Garanti BBVA has introduced a treasury solution using derivatives to help companies trading with the European Union hedge carbon cost risk from price swings in Carbon Border Adjustment Mechanism (CBAM) certificates.
In the first application of its kind in Türkiye, the bank structured and executed a transaction for Medcem Cement Group. Medcem locked in the average EU Allowances (EUA) price over the reference period, reducing future carbon cost uncertainty and improving pricing visibility for the covered period.
CBAM certificate prices mirror the EU ETS carbon price and can affect exporters’ cost structures, profitability and pricing strategies. The solution lets EU exporters fix greater certainty around those costs.
Sinem Edige, Executive Vice President of Garanti BBVA: “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.”
She added: “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.”
Medcem Cement Group CEO Mehmet Ali Ceylan: “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.”