Carbon & Capital: Earnings-At-Risk?

Back in 2018, the world was waking up to a new reality: carbon wasn’t just an environmental issue—it was a financial risk with real balance sheet implications. Carbon pricing was accelerating, with 51 jurisdictions covering 20% of global emissions, and the EU carbon price had surged from €8 to €18 per ton. The big question then was how fast and how deeply markets would integrate carbon risk into valuations and capital flows. Fast forward to 2025, and while progress has been uneven, the shift is now undeniable—and its next phase will be even more disruptive.

Since then, carbon pricing has skyrocketed past €100 per ton in key markets, while new regulations—emissions caps, corporate disclosure mandates, and nature-related financial risk assessments—are forcing a fundamental reassessment of value. What was once a hypothetical earnings risk is now a bottom-line reality. Investors are no longer just tracking carbon footprints; they’re stress-testing future cash flows for exposure to transition risk. The shift from static emissions reporting to forward-looking financial modeling has redefined how markets measure resilience.

The trends forecasted in 2018 have largely materialized, but the next phase of disruption is even bigger. Nature-related risks, AI-driven climate analytics, and supply chain upheavals are layering new complexity onto markets. The ability to price systemic risks—carbon, biodiversity loss, geopolitical instability—will define the next generation of financial winners. The lesson from 2018 is clear: markets evolve, but not evenly. Those who move beyond compliance and into strategy—treating carbon not as a cost but as a variable in the restructuring of global finance—won’t just mitigate risk; they’ll drive the next economic transformation. The race isn’t over—it’s accelerating.