Garanti BBVA Launches a New Treasury Solution to Help Clients Manage CBAM-Related Carbon Cost Risk
Garanti BBVA has developed a new treasury solution to help companies trading with the European Union manage the carbon cost risk arising from potential price fluctuations in Carbon Border Adjustment Mechanism (CBAM¹) certificates through derivative products. As part of this initiative, Garanti BBVA introduced an early solution in Türkiye by structuring and executing a transaction to help Medcem Cement Group manage and hedge its CBAM-driven price risk. Through this innovative solution, Medcem Cement Group has gained greater predictability over its future CBAM certificate costs by managing a portion of the price risk associated with the CBAM certificates underlying the transaction today
Garanti BBVA has added another innovation to its trade finance and risk management offering. At a time when climate regulations are becoming an increasingly important financial risk management issue for companies, the Bank has introduced a new solution based on derivatives designed to help clients trading with the European Union manage carbon cost risks arising from the Carbon Border Adjustment Mechanism (CBAM).
Fluctuations in CBAM certificate prices² may affect exporters' cost structures, profitability and pricing strategies. Garanti BBVA enables exporters to the EU to lock in greater certainty around CBAM costs, giving them the confidence to plan their business over the long term.
Garanti BBVA has developed an early solution in Türkiye, allowing exporters that have CBAM exposure to manage certificate price volatility. Under the transaction, Medcem Cement Group locked in the average EU Allowances (EUA³) price over the reference period, reducing future carbon cost uncertainty for the period covered by this transaction and improving pricing visibility.
Sinem Edige: "Sustainability is transforming not only environmental strategies, but also financial strategies and risk management."
Commenting on the transaction, Sinem Edige, Executive Vice President of Garanti BBVA, said: "Today, sustainability has become a key driver transforming not only companies' environmental impact, but also their financial strategies and risk management approaches. Climate regulations such as the European Union's Carbon Border Adjustment Mechanism are making the predictable management of carbon costs increasingly critical for companies trading with the EU.
At Garanti BBVA, we support our clients in managing the financial risks associated to a lower-carbon economy and with compliance with CBAM requirements. By combining our expertise in sustainable finance with treasury products and risk management solutions, we help our clients prepare for a new generation of financial risks.
The cost of CBAM certificates is subject to changes driven by developments in EU carbon prices. As a result, companies planning exports, pricing products or projecting costs today cannot accurately predict the carbon costs they may face in the future. Through this transaction with Medcem Madencilik—one of the early applications of its kind in Türkiye—we aim to help our client manage this uncertainty and reduce their exposure to EU carbon prices.
Looking ahead, we will continue developing innovative solutions that help our clients integrate climate-related financial risks into treasury planning."
Medcem Cement Group CEO Mehmet Ali Ceylan also commented on the transaction: "With the transition of the Carbon Border Adjustment Mechanism (CBAM) into its financial obligation phase, closely monitoring carbon costs and improving their predictability is becoming increasingly important, particularly for industries exporting CBAM-covered products to the European Union. We believe that, for the cement sector, this process should be addressed not only from a regulatory compliance perspective but also in terms of financial resilience and international competitiveness.
At Medcem Cement Group, we consider uncertainty around carbon costs as one of the financial dimensions of our decarbonization strategy. In this context, we worked in close consultation with the Garanti BBVA team and through the hedge transaction we executed, we aimed to make a certain portion of our CBAM-related costs more predictable."
Innovative Solutions for a New Generation of Financial Risks
Garanti BBVA aims to support its clients not only in managing traditional market risks such as foreign exchange, interest rate and commodity risks, but also in addressing the new generation of financial risks arising from climate regulations.
By combining its expertise in sustainable finance with innovative treasury and risk management solutions, the Bank supports companies as they navigate the financial impacts of climate-related regulation.