Climate and Competitiveness Border Carbon Adjustments in Action 2025

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. Climate and Competitiveness: Border Carbon Adjustments in Action 18