Green Incentives: Six decarbonisation levers for business opportunities (Part 1)

This is Part 1 of our Green Incentives series, which examines the opportunities afforded by existing grants and incentives and how companies can strategically capitalise on them to turn sustainability into a competitive edge.

Introduction 

Climate change is no longer a distant concern; it is actively transforming how global businesses operate. Across every sector, companies face rising expectations to cut emissions, comply with new regulations, and adopt sustainable practices. However, there’s good news: global green incentives, ranging from carbon pricing to innovation funding, are making the transition not only necessary but also profitable. 

However, decarbonisation isn't just about avoiding penalties. It’s a strategic move to future-proof operations, reduce costs, drive innovation, and strengthen competitiveness in a low-carbon economy.

Governments and international bodies are responding with an expanding array of green incentives, including tax credits, grants, subsidies, and innovation funding, that reward businesses for adopting environmentally friendly practices. Discover key global trends and understand how businesses can leverage them not only for compliance but also for long-term value creation.

In this article, find out what these different incentives mean for your bottom line, which tax credits and grants support clean energy, how sustainability reporting builds trust, the role of green finance in net-zero strategies, and industry-specific incentives that could benefit you.

Carbon pricing and compliance: The financial benefit of cutting emissions

A major development in global decarbonisation policy is the introduction of carbon pricing mechanisms. Instruments such as carbon taxes and emissions trading systems make pollution more expensive. 

The European Union’s Carbon Border Adjustment Mechanism (CBAM), for instance, imposes tariffs on imports of certain goods from countries with less stringent climate policies, ensuring a level playing field for EU businesses already reducing emissions. Similarly, the UK’s Carbon Price Floor (CPF) sets a minimum price for emissions in the energy sector at £18 per tonne of CO₂, incentivising cleaner production.²

Carbon-intensive sectors, such as steel, cement, aluminium, fertilisers, and electricity industries, are currently within the scope of CBAM. From 2026, countries such as Russia, China, Turkey, and India, major exporters of these goods to the EU, are expected to be significantly affected by these measures. This creates a strong signal: as the cost of carbon rises, global supply chains will feel the pressure to decarbonise or face financial penalties at the border.

These pricing tools serve as financial motivators for companies to optimise energy use, adopt renewable sources, and invest in emission-reduction strategies to remain competitive. A significant shift is underway in global decarbonisation, and with the introduction of carbon pricing, carbon emissions are becoming increasingly costly. This makes decarbonisation a financial imperative, pushing companies to adopt cleaner technologies.³

💡 INSIGHT: Businesses that cut emissions early can reduce future compliance costs by up to 30% and gain priority access to funding tailored to their sector.⁴

Sector-specific incentives: Tailored decarbonisation support for industries

Governments are designing targeted incentives that focus on sectors with significant carbon footprints, including transportation, agriculture, and heavy industry. These programmes recognise the unique decarbonisation challenges for each sector and provide support that is tailored accordingly.

In the plastics sector, incentives increasingly target the shift toward recycled content, bio-based materials, and closed-loop systems. The EU’s Circular Economy Action Plan, for example, promotes the uptake of recycled plastics through eco-modulation of Extended Producer Responsibility (EPR) fees and green public procurement criteria⁴. Meanwhile, funding schemes support investments in advanced recycling technologies, traceability systems, and product redesign for circularity. 

In the transportation sector, widespread subsidies for electric vehicles and charging infrastructure are helping logistics and fleet operators accelerate their transition to cleaner mobility. In agriculture, Canada’s carbon farming initiatives reward regenerative practices that sequester carbon in soil. Various other countries are also incentivising low-carbon construction materials, energy-efficient manufacturing upgrades, and circular design in textiles.

These targeted incentives offer tangible benefits to companies adopting sustainable solutions tailored to the unique challenges of their industries.⁵ 

💡 INSIGHT: Tailored incentives give plastics producers a double win, cutting the cost of circular innovation and future-proofing their business as regulations tighten. In the EU alone, circular economy measures could deliver up to €600 billion in net economic benefits by 2030.⁶ 

Tax credits and subsidies: Making renewable energy cost-effective

Many countries are prioritising renewable energy and energy efficiency through tax credits and subsidies. Whether it involves deploying solar and wind energy or enhancing manufacturing efficiency, substantial financial incentives are available to support the shift.

The U.S. Inflation Reduction Act (IRA) offers wide-ranging tax credits for clean energy production, electric vehicles, and energy-efficient infrastructure.⁴ For example, under the IRA, companies installing solar panels or investing in battery storage can receive tax credits covering up to 30% of the project’s cost, significantly lowering the barrier to entry for renewable energy adoption. Meanwhile, the EU Green Deal provides funding to accelerate the transition from fossil fuels to renewables, such as through the Innovation Fund, which supports large-scale clean tech projects across Europe.⁵

💡 INSIGHT: These initiatives significantly lower the cost of energy transition, improve energy security, and reduce operational emissions and long-term energy costs, enhancing energy security and reinforcing corporate sustainability credentials. In a volatile energy market, they serve as critical tools for reinforcing corporate sustainability, financial stability and environmental responsibility.⁶

Green finance: Unlock funding for the low-carbon transition

Green finance is transforming how businesses fund their sustainability strategies. Instruments like green bonds, ESG-linked loans, and sustainability-focused investment funds offer new pathways for financing decarbonisation⁷.

The EU leads with green bonds financing large-scale renewable projects. For example, proceeds from the NextGenerationEU green bond programme have been allocated to initiatives such as the construction of offshore wind farms and the decarbonisation of public transport networks in countries like Spain and the Netherlands, helping reduce emissions at scale⁸.

In the automotive sector, for instance, green finance is being used to accelerate the shift to low-emission vehicle production and sustainable manufacturing. Companies can access national and EU-level funding to invest in battery development, electric mobility, and circular vehicle components. In Germany, grants and incentives help automotive firms integrate low-carbon technologies and energy-efficient processes, enabling them to meet emissions targets while remaining globally competitive.⁹

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Meanwhile, the UK supports businesses through green loan schemes. These financial mechanisms are often coupled with tax benefits and subsidies to encourage participation. Integrating green finance allows companies to reduce capital costs, attract sustainability-minded investors, and align long-term financial goals with environmental performance.⁹

💡INSIGHT: Green finance isn’t just ethical, it’s strategic. It lowers capital costs, attracts ESG-focused investors, and ties sustainability to stronger financial performance. Global ESG assets are projected to reach $50 trillion by 2025, representing over a third of total assets under management.¹⁰

Green tech innovation: Incentives for future-ready businesses

Governments are increasingly funding research and development in green technologies. Initiatives such as the EU’s Horizon Europe and Japan’s Green Innovation Fund support projects in areas like electric vehicles, carbon capture and storage (CCS), and green hydrogen. 

Under Horizon Europe, the EU awarded funding to the Clean Hydrogen Partnership, a public-private initiative aimed at developing a comprehensive hydrogen value chain in Europe. This includes projects focused on green hydrogen production, storage, and distribution, to decarbonise heavy industry and transport.¹⁰

One such example is Climeworks, a Swiss company specialising in direct air capture (DAC) technology. Backed by EU innovation funding, Climeworks has scaled its operations to develop carbon removal plants that extract CO₂ directly from the air, offering a promising solution for achieving net-zero emissions.¹¹

By reducing the financial burden of R&D, these programs enable businesses to innovate and bring sustainable solutions to market faster. Participating in such initiatives positions companies at the forefront of the green tech sector, aligning them with global climate targets. 

💡 INSIGHT: Accessing innovation funding provides businesses with a first-mover advantage in emerging green tech markets and accelerates their time to market.

Standardised sustainability reporting: Why it builds market trust

Accountability is the backbone of sustainability. To ensure transparency in decarbonisation efforts, many regulatory bodies are implementing standardised sustainability reporting requirements. The EU’s Corporate Sustainability Reporting Directive (CSRD) and the U.S. SEC’s climate disclosure rules are key examples.

These frameworks go beyond administrative formalities. They foster accountability, build investor trust, and unlock access to ESG-oriented funding. Businesses that align with reporting standards can strengthen their market reputation and access new growth opportunities. 

One useful framework is the World Business Council for Sustainable Development’s (WBCSD) Circular Transition Indicators (CTI), which categorises circularity performance in areas such as material flows, product design, and business models. Integrating CTI into sustainability reporting allows companies to quantify their circular efforts and better meet both compliance and stakeholder expectations. The figure below provides a visualisation of various regulations and frameworks mapped along value chains and the required data categories. 

For businesses, adopting standardised reporting frameworks means less friction when navigating sustainability regulations across different regions. It streamlines compliance efforts, reduces the risk of legal penalties, and positions companies as credible and transparent actors. This transparency not only builds investor confidence but also strengthens long-term trust with customers, partners, and regulators, ultimately supporting more resilient and competitive operations.

💡INSIGHT: Adopting standardised reporting frameworks makes it easier to comply with evolving regulations across markets while reinforcing transparency that builds investor confidence and long-term stakeholder trust.

Traceability and transparency: Enablers of ESG performance and green incentives

In today’s global economy, supply chain visibility is a crucial component of sustainability. As businesses face increasing pressure to demonstrate the sustainability of their supply chains, regulations and incentives are being implemented to make this possible.

Take, for example, the EU’s Ecodesign for Sustainable Products Regulation (ESPR). It’s all about ensuring products meet strict environmental standards from start to finish — from the traceability of materials to energy efficiency and recycling potential. Additionally, technologies such as digital product passports (DPPs) are enabling companies to track and share the sustainability credentials of their products.

In a partnership between Circularise and Samsonite, the global leader in travel luggage, digital product passports (DPPs) were deployed to enhance transparency in Samsonite’s limited-edition circular collections. By leveraging Circularise’s blockchain-based traceability platform, the initiative enables end-to-end tracking of materials, such as recycled polypropylene from post-consumer plastic waste, throughout the supply chain. This empowers Samsonite to verify sustainability claims, comply with evolving regulations, and offer consumers a deeper understanding of the environmental impact behind their products.

Embracing these practices allows businesses to build consumer trust, improve brand positioning, and qualify for green incentives linked to responsible sourcing and production.

💡 INSIGHT: If accountability is the backbone of sustainability, traceability is the nervous system — enabling businesses to sense, verify, and act on environmental impact across complex value chains.

Capture long-term value through green incentives

The global landscape of green incentives is no longer just about compliance; it has become a strategic playing field where proactive businesses can gain a competitive edge. From carbon pricing mechanisms and innovation grants to tax credits and ESG-linked finance, these green incentives offer environmental benefits, unlocking pathways to cost savings, technological leadership, and future market access.

For companies looking to decarbonise, these tools can accelerate investment in clean technologies, reduce operational emissions, and improve supply chain resilience. But capturing this value requires awareness and a proactive approach. Businesses should audit their eligibility for regional incentives, integrate sustainability goals with financial planning, and engage with partners who can help navigate the regulatory landscape.

Businesses that move early not only avoid rising compliance costs but also secure first-mover advantages in their sector, attracting capital, meeting stakeholder expectations, and future-proofing their operations.

In Part 2 of our Green Incentives series, we explore the green funding landscape in the EU and the UK — from major research grants to industrial-scale subsidies — and how you can utilise them to fuel the transition and future-proof your business operations.