Companies won't start installing wind turbines until green profits become sustainable

Reading the newspaper this morning provided a crystal-clear example of the mixed message about the profitability of climate change. On one page, I read that leading carbon emissions trader Climate Exchange announced pre-tax losses of £10.5m, down from profits of £1.5m in 2005.

On the opposite page, I read that energy giant Centrica has announced the launch of New Energy, a new environmental service for customers of British Gas, which is also owned by Centrica. New Energy will allow British Gas’s 12m customers to get energy-saving reports, have insulation fitted, and buy solar panels to heat water.

It seems as if barely a day goes past without another company announcing a new environmental initiative or business plan but Climate Exchange’s losses show it is still far from clear whether investing in green business will pay off.

And while companies that make a focussed effort to go green without the possibility of financial reward are to be applauded, it is unlikely that industry across the board will drop everything – or at least drop its profit margin – to voluntarily make concessions to the environmental lobby.

It’s not because individually, business leaders don’t care – mostly, they do – but because it’s simply not how the market works. Good intentions don’t make money. It may sound cynical, but show me the company that doesn’t put toeing the financial line in front of CSR.

In spite of Defra and the DTI claiming climate change is the business opportunity of our generation, the market for green business is not yet reliable enough to see widespread environmental change funded by industry.

The companies promising to supply solar panels, roof turbines and the like will carry on splashing around in the shallows of industry until the temperature is warm enough to wade deeper. But while we wait for the business climate to heat up, the planetary climate continues to heat up too. We can only hope the former overtakes the latter.