Climate change is top of mind for many executives. Media attention is high, political discussions are intense, valuations for clean-technology companies have increased considerably, and the corporate carbon footprint has become an important topic among senior managers. Apart from talk, what must companies do to address climate change, and how can they profit from what they do?

We believe that the shift to a low-carbon economy is already under way and that business must get ready for it, especially in energy, transport, and heavy industry—the heart of today’s carbon-intensive economy—and in many other industries as well. If current climate science holds true (and there is considerable uncertainty in the estimates) global greenhouse gas emissions should ideally decrease from today’s levels by 90 percent as of 2050 in order to contain global warming below two degrees centigrade.¹ To reach this ambitious goal, taking economic growth into account, the global economy’s carbon productivity² would have to increase by 5 to 7 percent a year, compared with a historic rate of just 1 percent, in the days when carbon emissions were not an issue. Economic growth must be fundamentally decoupled from emission growth (Exhibit 1).