Climate and Competitiveness Border Carbon Adjustments in Action 2025

Foreword 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.Pedro Gómez Head, Industry Agenda, World Economic ForumWater Cheung Chair, Climate Finance Asia Climate and Competitiveness: Border Carbon Adjustments in ActionDecember 2025 Climate and Competitiveness: Border Carbon Adjustments in Action 3