The steady trickle of companies signing up to do their bit to reduce carbon emissions is turning into, if not quite a flood, then a sizeable river. Retailers are joining power generators in promising a smaller carbon footprint; banks are pledging to do their bit alongside old-economy energy gluttons.

Marks and Spencer, reborn as one of Britain's most successful retailers, said the other day that it intended to make its operations entirely carbon-neutral. In future, unsold food will be recycled as a source of energy, plastic bottles as polyester clothing. Packaging will be bio-degradable.

Not to be outdone, 17 other leading British companies announced a new taskforce promising what Richard Lambert, director-general of the CBI employers' organisation, declared would be "radical" ideas to tackle climate change. No one could be surprised by the inclusion in the list of BP, British Airways, Rolls-Royce or RWE npower. Alongside them, though, are the London Stock Exchange and BT.

George W. Bush, of course, has thus far held out against capping America's huge contribution to rising carbon dioxide levels in the atmosphere. But US business is well ahead of its president. GE, Wal-Mart and Dupont all trumpet their green credentials. You know something is stirring when ExxonMobil shows signs, albeit small ones, of acknowledging something more than a tenuous connection between greenhouse gases and global warning.

Mr Bush, I have heard it said, could yet follow up last year's warning about America's dangerous addiction to imported oil with an admission that he too is having second thoughts. Of course he would not put it quite like that. But he could say the US is ready to join negotiations for a successor agreement to the present Kyoto protocol. European officials have been told to watch the State of the Union address.

This could turn out to be wishful thinking. But the domestic and international momentum has already left Mr Bush behind. California wants to do deals with Europe on carbon trading. China is well ahead of the White House in thinking about climate risks. Even Russia's Gazprom is moving into emissions trading.

We may still be years of wrangling away from a new global compact, but you do not have to be a fan of the Al Gore film to see that the direction of travel is set. Business is beginning to understand that carbon has a price; and that it will rise steeply during coming years and decades.

The point is made well in an interesting report on the implications of climate change for business and financial markets soon to be published by Lehman Brothers. The investment bank concludes that there is a more than 50 per cent chance that a global carbon emissions trading system will be in place within the next five years.

The report's deeper insight is that climate change, and the measures taken to address it, should not be seen as a one-off shock. Like globalisation, demography and technical innovation, it will remain a permanent and powerful force shaping the economic landscape. The businesses that prosper will be those that recognise its importance and inexorability.

Action to forestall climate change has now entered the mainstream of politics - pre-eminently in Europe but also in the US, and increasingly, in the emerging economies. The Stern report on the costs, economic as well as human, of global warming marked a turning point. The economist author Nicholas Stern may not have every equation right, but his report has reinforced official recognition of the danger just as global warming has become more visible to voters.

Domestic politics has coalesced with geo-politics. Slowing global warming is the other side of the energy security coin. Last week the European Commission produced an impressive paper on how the 27 nations of the European Union should secure their supplies of oil and gas in the face of an unstable Middle East and an unreliable Russia. Integral to the strategy is a commitment that the EU should accept a 30 per cent cut in emissions by 2020. A plan to liberalise the continent's supply and generation caught most of the media attention. Just as important was a proposal that all coal-fired power stations built after 2020 should be equipped to fully sequestrate their carbon.

Americans are more likely shunning gas-guzzling sports utility vehicles because of higher prices at the pump than fears of global warming. But the country's dependence on Middle East oil is now at the centre of Washington's security agenda. Motives are a second-order issue if the effect is to reduce carbon emissions.

The fight to clean up the earth's atmosphere will be anything but smooth. It is one thing to sign up to a low-carbon economy; another to bear the withdrawal symptoms. Voters will discover there is more to sustainability than forsaking the occasional cheap flight. Businesses will protest that they are being unfairly disadvantaged. From time to time, politicians will lose their nerve.

There will be epic battles between nations as well as within them. China and India will rightly protest at being asked to bear the cost of the damage done to the atmosphere by more advanced economies. In the US, followers of Mr Gore may find it is easier to win applause than votes.

All that said, there is no turning back. Weather patterns are set to become more unpredictable, the costs of global warming more visible. However bumpy the ride, we are moving to a low carbon economy. Smart businesses will bend with the wind; others will be swept away. Taking the first course should encourage governments to opt for relatively friendly market-based solutions - carbon taxes or tradeable permits. Resistance will invite heavy-handed regulation. Sometimes New Year's resolutions have to be kept.

source: The Financial Times Limited 2007 - www.ft.com