Climate and Competitiveness Border Carbon Adjustments in Action 2025

Financing strategies Companies can develop financing strategies for GHG emissions reduction that use governmental incentives and climate-focused financial institutions. Government support Many carbon-pricing policies provide direct financial support such as co-financing for clean- technology deployment, free allowance allocations that subsidize investments, technical assistance or reduced taxes. Labelled bonds Companies can structure financing strategies with labelled bonds and loans (including revolving credit) that fund decarbonization technologies. Sustainability-linked instruments tie interest rates to emissions-reduction targets, creating rewards for achieving compliance while reducing capital costs. Sustainability-aligned investors Additionally, companies can engage ESG-focused investors by demonstrating alignment between decarbonization investments and compliance strategies. Companies should present financial models showing how government incentives enhance project returns and cost–benefit analyses that highlight improved financial performance. This includes quantifying how policy-driven revenue streams from tax incentives and compliance benefits improve project economics. Syndicated climate loans Syndicated climate loans can serve as a key financing instrument for companies adapting to emerging BCAs. By linking borrowing terms to measurable emissions-reduction targets, these facilities enable firms to access capital at preferential rates while decarbonizing production processes and supply chains. The transparency and third-party verification embedded in such loans also strengthen emissions reporting and traceability, supporting compliance with evolving carbon disclosure and adjustment regimes. In this way, syndicated climate loans can help companies manage both the financial and operational dimensions of BCA exposure while enhancing long- term competitiveness.59 Demand aggregation platforms Demand aggregation platforms, such as the First Movers Coalition, pool the purchasing commitments of leading companies to create early markets for low-carbon materials and technologies. By combining corporate demand, these platforms provide clear market signals that de-risk investment and accelerate commercialization in hard-to-abate sectors. As these technologies scale, they can drive down production emissions and costs, reducing corporate exposure under emerging BCA regimes. Investors increasingly recognize that companies addressing carbon-pricing policies through systematic decarbonization investments offer superior risk-adjusted returns. The financing strategy should therefore emphasize how compliance positions companies for long-term competitiveness, particularly regarding BCAs. Investors increasingly recognize that companies addressing carbon- pricing policies through systematic decarbonization investments offer superior risk- adjusted returns. Climate and Competitiveness: Border Carbon Adjustments in Action 33