Climate and Competitiveness Border Carbon Adjustments in Action 2025

Competitiveness and strategic opportunities BCAs have not yet caused major competitiveness losses, because mechanisms currently remain in transitional reporting phases. Operational impact is emerging for some industries, but changes remain limited. Companies may be in early stages of adaptation, but proactive readiness is gaining momentum. True impacts on profit margins, pricing power and procurement will become clear once definitive measures take effect. Companies that prepared early could gain first- mover advantages, including enhanced reputation, premium market access and resilient supply chains. Investors and clients are increasingly scrutinizing corporate transition plans, emphasizing executable roadmaps and transparent MRV systems. Therefore, proactive decarbonization can support investor confidence, regulatory goodwill and competitive positioning. Implications Viewing BCAs not just as a compliance cost but as a strategic opportunity allows companies to leverage low-carbon products to differentiate themselves in the market, justify premium pricing and protect or expand market share. BOX 2 A key example of private-sector alignment around deep decarbonization is the First Movers Coalition (FMC).52 The FMC brings together more than 90 companies across seven hard-to-abate sectors, using aggregated purchasing commitments to accelerate the commercialization of zero-carbon technologies. By securing demand signals for green steel, cement, shipping and aviation fuels, FMC members are creating early markets that directly support the decarbonization goals underlying mechanisms such as BCAs. The initiative demonstrates how collective corporate action can complement policy tools by reducing cost barriers and scaling low-carbon supply chains. Key takeaways and potential actions BCAs are accelerating the coupling of climate ambition with trade competitiveness. Companies could: –Assess exposure and align internal systems, such as building decarbonization roadmaps that integrate MRV, internal carbon pricing and cross-functional governance to meet product-level disclosure and traceability requirements. –Engage in policy dialogue for harmonization of fragmented BCA designs to reduce administrative complexity and trade barriers; this helps achieve coordinated standards externally and corporate scenario planning, with incentives aligned across markets. –Strategically frame BCAs as catalysts for innovation and competitiveness, not as regulatory challenges. Economies and businesses with coordinated responses across policy, finance and industries will be better positioned to thrive and succeed in the low-carbon future. Economies and businesses with coordinated responses across policy, finance and industries will be better positioned to thrive and succeed in the low-carbon future. Proactive decarbonization can support investor confidence, regulatory goodwill and competitive positioning. Climate and Competitiveness: Border Carbon Adjustments in Action 20