steps towards decarbonization and global transparency in emissions accounting.