The next climate obligation may not arrive as a regulation.
It may arrive as a clause in a customer contract.
For years, companies have largely approached carbon regulation as a compliance question. Which emissions must be measured? What must be reported? Which facilities fall within scope? How will carbon prices be calculated?
These questions remain important. But they no longer capture the full commercial impact of carbon regulation.
The European Union’s Carbon Border Adjustment Mechanism entered its definitive regime on 1 January 2026. EU importers of covered goods now face authorisation, reporting and financial obligations linked to the embedded emissions of the products they import. The mechanism currently covers selected goods in cement, iron and steel, aluminium, fertilisers, electricity and hydrogen.
Türkiye has also taken a significant step. The Türkiye Emissions Trading System Regulation was published on 27 August 2026, establishing the legal and operational framework for the national carbon market. It introduces rules covering emissions permits, allowances, monitoring, reporting, verification and allowance surrender, with an initial pilot phase to be determined by the Carbon Market Board.
Together, these developments signal a structural change for industrial value chains connecting Türkiye and the European Union.
Carbon is no longer only an environmental metric.
It is becoming a cost, a contractual obligation and a factor in the allocation of commercial value.
Carbon has a price, but who owns the cost?
Carbon regulation can determine how emissions are measured and priced. It does not, by itself, determine which company will ultimately absorb the economic cost.
Under CBAM, the formal financial obligation sits with the authorised CBAM declarant in the European Union. Yet the amount, quality and verifiability of emissions information often depend on the producer outside the EU.
This creates an important commercial tension.
An EU importer may be legally responsible for purchasing and surrendering CBAM certificates, but it may seek to transfer the associated cost, data obligations and liability risks to its supplier. A Turkish producer may not be the party surrendering the certificates, but it could still face lower purchase prices, new data requirements, contractual penalties or the loss of a customer if its carbon performance is considered too costly or uncertain.
The regulatory obligation and the economic burden do not necessarily remain with the same party.
The real allocation takes place through pricing power, procurement decisions and, increasingly, contractual terms.
This is where the carbon clause begins.
Regulation is moving into the contract
Commercial contracts have always allocated risk.
They determine who carries the impact of currency movements, commodity-price volatility, delivery delays, changes in law, product defects and inaccurate information. Carbon is now joining that list.
As carbon costs become more material, companies are likely to introduce more detailed provisions into supply, procurement, offtake, EPC, financing and long-term sales agreements.
These provisions may address several distinct issues.
First, contracts may require suppliers to provide product-level or installation-level emissions information using specified methodologies. A general commitment to “provide sustainability data” may no longer be sufficient. Customers may ask how the data was calculated, which production period it covers, whether default or actual values were used and whether the information has been independently verified.
Second, suppliers may be asked to provide representations and warranties regarding the accuracy and completeness of emissions data. Once carbon information affects a customer’s financial obligation, incorrect data is no longer simply a reporting weakness. It can create a measurable commercial loss.
Third, contracts may establish audit, access and cooperation rights. Customers may seek the ability to request supporting documents, obtain updated calculations, work with accredited verifiers or access information required for regulatory submissions.
Fourth, contracts may include carbon-related price-adjustment mechanisms. If the carbon price rises, emissions values change or the regulatory scope expands, the parties will need to decide whether the resulting cost is absorbed, shared or passed through.
Fifth, change-in-law and hardship provisions may become increasingly important. A multi-year contract negotiated under one carbon regime may continue under a very different regulatory and cost environment. If the contract does not define how this change will be managed, the parties may face a difficult renegotiation precisely when the financial exposure becomes material.
Finally, contracts may allocate liability for inaccurate data, missed deadlines, failed verification or regulatory penalties. The most commercially powerful party may attempt to transfer a significant share of this exposure to the other side.
None of these clauses is merely administrative.
Each one influences cost, risk and margin.
The carbon margin is not distributed equally
Consider a simplified value chain involving a Turkish producer, an EU importer and a downstream industrial customer.
The Turkish producer manufactures a CBAM-covered product. The EU importer purchases that product and carries the formal CBAM obligation. The downstream customer expects a competitive and increasingly low-carbon input.
If the producer has high embedded emissions, the importer’s exposure may increase. The importer may respond by demanding a lower product price, requesting a carbon-cost adjustment or switching to another supplier.
If the producer has low embedded emissions, it may reduce the importer’s CBAM exposure. But this does not automatically mean that the producer captures the resulting value.
The commercial outcome will depend on the contract.
Can the producer demonstrate its carbon advantage with reliable and verified data?
Does the pricing formula recognise lower embedded emissions?
Can the importer retain the entire benefit while continuing to pay the same purchase price?
Does the producer have sufficient negotiating power to convert lower carbon intensity into a premium, a longer contract or preferred-supplier status?
A low-carbon product can create value without the producer capturing that value.
This is a critical but often overlooked point. Companies can invest significantly in cleaner electricity, efficient equipment, process transformation and emissions-data systems, yet fail to translate these investments into stronger margins if their commercial agreements do not recognise the improvement.
Decarbonisation, therefore, is not only a technology and investment challenge.
It is also a value-capture challenge.
Carbon clauses can extend regulation beyond its formal scope
The contractual impact of carbon regulation will not stop at the legal boundaries of CBAM or an emissions trading system.
A company may fall outside a regulatory threshold and still be affected through the requirements of its customers.
Large manufacturers may request emissions information from suppliers that are not directly covered by CBAM. Banks may introduce carbon-related information or performance requirements into financing documentation. Procurement processes may include product carbon thresholds. Buyers may expect suppliers to maintain monitoring systems, follow recognised methodologies or develop emissions-reduction plans.
This creates a form of contractual transmission.
Regulation applies directly to one company, but that company transfers part of the operational burden to its suppliers. Those suppliers may then transfer similar requirements further down the value chain.
As a result, formal regulatory scope and effective commercial scope begin to diverge.
A company may be outside the regulation but inside the contract.
For Turkish companies connected to European value chains, this distinction is becoming increasingly important. Waiting to become directly regulated may mean preparing too late. Customer expectations and contractual requirements can move faster than statutory thresholds.
Data is becoming a commercial representation
The growing role of emissions information introduces another fundamental change.
Carbon data is moving from the sustainability report into the commercial relationship.
Under the definitive CBAM regime, EU importers can use default values or actual emissions data. Where actual values are used, producers outside the EU must provide the necessary verified information. The European Commission has continued to issue detailed guidance during 2026 on calculation methodologies, default values, verification and registry procedures.
This means the quality of carbon data can affect the cost of doing business.
Default data may appear administratively easier, but it may not reflect a producer’s actual performance. A company that has invested in lower-carbon production may need robust and verifiable actual data to demonstrate the economic value of that investment.
At the same time, providing data creates responsibility.
Who owns the methodology?
Who approves the calculation?
Who pays for verification?
What happens if previously submitted information must be corrected?
Who bears the cost if the customer relies on inaccurate information?
These are no longer questions only for sustainability teams. They require coordination across operations, finance, legal, procurement, sales and data governance.
The carbon clause is therefore not a single provision. It is the contractual expression of a wider management system.
Türkiye’s ETS adds a second layer
The introduction of Türkiye’s ETS framework makes this discussion even more relevant.
Turkish industrial companies may increasingly face carbon exposure from two directions.
The first is domestic: emissions permits, monitoring, reporting, verification and allowance obligations under the emerging national system.
The second is external: CBAM costs, customer requirements and low-carbon procurement expectations connected to the EU market.
These two layers will interact.
If a carbon price paid in Türkiye is recognised under the applicable CBAM rules, it may affect the adjustment of the CBAM obligation. But even where regulatory mechanisms interact, the commercial consequences will still need to be addressed between companies.
Contracts may need to clarify how domestic carbon costs are evidenced, whether they are included in the product price and how any CBAM-related adjustment is shared. Parties may also need to address differences in timing, methodology, verification and regulatory interpretation.
The same tonne of embedded carbon may therefore create several connected questions:
How is it measured?
Where is it priced?
Who pays the initial regulatory cost?
Who receives any corresponding adjustment?
Who ultimately absorbs the cost in the product margin?
Without contractual clarity, the answer may be determined less by climate performance than by bargaining power.
What should companies review now?
Companies do not need to begin by creating a standard “carbon clause” and inserting it into every agreement. Different products, customers, sectors and jurisdictions will require different approaches.
They should begin by understanding their exposure.
Which customer and supplier contracts are most sensitive to carbon costs?
Which agreements already contain change-in-law, price-adjustment, audit or sustainability-data provisions?
Can those provisions respond adequately to CBAM, Türkiye’s ETS and future changes in carbon pricing?
Who is responsible for providing and verifying emissions information?
Can carbon costs be passed through, and under what conditions?
Does the company’s pricing strategy reward lower-carbon performance?
Could the company become liable for information produced by a supplier or another facility?
Most importantly, are sustainability, legal, finance, procurement and commercial teams examining these questions together?
A sustainability team may understand the emissions methodology. A legal team may understand the allocation of liability. Finance may model the carbon-price exposure. Sales may understand what the customer will accept.
But unless these perspectives are connected, the company may comply with the regulation while negotiating away the value.
From climate compliance to commercial architecture
COP31 is being framed around implementation: converting targets into investments, projects and measurable outcomes.
For businesses, part of that implementation will occur far from the negotiating rooms in Antalya.
It will occur when a buyer decides which emissions data to request.
When a supplier negotiates whether carbon cost is included in the price.
When a bank determines what information must support a financing decision.
When an investor assesses whether a company can protect its margins during the transition.
And when parties decide who carries the risk if carbon regulation changes faster than their contract.
Governments can establish carbon markets and border mechanisms. They can determine regulatory coverage, methodologies and compliance obligations.
But commercial contracts will transmit those policies through the real economy.
They will influence who pays, who adapts, who captures the value of lower-carbon production and who loses competitiveness despite technically remaining compliant.
The next phase of climate regulation will not be negotiated only by policymakers or at COP31.
It will also be negotiated clause by clause, across supply agreements, procurement frameworks and commercial relationships.
Carbon has entered the contract.
The strategic question is whether companies are ready to negotiate what happens next.
