Davos 2025: Key Trends for the Carbon Market and Sustainability

Climate commitments and investments at Davos 2025

Several important initiatives were announced at Davos 2025, signaling significant advances in financing and partnerships for the carbon agenda. One highlight was the "Race to Belém" initiative, launched by carbon market investors with support from Swiss trading firm Mercuria, aiming to raise US$ 1.5 billion to protect the Amazon through jurisdictional carbon credits (JREDD+). This program will work with state governments, farmers, and local communities, issuing robust Reducing Emissions from Deforestation and Forest Degradation credits across vast areas — an effort organizers hope to expand beyond the initial US$ 1.5 billion target.

Additionally, global business coalitions reinforced their decarbonization targets. For example, the First Movers Coalition — a partnership between governments and major corporations — expanded its reach by including new members and focusing on technologies to remove and reduce carbon in hard-to-abate sectors (aviation, steel, cement, etc.). Its participants committed to directing US$ 600 million in investments by 2030 in CO₂ removal solutions, demonstrating the private sector's appetite to finance carbon capture and storage technologies. On the governmental front, several countries used Davos to announce more ambitious climate plans or regional initiatives. The Democratic Republic of Congo, for instance, announced the creation of the world's largest tropical ecological corridor, protecting 540,000 km² of forests — an area the size of France — that currently sequesters 1.5 billion tonnes of CO₂ per year. Thailand announced policies to expand sustainable food production (such as low-methane rice) with support for farmers and industry, aiming to reduce agribusiness emissions.

These commitments signal expectations of accelerated growth in the carbon credit market. Estimates indicate that global carbon trading could exceed US$ 300 billion by 2050, with approximately US$ 50 billion in the next 5 years alone. The Davos announcements reinforce this trend: large volumes of resources are being directed to sustainable projects, which should increase demand and the value of carbon credits in coming years. Attentive companies and investors see the opportunity to deploy capital in climate solutions and reap both financial and reputational returns.

Climate policies under debate and carbon pricing

The regulatory debates at Davos 2025 highlighted that to achieve global climate goals, it will be necessary to strengthen carbon pricing mechanisms and align public policies across nations. A latent concern was about backsliding on climate commitments: UN Secretary-General António Guterres warned in his speech that certain companies and financial institutions retreating from their emission targets are on the wrong side of history and science. Guterres made a strong appeal for all major emitters to present updated climate plans aligned with limiting warming to 1.5°C already in 2025, before COP30 in Belém. This demand sets the tone for future policies: there is an expectation that governments will implement stricter short-term targets and market mechanisms to enforce them.

One policy in the spotlight was the EU's Carbon Border Adjustment Mechanism (CBAM). Brazilian leaders at Davos emphasized that without its own carbon pricing, Brazilian exporters could suffer billions in losses from paying carbon taxes when selling to the EU. This example catalyzed discussions on market integration: developing countries see advantages in creating domestic carbon markets to remain competitive and avoid climate-related trade barriers. There was also emphasis on international cooperation via the Paris Agreement (Article 6), still under development. Some panelists warned that geopolitical tensions and lack of global collaboration could delay the standardization of a truly global carbon market — reinforcing the importance of forums like Davos for aligning multilateral efforts.

Another regulatory trend discussed was transparency regarding climate and nature risks. The recently created Taskforce on Nature-related Financial Disclosures (TNFD) was mentioned, which launched new sector guidelines at Davos. The TNFD initiative complements the established TCFD (focused on climate risks) and will help companies identify and report biodiversity-related risks. This convergence of agendas indicates that future climate policies may incorporate not only carbon but also ecosystem impacts, creating integrated environmental credits (climate + nature). Regulators and leaders present agreed that clear rules and standardized data on sustainability are crucial for giving credibility to the carbon market and guiding consistent investments in green projects.

Sectors in focus: impacts and opportunities for companies

Discussions at Davos highlighted which economic sectors will most strongly feel the effects of carbon and sustainability trends — and consequently where the greatest opportunities lie for innovative companies:

• Energy and Base Industries: The energy transition was a central theme. Sector representatives emphasized the need to modernize infrastructure, expand renewables, and even reconsider the role of nuclear energy to ensure energy security with low emissions. There was consensus that smart grids and advanced storage are vital to support the expansion of clean energy. Carbon-intensive industries (such as steel, cement, chemicals) face growing pressure to decarbonize their production chains — but also see opportunities in leading green materials markets. Companies in these segments are investing in green hydrogen, carbon capture, and process electrification to meet future emission targets and satisfy customer demand for lower-footprint products.
• Agribusiness and Land Use: Nature-based solutions gained prominence as a way to mitigate emissions and generate co-benefits. Deforestation and biodiversity loss risks were cited among the largest in the global landscape, but programs like the Race to Belém show that capital is being directed to forest credits at scale. For agribusiness companies, this opens two fronts: on one hand, pressure to adopt sustainable production (e.g., low-carbon agriculture, supply chain traceability); on the other, the chance to monetize environmental assets (maintaining intact forests, recovering degraded areas, and generating carbon and biodiversity credits).
• Finance and Investments: The financial sector, represented by major banks and asset managers at Davos, emphasized both risks and opportunities related to carbon. A WEF report indicated that physical climate change impacts could reduce corporate profits by up to 7% annually by 2035 without sufficient adaptation. This type of data reinforces the urgency of resilient investments. With the potential evolution of the carbon market to a commodities stage (including carbon derivatives and futures), prepared companies can benefit from new financing sources and hedge against climate risks.
• Technology and Innovation: The technology sector played a dual role in discussions. On one hand, it was praised as a crucial tool for tackling the climate crisis — through AI, big data, and IoT, it is possible to optimize emissions management, predict extreme events, and increase efficiencies. On the other hand, there were warnings that technological advancement itself could raise emissions if not accompanied by clean energy. At Davos, experts advocated for green guardrails for technology, ensuring the digital revolution goes hand in hand with power sector decarbonization.

Carbon price influences and future outlook

Insights shared by global leaders at Davos are expected to directly influence carbon pricing and sustainable investments in the coming years. The message is clear: those who get ahead of the green transition will reap the rewards. Governments indicated they will internalize emission costs increasingly — whether through carbon markets, taxes, or stricter standards. The EU already operates with high carbon prices in its ETS and is implementing the CBAM; the US, while lacking a federal market, has states with cap-and-trade systems and, post-Davos, new initiatives may emerge. Economies like China and India were also mentioned: China already has the world's largest carbon market (power sector) and discussed expansion to other sectors at Davos, while India is betting on aggressive renewable energy targets that in practice create an implicit carbon price by displacing fossil fuels.

Leaders also highlighted the importance of interim emission targets. Rather than aiming only at 2050, many companies and governments will set targets for 2030 or even 2025, driving immediate action. This urgency adds short-term pressure to the credit market: demand for high-quality credits is expected to increase substantially as companies seek to meet annual or biennial targets. With demand outstripping supply, the trend is for carbon prices to rise globally. Experts suggest that carbon prices need to rise above US$ 75-100 per tonne this decade to induce deep technological changes and achieve net zero.

Finally, the Davos 2025 message was one of cautious optimism: although challenges are enormous, solutions — whether technological, market-based, or policy-driven — are within reach. CEOs emphasized that sustainability is already integrated into their multi-year business plans, and that billions in investments are already underway in clean energy, circular economy, and carbon credits. With public-private collaboration, innovation, and robust climate governance, it is possible to keep warming under control while generating sustainable economic growth.

The trends seen at Davos 2025 make it clear that the carbon market and sustainability will increasingly be at the center of corporate strategies and public policies. Companies operating in Brazil or globally should position sustainability as a driver of innovation and competitive advantage. It is time to assess climate commitments, identify investment opportunities in clean energy, efficiency, and carbon credits, and prepare teams for new regulations. Carbonova remains attentive to these global trends to support its clients: contact us to understand how your company can benefit from this new landscape of green economy and increasingly robust carbon pricing. Together, we can transform climate goals into real business opportunities.