This article examines how Environmental, Social and Governance (ESG) factors, particularly the European Union’s Carbon Border Adjustment Mechanism (CBAM), are reshaping transfer pricing policies and global value chains. It highlights the growing importance of tax transparency within ESG frameworks and explores how CBAM compliance requirements affect multinational enterprises’ sourcing strategies, intercompany pricing and functional allocation of profits. The article argues that ESG considerations, while not explicitly addressed by the OECD Guidelines, must increasingly be integrated into transfer pricing analyses to reflect the economic reality of modern business models. The conclusion stresses the need for alignment between ESG disclosures, CBAM compliance and transfer pricing documentation to ensure both regulatory adherence and reputational resilience in a sustainability-driven global economy.