As we reach the end of the first month of 2026, one of the most consequential global developments for trade finance is no longer theoretical or preparatory: carbon border adjustment mechanisms are moving into their first operational phase, with direct implications for pricing, risk assessment and financing structures in international trade.

On 1 January 2026, the European Union's Carbon Border Adjustment Mechanism (CBAM) began its transition from reporting-only obligations to financial exposure, a shift that has been closely analysed by the Financial Times in recent reporting.

CBAM requires importers of carbon-intensive goods, including steel, aluminium, cement, fertilisers and electricity, to purchase carbon certificates reflecting the embedded emissions of those products.

While the environmental intent is clear, the trade finance consequences are only now becoming fully apparent. What was previously a regulatory compliance issue is rapidly becoming a balance-sheet and liquidity consideration for exporters, importers and their banks.

For trade finance providers, CBAM introduces a new layer of cost uncertainty and timing risk. Carbon certificate costs fluctuate, reporting obligations are complex, and liability sits with the importer, but is often contractually pushed upstream through pricing adjustments or indemnities. This complicates traditional trade finance structures, particularly where financing is extended against fixed invoice values or where margins are already tight.

Documentary credits, supply chain finance programmes and receivables discounting now increasingly require carbon-cost sensitivity in credit assessment.

The Financial Times notes that exporters in emerging markets are particularly exposed. Many lack reliable emissions data or the systems needed to quantify carbon intensity at product level, increasing the risk of conservative assumptions, and therefore higher costs, being applied at the border. For banks, this raises questions around documentation sufficiency, data reliability and the potential for disputes when CBAM-related charges diverge from commercial expectations.

From a global trade finance perspective, the introduction of CBAM also challenges long-standing assumptions about risk neutrality in trade instruments.

Traditionally, banks examine documents rather than underlying goods or production processes. CBAM blurs this boundary by making how goods are produced financially relevant to cross-border transactions. This creates pressure to integrate ESG and emissions data into trade workflows, something many banks are not yet operationally equipped to do at scale.

There are also liquidity implications.

CBAM certificates must be purchased and surrendered, tying up cash that would otherwise circulate through working-capital cycles. For importers reliant on short-term trade finance, this can increase utilisation rates and funding costs. Some banks are already exploring CBAM-linked financing add-ons, including short-term facilities to bridge carbon certificate obligations, but these remain nascent and unevenly available across regions.

Crucially, CBAM is not an isolated European initiative.

The Financial Times reports growing international concern that similar mechanisms could be replicated elsewhere, creating a fragmented landscape of carbon border measures. For global trade finance providers, this raises the prospect of multi-jurisdictional carbon exposure, further complicating risk modelling, covenant structures and pricing strategies.

In effect, CBAM marks a structural shift: environmental policy is no longer external to trade finance mechanics. It is becoming embedded in transaction economics, credit decisions and documentary expectations. Banks that fail to adapt may find traditional trade products misaligned with the new cost and risk realities of cross-border commerce.

Further information: https://www.ft.com/content/9e4afe62-b474-478e-ac88-fa1417064e5f

This article represents the views of the author and not necessarily those of ICC.