从碳定价到碳边境_企业战略与全球供应链的再平衡_42页_13mb

> **来源：[研报客](https://pc.yanbaoke.cn)** # Climate and # Competitiveness: # Border Carbon Adjustments in Action WHITE PAPER DECEMBER 2025 # Contents Foreword 3 Executive summary 4 Introduction 6 1 Overview and industry responses to BCAs 7 1.1 Design and implementation of BCAs 7 1.2 Global evolution of BCAs and carbon-pricing frameworks 8 1.3 Environmental and economic impacts of BCAs 9 1.4 Private-sector strategic responses under different regimes 9 1.5 How leaders of carbon-intensive industries are responding to BCAs 11 1.6 Wider industry responses to border carbon adjustments 18 2 Strategy playbook 21 2.1 Plan administration of carbon-pricing policies 23 2.2 Achieve domestic and international compliance 26 2.3 Change operations to decarbonize - and engage stakeholders 26 2.4 Financial considerations 32 3 From insight to action 34 Contributors 36 39 # Disclaimer This document is published by the World Economic Forum as a contribution to a project, insight area or interaction. The findings, interpretations and conclusions expressed herein are a result of a collaborative process facilitated and endorsed by the World Economic Forum but whose results do not necessarily represent the views of the World Economic Forum, nor the entirety of its Members, Partners or other stakeholders. © 2025 World Economic Forum. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, including photocopying and recording, or by any information storage and retrieval system. # Foreword Pedro Gomez Head, Industry Agenda, World Economic Forum Water Cheung Chair, Climate Finance Asia The global economy is entering a new chapter in the transition to net zero. Even within a context of geopolitical shifts, carbon-pricing mechanisms continue to expand. Moreover, the novel development of border carbon adjustment policies is reshaping the fundamentals of trade, competitiveness and cooperation. Unlike previous emissions reduction measures focused primarily on domestic regulation, border carbon adjustments reach across frontiers, making the capacity to manage carbon emissions an important factor of global market access. Their emergence represents a significant intersection of climate and trade policy. At the same time, they do not come without challenges or without controversy – they raise concerns about protectionism, economic equity and the risk of deepening trade divisions. These developments are not only a response to the urgent need to reduce greenhouse gas emissions, they are also signals of how deeply climate policy can become embedded in the fabric of the global economy. For business leaders, this moment presents both risk and opportunity. Indeed, border carbon adjustments can create new costs and complexities in international supply chains. However, they also hold the potential to accelerate decarbonization and reward first movers and those with proactive strategies. The companies that thrive in this environment will be those that succeed in treating decarbonization not as a compliance burden but as a strategic driver of competitiveness, resilience and long-term value creation. This white paper provides a timely framework to guide decision-makers through this transformation. Drawing on case studies from emerging economies and lessons from pioneering industries, it highlights practical steps that companies can take today to prepare for a carbon-constrained future. The strategy playbook set out here underscores the importance of planning in integrating carbon pricing, aligning operations and supply chains with low-carbon goals, ensuring compliance across jurisdictions and engaging stakeholders to build systemic resilience. This project was conducted by the World Economic Forum in collaboration with Climate Finance Asia, a specialized knowledge partner that supported policy research and conceptual development of the strategic playbook, and assisted with engagement and the collection of insights from local experts and institutions across the focus economies. Navigating the intersection of climate and trade will be one of the defining leadership challenges of this decade. Border carbon adjustments can quickly become a practical reality in the global economy. In light of that, how governments, businesses and investors respond will play a critical role in shaping the trajectory of both competitiveness and climate action. Collaborative action to align policies, markets and corporate strategies could help economic actors use these new carbon-pricing mechanisms as a catalyst to align ambitious climate action with business competitiveness imperatives, ultimately driving sustainable, resilient growth. # Executive summary The emerging landscape of carbon border adjustments is redefining competitiveness, creating risks and opportunities in trade, strategy and global market positioning. The introduction of border carbon adjustments (BCAs) as a new feature of the carbon-pricing landscape highlights a fundamental tension between climate and trade. The European Union's Carbon Border Adjustment Mechanism (EU CBAM), for example, is designed primarily to prevent carbon leakage and ensure the equivalent treatment of domestic and imported goods. In doing so, it may enable greater domestic ambition, thereby supporting the objectives of the Paris Agreement; however, it also raises concerns about trade protection, competitiveness and economic growth. Companies now face the dual challenge of meeting climate goals while maintaining market access and profitability. Policy uncertainty is high, and jurisdictional fracturing seems likely, as each BCA (if/when implemented) may have different scopes, reporting periods and cost calculation methods, creating additional trade barriers and administrative complexity. At the same time, BCAs create novel opportunities to align decarbonization efforts with long-term competitive advantage. For companies, these mechanisms influence which markets are more advantageous, how supply chains are organized and where capital flows. While BCAs introduce new costs and compliance obligations, they also create opportunities for strategic differentiation, resilience and long-term growth. The scale of the opportunity is substantial. The World Bank's State and Trends of Carbon Pricing 2025 report 1 highlights that there are 80 carbon taxes and emissions trading systems (ETSs) in operation worldwide, with five being introduced over the past 12 months, covering $28\%$ of global emissions, with economies representing nearly two-thirds of global economic output having implemented either a carbon tax or an ETS. For carbon-intensive sectors such as steel, cement, mining and energy, early alignment with carbon policies can mitigate risk, unlock emerging green markets, attract low-cost capital and strengthen competitiveness in a volatile global environment, provided that mechanisms like BCAs duly recognize effective carbon prices already paid. The message is clear: proactive alignment could yield a competitive edge. Meanwhile, climate and trade pressures are intensifying. The EU CBAM will become the first fully implemented BCA as of January 2026, signalling a new era in which carbon competitiveness is enforced at the border. For exporters from emerging economies such as China, Brazil, India and South Africa, this creates both pressure and opportunity: comply and remain cost-competitive in European markets or risk exclusion from high-value markets. The EU CBAM could influence trade patterns, but it may also drive systemic shifts towards cleaner production. This white paper presents case studies across numerous emissions-intensive sectors from the BASIC group of countries (Brazil, South Africa, India and China) to illustrate how leading companies in emerging markets are already adapting. From Chinese steel and battery manufacturers embedding carbon management into their global strategy, to a Brazilian energy company aligning energy transition pathways with national resource advantages, to Indian and South African companies navigating both domestic carbon policies and international trade risks, the message is clear: proactive alignment could yield a competitive edge. This white paper offers a strategy playbook for executives, built on a PACE framework (Plan, Achieve, Change, Engage). It highlights the urgent actions CEOs must prioritize: Plan for the integration of carbon pricing into strategic and financial planning - Achieve compliance with domestic carbon rules and international BCAs - Change operations to reduce greenhouse gas (GHG) emissions and enhance competitiveness - Engage stakeholders to align value chains and support policy objectives This playbook is designed for CEOs, CFOs, COOs and supply chain, procurement and sustainability officers as well as corporate strategists navigating climate policy, carbon-embedded trading landscapes and investor expectations. It provides actionable guidance relevant to companies for effectively navigating carbon pricing and BCA requirements, including the EU CBAM. # Introduction CEOs will benefit from a strategic framework to align corporate decisions with carbon policies, trade dynamics and decarbonization imperatives. The intersection of climate policy, trade dynamics and decarbonization imperatives is increasingly shaping global business strategy. Even amid uneven momentum across geographies, climate-aligned strategies are unlocking new pathways for growth, competitiveness and long-term value beyond compliance. Executives require actionable insights that connect operational decisions to broader geopolitical, trade and competitive contexts. This white paper is designed to equip CEOs and C-suite leaders, particularly in the BASIC countries (Brazil, South Africa, India and China) and other emerging economies, with a strategic framework for navigating carbon-pricing mechanisms (CPMs) and BCAs. Rather than focusing solely on micro-level operational guidance, it situates corporate decisions within the larger dynamics of global trade, market share and competitive advantage. The white paper is structured as follows: Section 1. Overview and industry responses to BCAs: Provides context on the emerging landscape of global BCA and carbon-pricing frameworks, examining trade impacts, carbon leakage mitigation and corporate strategy; synthesizes insights from case studies and industry discussions, highlighting how companies in emissions-intensive sectors in BASIC countries are responding to BCAs and CPMs more broadly Section 2. Strategy playbook: Offers actionable guidance for executives, prioritizing short- and long-term interventions, investment strategies and policy engagement to strengthen competitiveness in a decarbonizing global market Section 3. Recommendations and urgent actions: Provides high-level actions for CEOs to integrate carbon pricing into operations, decarbonize supply chains, leverage green finance and collaborate across sectors, turning regulatory risks into opportunities for resilience and competitive advantage Collectively, these sections provide a high-level strategic overview of how to navigate evolving carbon regulations while delivering concrete, operationally relevant insights for CEOs and C-suite leaders. 1 # Overview and industry responses to BCAs How are BCAs around the world designed and implemented, and how are companies in emissions-intensive sectors responding? # 1.1 Design and implementation of BCAs Under border carbon adjustments, charges are levied on embedded emissions of imported goods at a carbon price equivalent to what would have been applicable if the goods were produced under the policies of the importing country.2,3 BCAs can be structured in different ways, either as border taxes linked to domestic carbon taxes or as certificate systems tied to emissions trading schemes, and different jurisdictions developing BCAs may take divergent approaches. The EU CBAM, the first operational BCA globally, follows the latter approach, requiring importers to purchase certificates priced in line with the EU ETS, ensuring imported goods face similar carbon costs to domestic products. Critical implementation elements on the ground include the development of rigorous yet pragmatic measurement, reporting and verification (MRV) systems, enforcement mechanisms across customs and climate agencies and phased rollout timelines.4 Moreover, accurate MRV necessitates independent verification, with EU regulations mandating that importers have emissions certified by accredited verifiers.5,6 Once MRV data is collected, BCAs must be enforced to ensure compliance. Authorities verify whether goods fall within the scope of a BCA using tariff codes and importer registration.7 Compliance involves periodic declarations of import volumes and embedded emissions, with importers surrendering certificates or paying carbon dioxide $(\mathrm{CO}_{2})$ costs. The EU's CBAM (following the Omnibus package 8 ) and the UK's CBAM also allow default values as an alternative to actual emissions, although these can entail higher costs than actual emissions as they are based on average emissions intensity by country or region. Penalties for non-compliance are enforced nationally, while verifying overseas data remains challenging. 9 For companies, these design choices translate into compliance strategies and competitive positioning. Companies in energy-intensive industries face the most immediate reporting and cost pressures but also the greatest incentives to decarbonize, adopt cleaner production methods and/or certify lower emissions intensity. Multinationals with global supply chains are adapting by improving emissions data collection, engaging suppliers to meet uniform benchmarks and using transparency as a signal to investors and consumers. In practice, corporate responses are increasingly going beyond compliance: some companies (see Section 1.5) are adapting to BCAs by adjusting supply chains and exploring opportunities in low-carbon markets. # 1.2 Global evolution of BCAs and carbon-pricing frameworks From 2026 onwards, full obligations will take effect in parallel with the gradual phase-out of free carbon allowances for EU industries. The first major operational BCA, the EU CBAM, has been designed in coordination with the EU ETS to ensure that Paris climate goals $^{10}$ and EU economic objectives are met. Importers report embedded emissions of covered products and purchase "CBAM certificates" at a price that mirrors the EU ETS allowances. $^{11}$ Until the end of 2025, CBAM is in a transitional phase that requires importers to submit quarterly reports on their emissions without incurring a fee, allowing time to establish a rigorous MRV procedure structure. From 2026 onwards, full obligations will take effect in parallel with the gradual phase-out of free carbon allowances for EU industries. $^{12}$ The EU has expressed its intention to expand the CBAM's scope by 2030 to include all sectors covered by the EU ETS. $^{13}$ Several countries outside the EU are also exploring BCAs and advancing carbon-pricing initiatives, as summarized in Table 1. The evolution of BCAs remains highly dynamic and context-specific, with emerging frameworks reflecting differing national priorities and creating uncertainty for globally integrated value chains. Further, the introduction of the EU CBAM may create incentives for domestic jurisdictions to strengthen or expand their own carbon-pricing systems in order to preserve competitiveness and ensure domestic revenues are retained rather than flowing abroad, potentially resulting in increased carbon costs for companies across all products, not just those exported to jurisdictions implementing BCAs. TABLE 1 Global developments in BCAs and carbon-pricing frameworks in BASIC countries Country Status/plans on BCA development Canada Exploring bilateral solutions (e.g. Joint EU-US Statement on a Global Arrangement on Sustainable Steel and Aluminium14)Initiated consultations on a possible BCA to complement domestic carbon pricing15The programme of the 2025 Liberal-led government includes plans for a national BCA16 United States Multiple versions of BCA frameworks have been presented in recent years, with one BCA legislation re-introduced in Congress in April 2025 (Foreign Pollution Fee Act17); the FPFA sits with the Congressional Committee on Finance at time of publication Australia Safeguard mechanism in place; ongoing review on carbon leakage may lead to BCA development, with unclear timeline18 United Kingdom Adopted a UK CBAM, set for implementation beginning January 2027, with discussions ongoing with the EU about possible links with the EU CBAM19 Türkiye Included provisions for a BCA in its 2025 climate law20 Japan Plans to introduce a carbon levy on fossil fuel importers in the financial year 2028–202921Developing carbon markets under the Green Transformation (GX) strategyHas had a carbon tax on fossil fuels since 201222 Carbon-pricing mechanisms in BASIC countries Brazil Approved a national-level ETS in 2024, with a phase-in period through 203023 South Africa Implemented a stand-alone carbon tax in 2019,24 with a more stringent Phase 2 beginning in 202625 India Established a national-level ETS (the Carbon Credit Trading Scheme) in 2024,26 with a gradual phase-in period starting in 2025 China National ETS covering the power sector operational since 2021; in March 2025, the State Council formally approved the inclusion of the iron and steel, cement and aluminium smelting industries in China's national ETS27 The ETS will be expanded gradually across numerous additional emissions-intensive industries by 2030 # 1.3 Environmental and economic impacts of BCAs A $1 per tonne of carbon dioxide equivalent increase in carbon prices reduces emissions by 1.3% across steel and cement plants, but carbon leakage through international trade offsets roughly 13% of these domestic reductions. A BCA distinguishes itself from traditional carbon pricing, which directly increases the cost of emitting and reduces emissions, by extending domestic pricing to trade instead of establishing a new carbon price through taxes or cap-and-trade. The primary environmental rationale for BCAs is the mitigation of emissions leakage. Evidence from an Organisation for Economic Cooperation and Development (OECD) study[28] suggests that for cement and steel plants across 140 countries, a $1 per tonne of carbon dioxide equivalent (tCO₂e) increase in carbon prices reduces emissions by 1.3%, but carbon leakage through international trade offsets about 13% of this domestic reduction, illustrating how carbon pricing and trade dynamics interact to influence net emissions outcomes. While carbon taxes and ETS deliver greater direct emissions cuts overall, BCAs reinforce those reductions at the border. For example, an $88/tonne CO $_2$ price in the EU was projected to reduce emissions by 21%. Economically, BCAs can improve the efficiency of emissions reduction by aligning the carbon costs of imports with those of domestic goods. Studies show that BCAs are effective in reducing leakage. With BCAs, leakage falls to 8% on average, compared with a mean value of 12% before BCAs.[29] BCAs can influence trade dynamics by harmonizing carbon costs and decreasing trade distortions. An ETS may raise production costs, potentially leading to an increase in carbon-intensive goods from countries with less stringent climate policies.[30,31] By rebalancing these incentives, BCAs offset competitive disadvantages created by domestic carbon pricing. # 1.4 Private-sector strategic responses under different regimes As border carbon policies mature, leading multinationals are forming "BCA-aligned procurement coalitions" to coordinate low-carbon sourcing and streamline emissions accounting across jurisdictions. Companies may need to review supply chains for BCA-covered products. For example, the EU's CBAM guidance recommends mapping suppliers of in-scope goods by origin and volume, and tracking embedded $\mathrm{CO}_{2}$ emissions,[32,33] leading companies to shift towards lower-carbon suppliers or alternative materials to reduce border fees. Guidance from international institutions emphasizes the value of digital emissions tracking systems, which allow companies to centralize data collection across suppliers and comply with emerging disclosure mandates more efficiently.[34] Some may consider rerouting trade or relocating production away from high-carbon jurisdictions, but with multiple economies planning similar BCAs, pure avoidance is likely to be a limited strategy. As costs increase, this could prompt a strategic reassessment of long-term supplier viability, with emissions transparency becoming an important factor in determining procurement partnerships. Companies are greening their procurement practices: standard contracts are being updated to include emissions reporting and CBAM-compliance clauses. Thomson Reuters notes the inclusion of clauses requiring suppliers to share embedded emissions data and assume compliance responsibilities.[35] As border carbon policies mature, leading multinationals are forming "BCA-aligned procurement coalitions" to coordinate low-carbon sourcing and streamline emissions accounting across jurisdictions.[36] Companies reducing supply chain emissions can significantly increase EBIT by 15 to $50\%$ by 2030. Some companies are exploring structured responses that integrate CBAM compliance with broader supply chain and climate strategies. While limited, practices include: - Mapping suppliers of in-scope goods by origin, volume and embedded emissions - Transitioning to suppliers of materials with lower carbon footprints; investing in digital MRV systems to centralize emissions data and comply efficiently - Forming cross-functional CBAM teams supported by governance structures, external consultants or specialized software - Updating contracts to include emissions reporting and CBAM-compliance clauses - Applying internal carbon pricing, ideally aligned with the EU CBAM Scope, to stress-test costs and inform operational decisions During the transition to new systems and processes for collecting and analysing emissions data, companies may use default emissions factors when actual data is unavailable.37 Deloitte notes importers can initially report default values or use alternative monitoring if supplier data is missing. While this provides a short-term compliance pathway, it can create risks in energy-intensive industries, since default values are often higher. This may inflate reported carbon costs, distort competitiveness by making some imports appear more carbon-intensive than they actually are and reduce incentives for suppliers to improve accuracy. Investing in robust MRV systems is essential to avoid such cost penalties and credibility gaps. Based on the case studies and focus group meetings organized for this paper, companies have reported forming cross-functional CBAM teams to ensure compliance, supported by transparent governance, external consultants or specialized software. These compliance tools automate data requests from suppliers and implement fall-back strategies, reducing manual errors and associated risks. $^{38}$ To better anticipate carbon costs, companies apply internal carbon pricing in two ways: hypothetically, as a planning and accounting tool, or concretely, by assigning a cost to each unit of emissions. By mapping Scope 3 emissions and integrating carbon tracking into their reporting, businesses can facilitate a smoother transition and reduce uncertainty. As regulatory expectations tighten, these internal systems are evolving from compliance tools into competitive enablers, allowing companies to anticipate cost exposure and differentiate in carbon-sensitive markets. An additional concern in this transition is the risk of "carbon poverty", where smaller companies, especially micro, small and medium-sized enterprises (MSMEs) in developing economies, lack the financial or technical capacity to measure and report emissions with the same rigour as multinationals. These companies may face exclusion from international supply chains, reinforcing inequalities. Addressing this requires global cooperation, public-private partnerships, capacity-building and technology transfer, so that all suppliers can participate in low-carbon trade. The diversity of private-sector responses provides a foundation for shaping carbon strategies. The strategy playbook provided in Section 3 outlines actionable pathways for companies navigating BCA-aligned procurement, risk management and emissions disclosure. Under a BCA, companies respond to border fees by innovating with low-carbon inputs and processes worldwide. Early adopters can gain a competitive advantage; for example, McKinsey, by analysing a European automotive OEM, finds that "companies reducing supply chain emissions can significantly increase EBIT by 15 to $50\%$ by 2030".[39] To understand how major players in carbon-intensive sectors are adapting, in-depth case studies of leading companies in BASIC countries have been conducted, highlighting strategic innovations and operational approaches that illustrate paths towards compliance and competitiveness. # 1.5 How leaders of carbon-intensive industries are responding to BCAs CASE STUDY 1 China - S Group40 # Company and sector profile The steel industry is a cornerstone of China's economic might. It is also a primary source of its GHG emissions, contributing an estimated 1.8 billion tonnes of $\mathrm{CO}_{2}$ , or about $15\%$ of the national total. Domestically, inclusion of the steel sector in China's national ETS forces producers to internalize what was once an externality. Although around $10\%$ of its export volume goes to BCA-regulated markets, S Group's proactive investments highlight both a viable path and critical policy gaps for China's steel sector. With an annual crude steel output consistently exceeding 1 billion tonnes, China accounts for more than $54\%$ of global production. S Group is a major, publicly listed steel producer with an annual capacity exceeding 30 million tonnes, with $12.9\%$ of its production exported to more than 80 countries and regions. The company's push towards electric arc furnace (EAF) and hydrogen-based production exemplifies the shift to "new quality productive forces", aligning with the national carbon goals and positioning S Group for BCA-regulated markets. # Business exposure and response Figure 1 compares the EU CBAM trade exposure for the iron and steel sector in the BASIC group of countries using data from the World Bank.41 The vertical axis shows the carbon payment per dollar of EU production and imports $(\%)$ - $17\%$ for China, which is higher than South Africa and Brazil but lower than India. Trade dependence, measured as the share of China's total iron and steel exports destined for the EU, is $13\%$ , higher than Brazil but lower than India and South Africa. Projections suggest that BCAs could result in a $58\%$ loss of export profits for Chinese steel exporters and a $32\%$ reduction in export volume compared to the business-as-usual scenario.[42] This represents a significant impact on a high-value business segment, compounded by the added complexity of monitoring, reporting and complying with Scope 1 and 2 emissions requirements. FIGURE 1 EU CBAM trade exposure (iron and steel) in the BASIC group of countries Sources: World Bank Group, CBAM Exposure Index Apart from technological shifts, S Group has adopted a "shadow carbon pricing" mechanism – an internal carbon price of $20–30 per tonne of CO 2 – to evaluate all new capital expenditure projects. This mechanism creates a financial incentive for lower-carbon choices, supported by a switch to an advanced MRV system. Views diverge on the optimal pace of transition. While leaders at large enterprises, such as S Group, view BCAs as a catalyst for modernization, many others advocate for a more gradual, state-supported approach that prioritizes economic stability. # Key takeaways and potential actions - Short term (1–3 years): Based on these insights, corporates in trade-exposed sectors can consider focusing on building resilience in the short term. This includes investing in best-in-class digital MRV systems and conducting third-party verified life-cycle assessments for key products. Companies can also integrate an internal carbon price into all capital budgeting decisions. For companies exposed to the EU CBAM, the EU ETS price – currently around €80/tCO $_2$ (as of November 24 2025) $^{43}$ – can serve as a natural reference point to guide investment and operational decisions. - Long term (3-10+ years): In the medium-to-long term, the strategy must shift to transformation. This involves developing a clear technology roadmap for phasing out legacy assets, scaling up investments in low-carbon technologies such as EAFs and forming research and development consortia for solutions such as hydrogen and carbon capture, usage and storage (CCUS) (see Tables 2 and 3). TABLE 2 Corporate strategies for managing carbon and BCA exposure Risk category Type Timeline Severity of impact BCA carbon costs Direct Future High MRV admin burden Direct Current Medium National ETS costs Direct Current High Scrap metal supply Indirect Current Medium Clean power access Indirect Current High TABLE 3 Categories, types and severity of carbon-related risks for trade-exposed companies in the steel industry Source of risk Corporate strategy Policy support needed Technology and capital Invest in EAF, H2-DRI, CCUS pilots Green transition fund and CCfDs for first-of-a-kind projects Carbon pricing Internal carbon price Clear national ETS timeline and predictable price signal Regulatory complexity Build internationally aligned MRV system MRV equivalency protocols with key trading partners Supply chain Diversify export markets; develop green products Build scrap collection infrastructure Note: ${\mathrm{H}}_{2} - \mathrm{{DRI}} =$ hydrogen-based direct reduced iron; CCfD = carbon contract for difference # Company and sector profile Contemporary Amperex Technology Co., Limited (CATL) is a global leader in the lithium-ion battery sector and green transition. However, its energy-intensive manufacturing and complex global supply chains create significant carbon exposure. Two-thirds of the world's cobalt is mined in the Democratic Republic of the Congo, and nearly two-thirds of nickel originates from Indonesia.[44] CATL was selected to illustrate how a market leader navigates the pressures of global decarbonization. # Business exposure and response CATL's primary exposure is indirect. While batteries are not currently covered by the CBAM, key upstream materials, such as aluminium and steel, are. As an importer of Chinese-made components for its European facilities, CATL is responsible for compliance. According to the company's carbon accounting reports, the proportion of its total carbon footprint originating from Scope 3 has shown an upwards trend, accounting for the significant majority of total emissions in recent years. Although precise data on the share of aluminium and steel in the value-added of batteries is limited, their presence in production inputs underscores the indirect exposure risk. # Strategic responses - Strong corporate governance: A dedicated team manages carbon issues with regular oversight from the board and senior management, supported by investment in digital carbon accounting infrastructure. - Strategic localization: Establishing manufacturing bases in key markets such as Germany and Hungary helps avoid potential EU CBAM liabilities on finished goods and reduces transportation emissions. Supply chain decarbonization: The "CREDIT" programme, a sustainability audit and capacity-building The lithium-ion battery sector is a linchpin of the global energy transition. However, battery production itself has a significant carbon footprint, driven by the carbon intensity of the local electricity grid. The sector faces layered regulations, including BCAs targeting materials and the EU's forthcoming "battery passport", 45 which will mandate detailed carbon footprint declarations. Challenges include complex compliance and difficulties in obtaining accurate emissions data from upstream suppliers. The company emphasizes that BCA policies must be fair and impartial, ensuring a reasonable distribution of carbon responsibility and benefits across the supply chain so that upstream and downstream actors are both incentivized to reduce emissions. system, engages CATL's vast network of suppliers on emissions reduction and data reporting. Market-based solutions: While batteries are not directly covered by the ETS in China, CATL is indirectly exposed through its electricity consumption and upstream suppliers. The company has also participated in the national voluntary carbon market, the China Certified Emission Reduction (CCER) programme. TABLE 4 Key takeaways and potential actions Timeframe Type Timeline Short term (1-3 years) Digital infrastructure and accounting Invest in transparent, auditable digital carbon accounting systems for BCA compliance Supplier engagement Launch capacity-building programmes for suppliers, particularly small and medium-sized enterprises (SMEs), on carbon management and MRV Collaboration Participate in cross-sector dialogues to share best practices and develop common solutions Long term (3-10+ years) Financial strategy Integrate an internal carbon price into investment planning to drive the adoption of low-carbon technologies R&D and innovation Focus research and development (R&D) on developing products with lower embedded carbon to achieve a durable competitive advantage, complemented by zero-carbon facilities powered 100% by off-grid renewable energy sources Supply chain strategy Build resilient, diversified supply chains by sourcing from lower-carbon regions and suppliers # Company and sector profile Petrobras, Brazil's largest corporate and semi-state-owned oil and gas company, dominates national production and refining. As one of the country's top GHG emitters, its exposure to emerging carbon-pricing policies has implications far beyond its corporate strategy. Petrobras's position is representative of Brazil's industrial landscape: oil and gas are a key element of the country's exports, revenues and energy mix. $^{46}$ How Petrobras navigates carbon pricing and BCAs offers lessons for Brazil's broader economy and other industries. # Business exposure and response Petrobras's exposure will intensify domestically and internationally. The forthcoming Sistema Brasileiro de Comércio de Emissões (SBCE) will cap emissions from large emitters, including Petrobras's refineries and power plants, creating compliance costs. Internationally, emerging BCA schemes – notably the EU CBAM – signal a new wave of trade-related climate measures. While crude oil and fuels are currently not included in CBAM, they fall under the EU ETS2,[47] which will apply to fuels of all origins. CBAM could potentially cover refinery-specific emissions, aligning imported refined products with EU carbon pricing. For Petrobras, this creates short-term indirect risks. Even without immediate coverage, BCAs reshape global demand patterns, tighten investor expectations and increase scrutiny of emissions intensity. Over time, the risks are likely to become direct, with potential carbon costs attached to exports. Petrobras faces structural challenges in aligning with carbon pricing and BCAs. Regulatory uncertainty over the SBCE's final rules complicates planning. Internationally, the absence of harmonized frameworks creates risks of double compliance if Brazilian carbon pricing is not recognized. High decarbonization costs and limited demand for "low-carbon crude" further reduce incentives to accelerate transformation. Finally, investors increasingly demand robust climate strategies, and weak alignment could elevate Petrobras's capital costs or limit access to environmental, social and governance (ESG) financing. To prepare, Petrobras has taken notable steps. It has implemented an internal carbon price to guide investment decisions and created a $1.3 billion decarbonization fund (2025-2029) to finance emissions reductions. The company is a leader in offshore carbon capture and storage (CCS), aiming to inject 40 million tonnes of CO $_2$ by 2025. It has also begun diversifying into biofuels and renewables and recently invested in carbon credits to complement operational reductions. These actions position Petrobras as a transitional actor among producers in the Global South. # Strategic responses Petrobras is addressing BCAs and carbon pricing through: - Internal carbon pricing: Applying shadow prices to guide investment decisions. - Decarbonization fund: Financing reductions via a $1.3 billion fund (2025–2029). - CCS: Scaling offshore CCS with a 40 million $\mathrm{tCO_2}$ target by 2025. - Renewables and biofuels: Investing in cleaner energy alternatives and carbon credit. - MRV systems: Strengthening MRV for compliance and transparency. These measures help manage risks and position Petrobras for future carbon pricing. # Key takeaways and potential actions The Petrobras case underscores progress and gaps in Brazil's oil and gas sector. To remain competitive in a context of BCAs, Petrobras and its peers could: - Strengthen MRV systems to meet BCA reporting requirements at facility and export levels. Integrate internal carbon pricing aligned with international benchmarks into project evaluations. - Invest in refinery retrofits and logistics upgrades to reduce life-cycle emissions. # Company and sector profile UltraTech Cement, the largest cement producer in India, has been strategically chosen as a case study due to its pan-India presence, high market share (20% market share in India) and leadership in sustainability actions. The company has a consolidated capacity of 192.26 million tonnes per annum of grey cement, including India and overseas. It has 34 integrated manufacturing units, 34 grinding units, one clinkerization unit and 10 bulk packaging terminals. The cement sector is highly energy- and emissions-intensive, contributing significantly to global $\mathrm{CO}_{2}$ emissions. Reducing these emissions requires fuel alternatives, clinker substitution and energy efficiency measures. # Business exposure and response Figure 2 illustrates the EU CBAM trade exposure of the cement sector in BASIC countries. The vertical axis shows the carbon payment per dollar of EU production and imports $(\%)$ - $64.73\%$ for India, which is higher than Brazil but lower than China and South Africa. Trade dependence, measured as the share of India's total cement exports destined for the EU, is $11.48\%$ , higher than both China and South Africa. Although the Indian cement industry has moderate direct exposure to the EU CBAM, indirect exposure through supply chains remains a concern. Analysts expect this indirect exposure of UltraTech to rise over the next three to five years as global supply chains become more carbon-regulated. In response, UltraTech has taken various measures, including committing to the Science Based Targets initiative (SBTI) $^{48}$ in 2021, enhancing energy efficiency through the implementation of clinker cooling systems and expanding the use of renewable energy sources. As of the 2025 financial year, UltraTech was operating 1,020MW of renewables and 351MW of waste heat recovery systems (WHRS). It also uses alternative fuels such as municipal solid waste and agricultural waste. The company applies an internal carbon price of $10 per tonne of CO $_2$ and is adopting innovative technologies, including Coolbrook's RotoDynamic Heater™ (RDH) and University of California, Los Angeles' (UCLA) ZeroCAL process for low-carbon operations. It has also set targets through the initiatives RE100 and EP100, $^{49}$ and is the first Indian company to issue dollar-denominated sustainability-linked bonds. To reduce Scope 3 emissions, UltraTech has developed a sustainable supply chain framework that identifies 160 suppliers to apply sustainability criteria for fuel, raw materials and packaging. As of the 2025 financial year, UltraTech has inducted over 600 LNG, CNG and electric trucks into its logistics fleet. Additionally, the company is gradually transitioning its logistics operations towards achieving net-zero emissions. While these actions strengthen overall sustainability performance, they do not directly impact EU CBAM obligations, which primarily focus on Scope 1 and 2 emissions for the cement sector. # Key takeaways and potential actions UltraTech is an example of how a private-sector entity can navigate the impact of BCAs by devising strategic action plans that include: - A sustainable supply chain framework to minimize the supply chain emissions. - Innovative mechanisms, such as sustainability bonds, that can be adopted to mobilize the necessary finance for sustainability projects. - An internal carbon price to prepare organizations to manage future risks. # Company and sector profile African Rainbow Minerals (ARM) is one of South Africa's largest diversified mining companies, operating in manganese, iron ore, coal, platinum group metals and nickel. The company plays a pivotal role in South Africa's mining and metals sector while supporting international trade. Approximately $10 - 30\%$ of its production is exported to regions where BCAs could apply in the future, including the EU, Canada and Australia. Exports are handled through joint ventures, exposing ARM to both direct and indirect impacts. # Business exposure and response ARM perceives BCAs as a significant potential future competitiveness risk, citing concerns over rising costs, administrative complexity and potential losses in the export market. BCAs are widely viewed as creating inequities, disproportionately affecting producers in developing regions while providing limited additional global climate benefits. Market bifurcation is anticipated, with high-carbon products potentially redirected to markets without BCA requirements rather than achieving genuine emissions reductions. In response, ARM's Sustainable Development Department elevates climate and environmental issues to board-level discussions, and the company has committed to net-zero GHG emissions by 2050 through short-, medium- and long-term pathways. Key initiatives include adopting internal carbon pricing to guide investments, accelerating low-carbon technologies and energy efficiency, and planning for Scope 3 emissions reductions throughout the supply chain. These measures demonstrate a structured approach to managing carbon risks and enhancing resilience in carbon-regulated markets. # Key takeaways and potential actions ARM has integrated carbon considerations into its strategy, committing to net-zero GHG emissions by 2050 and implementing internal carbon pricing, low-carbon technologies, Scope 3 engagement and centralized carbon data systems. However, barriers such as high upfront capital expenditure, limited green finance, policy uncertainty and reliance on coal-based electricity constrain adaptation. Companies could: - Embed carbon considerations into strategy early, adopting internal carbon pricing to guide investments and operational decisions. - Invest in low-carbon technologies and process innovations to reduce emissions and shift towards lower-carbon products. - Engage with suppliers and customers and address Scope 3 emissions with centralized MRV systems. - Plan for financial and operational resilience in the face of policy uncertainty and evolving BCAs, using scenario planning and strategic alignment with international regulations. # 1.6 Wider industry responses to border carbon adjustments Industries worldwide are grappling with the implications of BCAs. To complement the case studies with broader perspectives, the following analysis distils insights from cross-sector discussions and workshops, highlighting the systemic challenges and strategic opportunities businesses face as the evolving regulatory landscape reshapes global trade and competitiveness. # Exposure and internal readiness Exposure to carbon pricing and BCAs is increasing, with the EU's CBAM anticipated to expand to more sectors. Hard-to-abate sectors anticipate rising unit costs alongside declines in exemptions in domestic markets, making early strategic planning for direct abatement and robust accounting essential to avoid escalating compliance costs and margin erosion. Indirect emissions from electricity grids and supply chains add competitiveness risks, especially for exporters. Without accompanying policy support, BCAs could pose existential threats to smaller corporates with less capacity to rapidly adapt, while larger companies may see them as a catalyst for modernization and consolidation. Downstream users, such as car manufacturers, are concerned about the border charge costs and supply chain disruptions. Leading companies have developed decarbonization policies, ESG steering committees and carbon management systems, and are investing in low-carbon technologies along the supply chain. For example, a Chinese home-appliance manufacturer mapped emissions across production stages and developed a green value chain that began with product design. Companies are also developing decarbonization roadmaps aligned with domestic rules and anticipated BCA requirements, increasingly embedding internal carbon pricing to steer capital allocation and product portfolio decisions. However, weak engagement of operational teams, limited cross-functional coordination and insufficient internal audit support often hinder execution of measures. Cross-departmental teams and MRV systems are being introduced to track emissions through production stages and projects, and propose novel approaches to decarbonization. Companies with complex supply chains, such as the battery industry, continue to struggle with obtaining accurate primary data and building consistent, traceable datasets. # Implications Readiness is uneven. Companies that strengthen MRV, embed internal carbon pricing, invest in green technologies and institutionalize cross-functional governance have an opportunity to contain compliance costs, improve product-level traceability and preserve market access as BCA scopes expand. BOX 1 The experience of the Alliance of CEO Climate Leaders⁵⁰ illustrates this opportunity: its members have demonstrated that emissions can be decoupled from production growth through strategic, coordinated technology investment and transparent MRV. Representing more than 130 companies with 12 million employees and $4 trillion in revenues, its members reduced aggregate emissions by $12\%$ while delivering revenue growth of $20\%$ between 2019 and 2023. By aligning corporate strategies with measurable sectoral targets, the Alliance has shown how executive-level commitment and collaboration can translate ambition into competitiveness, offering a practical model for industries navigating emerging BCA regimes. Favourable trade financing support from an international bank under its adaptation and resilience finance framework, enabling the delivery of climate-resilient solar modules to international markets. The high costs place considerable strain on corporate balance sheets, making access to green finance essential. Instruments such as green loans are critical to enable compliance with BCA requirements without compromising competitiveness." # Strategic concerns, response and supports needed # Compliance complexity and uncertainty Fragmented regulatory regimes, definitions and standards are raising strategic and administrative complexity and costs. Some jurisdictions allow corporations using eligible carbon offsets to reduce a portion of their domestic carbon pricing, whereas the EU's CBAM does not recognize traditional offsets; there are differences in scope, reporting periods and cost calculation methods between the EU's CBAM and the UK's. Convergence of international standards would enable fair recognition and incentives for reduction efforts with smooth cross-border compliance. Given the evolving and uncertain market and regulatory landscape, companies are advised to engage in policy development and adopt an adaptive approach to strategy and operations. # Technology constraints Limited access to mature decarbonization technologies remains a barrier. Breakthroughs in aluminium technologies are