CBAM and its dual role as a trade defence mechanism and a climate diplomacy tool through the lenses of hard and soft law

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master_Kuparinen_Daria_2026.pdf (1.28 MB)

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School of Business | Master's thesis
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2025-12-08

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Mcode

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Master's Programme in Business Law
Yritysjuridiikan maisteriohjelma

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en

Pages

69

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Abstract

The undertaken research examines regulations in the area of sustainability with special attention devoted to the study and critical analysis of the Carbon Border Adjustment Mechanism. Particularly the double role of the mechanisms as a Trade Defence Mechanism and a vital policy tool used to promote and advance the path to the carbon-neutrality in Europe is inspected. The focus of the study is drawn to the analysis of the strengths and weak points of the regulation from the legal, financial and socio-political point of view. Analysis is undertaken on the European level and subsequently proceeds down to the individual member state level. Finland is used as part of the research to juxtapose the beginnings of the regulation as a proposal by the European Commission with the ability of smaller European countries to influence the path the proposed regulation takes and make sure that their vital interests are taken into account. Finland is also used an example of how smaller enterprises, so called SME, in the smaller European countries react, adapt and find necessary tools, including interpretation of laws and regulations, to transpose sustainability legislation into concrete measures on the individual company-level. An important conclusion of the study is that sustainability legislation cannot function by itself in the closed environment and be directed only towards European countries. Indeed, the success of the whole legal framework, is directly influenced by the “willingness to accept and comply” with the laws not only from inside the Block but from outside the European Common Market as well. The second major conclusion of the research is that “Hard Law” instruments alone cannot achieve the desired by the proposed legislation results. The indispensable inclusion of “Soft Law” and “Soft Policies” into the framework of sustainability legislation provide the path, the “tool” to achieve the desired goals which are the transition of the European economy towards carbon-neutrality and effective prevention of the carbon leakage. In the general conclusion the important issues of future development in the law making related to the sustainability regulation are being introduced and briefly analysed. These issues include the role of AI, social media and shift from the “classic law-making” towards hybrid legislation, which is based upon international agreements, soft policies and official and unofficial Codes of Conduct.

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Supervisor

Scherleitner, Moritz

Thesis advisor

Löfman, Martin

Keywords

CBAM, soft Law, Omnibus-I, ESG, trade defence mechanisms, special instruments

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https://urn.fi/URN:NBN:fi:aalto-202601151322

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[gradu] Kauppakorkeakoulu / BIZ