Temperatures rises are unstoppable and their effects cannot be forecast, says Carbon Trust chief Tom Delay

' Dealing with climate change is a combination of physical risk, compliance risk and true business risk in terms of mitigating against the risks of customer demand, according to Tom Delay, chief executive of the Carbon Trust.

The trust exists to assist businesses in dealing with these risks. "We encourage businesses to manage carbon as a business risk going forward, and not simply see it as one small isolated impact that might apply to a plant.

"We acknowledge the huge potential impact of energy efficiency improvement, but the second point is to mitigate physical risk to assets," says Delay.

The Carbon Trust also exists to accelerate the transition to a low carbon economy, by helping organisations reduce their carbon dioxide emissions and develop commercial low carbon technologies for the future.

Delay warns of rising temperatures: "We need to recognise currently our temperatures have gone up by 0.60C. If we do nothing else and we freeze emissions at their current levels, we're almost certainly going to run through in momentum to about a 1.20C rise.

"Beyond about 20C it gets very hairy indeed. And ultimately when you get towards the sort of 5.80C or the 50C plus position, most climate scientists are saying, we're into runaway effects that we cannot forecast today."

So the question is: can we hold back the increase in global temperatures to around about the 1-20C level?

"The first thing is the significant uncertainty as to how big the impact will be. The second big uncertainty is how you will feel it wherever you are. There is a notion that global warming is global, and that it's an even effect felt around the world."

But this is not the case, as there are different kinds of small impacts. "So global warming as you will perceive it, and as your customers will perceive it, will vary enormously based on where their businesses are located in the world and where, therefore, their risks and exposures lie."

And SMEs feel the heat on climate change. "It's a big issue, they're focusing very much on many other issues," says Delay.

The key point though is it is manageable. "What is a very significant risk, if managed properly, can be reduced very significantly."

There are four points that Delay says are absolutely fundamental.

"The first is that climate change risk is very uncertain, and going forward both the absolute quantum of that risk and how it would impact on individual businesses and geographies, is very uncertain.

"Second, there's absolutely no doubt that climate change is hitting the boardroom agenda. It's very much becoming a key business issue.

"It's going to take time to put itself alongside reputation, cost and profit, but as soon as we realise that actually it's the driver of reputation, cost and profit, there's going to be a very substantial shift forward.

"The third point is that physical risk is actually a key driver of this overall risk.

"And the last point, is that recognising the level of uncertainty, recognising the level of dependency that investors have on businesses to actually manage down this risk, and manage it appropriately, there are almost certainly going to be very significant winners and losers.

"The winners will be those businesses who understand climate change risk and are doing something about it on the basis of a better understanding.

The losers are those companies sticking their heads in the sand and saying, 'not one for me guv'."

Are you a winner or a loser?