ABSTRACT
The international debate on addressing global climate change and the concomitant reduction of greenhouse gases (GHGs), increasingly points at the role that business can (and/or should) play. In response companies have taken more responsibility for their impact on the changing climate. To explain why this has been the case, Chapter 5 paid attention to the factors that have influenced corporate activities on climate change, and also outlined strategies available to companies, which we labelled as compensation and innovation. Chapter 6 subsequently explained compensatory approaches, most notably carbon trading. It explained companies’ activities in this area in the face of a range of emerging carbon markets, and their peculiarities. However, creating a mature global carbon market is only the first step to a more fundamental corporate contribution to GHG emissions reduction. As we mentioned in Chapter 6, even if a carbon market functions as intended, it would still only be an incentive to take the price of carbon into account when making investment and other types of corporate decisions. Only if the incentives and basic rules are correct and companies actually choose abatement (be it internal or in developing countries), will the carbon market really work. Then there should be a stimulus for underlying innovation that realises such emissions reductions at the lowest cost.
