Economists have long argued that the best approach to curb international warming is to place a worth on the greenhouse-gas emissions that purpose it. A complete of 41 OECD and G20 governments have introduced both a carbon tax or a cap-and-trade scheme, or each. Add state and native schemes, and so they quilt 15% of the arena's emissions, up from four% in 2010. Voters fascinated about weather trade are egging them on. So, too, are company bosses. More corporations are enforcing such pricing on themselves, even in puts the place policymakers are dragging their toes.
Of the 6,100-odd firms which report climate-related data to CDP, a British watchdog, 607 now claim to use “internal carbon prices". The number has quadrupled since CDP first began posing the query in its annual questionnaire three years ago. Another 782 companies say they will introduce similar measures within two years. Total annual revenues of these 1,389 carbon-price champions amount to a hefty $7trn. Most come from rich countries, but more developing-world firms are joining them.
Many firms use shadow carbon prices to stress-test investments for a world of government-mandated levies, and investors increasingly demand that companies take that possibility seriously: 81 countries mention a carbon cost in their national pledges to limit global warming under the Paris climate agreement of 2015. Plenty of the Paris promises remain just that for now, but bosses ignore them at their peril, cautions Feike Sijbesma, who co-chairs the Carbon Pricing Leadership Coalition, which groups green-minded governments and businesses under the auspices of the World Bank.
The trend for firms to incorporate carbon pricing is welcome. Although such voluntary steps will not stop the planet sizzling, they do help firms prepare for when governments do bring in pricing schemes. In December China launched a market for trading carbon emissions which is the world's largest. The clearest sign of progress would be for similar policies elsewhere to render internal exercises redundant.
This article has been edited for length. Read the full piece on The Economist.