Forward-looking companies are starting to realise that they can gain competitive advantage by taking the lead on climate change.

Businesses are increasingly focussed on the opportunities generated in the move to a low-carbon economy, as a scientific consensus is emerging that industrialised countries will need to cut greenhouse gas emissions by at least 80 per cent by 2050. Rapid progress will be needed in the next few years.

Forum for the Future is working with more than 70 leading companies, challenging their climate change strategy and helping them prepare for a carbon-constrained world. Companies will do better if they future-proof against risks, identify opportunities, and innovate to develop low-carbon products and strategies.

Business has a key role to play in tackling climate change and can offer bold action and leadership. Forum for the Future has drawn up five rules for any company serious about this issue.

1. Understand fully the risks and opportunities posed by climate change

From pension funds to food retail, all companies face risks and opportunities from climate change. These will differ from sector to sector and company to company, but they demand serious debate at the board level of every corporation.

2. Offer products and services that are best-in-class for climate impact

Companies that offer products and services with a lower climate impact than those of their competitors will quickly gain market advantage as we move towards a low-carbon economy. They should not only ensure that these are best-in-class in terms of full life-cycle climate impact, they should also look to develop “zero carbon” products and services. Where possible they should provide solutions to climate change, in the way that effective videoconferencing technology is reducing the need to travel.

3. Identify climate impacts across the value chain

Companies should look beyond their own products and services, form a clear understanding of the entire carbon footprint of their supply chain, and focus their efforts where the impact is greatest. This may involve working with suppliers to reduce the energy they use or educating customers on how best to use and dispose of a product.

4. Understand your contribution to local, national and global greenhouse gas targets

Businesses should align their carbon reduction plans with the wider goals of society. The UK government is committed to an 80 per cent cut in greenhouse gas emissions by 2050 and this should be the starting point for any British company. Companies should be able to explain how they will meet such targets, or, if they cannot do it themselves, who will do it for them.

5. Engage actively – and progressively – in the political debate around climate policy

Companies need to speak up about the risk climate change poses to all economic activity and demand an appropriate governmental response. They should also ensure that their lobbying activities are consistent with their stated position on climate. It is unhelpful for the chairman to call for climate action as the public affairs department is lobbying against fuel tax rises.

Inaction is not an option: the costs of doing nothing will dwarf those of taking action now and business will suffer with the rest of society.

What you can do

Forum for the Future uses a carbon management hierarchy to identify and prioritise the actions that will have the most transformative and lasting impact on businesses’ carbon footprint.

This hierarchy prioritises avoidance of emissions, reduction through energy efficiency, and replacement of high-carbon energy sources with low or zero-carbon alternatives as the best means to tackle climate change.

You can use this same approach to consider your personal impacts. The Carbon Trust estimates that a third of the average person’s carbon footprint comes from things we buy and use, with transport and home energy use both accounting for another third.

Consequently, the lifestyle changes that will reduce your personal contribution to climate change will depend on where and how you live, how you shop and the frequency and type of journeys you make.

Offsetting should be considered last because it does not directly reduce the emissions a company or individual is responsible for. Nevertheless, high-quality offsetting has a valuable role to play in helping both tackle their contribution to climate change.

The author is Principal Sustainability Advisor at Forum for the Future