Reality has arrived. Recognition is filtering through to Australian business that to be outside worldwide moves to mitigate climate change will damage Australia's trade competitiveness and the bottom line of corporations - more than seeking to quarantine the issue.

To discover why, come on a journey to Buenos Aires. There, just four months ago, representatives of all nations gathered for the most recent climate change negotiations. At the end of the first week, the heavens opened up. An unseasonably harsh thunderstorm dumped its load on the city and the roof of the conference centre proved unequal to the task. The crack, through which floods of water poured, was directly above the office of the Global Climate Coalition, the group which for years had led attempts by the fossil-fuel industry to discredit the science of climate change which, incidentally, forecasts increasing numbers of unseasonable rainstorms. It was the symbol of the conference the tide of change sweeping away old thinking.

Since the 1992 Rio Earth Summit, the meetings of these continuing climate change negotiations have provided a unique snapshot of the state of the global debate. The pace of change has been extraordinary. Two years ago, sharp divisions between big business and the environment movement were much in evidence. Governments were caught in between, trying to understand the science and attempting to adjudicate and balance the conflicting arguments and priorities.

In the lead-up to the Kyoto meeting 16 months ago, real shifts began to emerge. No one at the time expected the head of one of the world's biggest oil companies to play a pivotal role. But that is what happened when the CEO of BP, John Browne, stated that the evidence that climate change posed a real risk was mounting, the community wanted action and that a market-responsive company such as his would act in the interests of its shareholders.

It was the first of the international meetings to which the Australian media sent not one representative. The significance of what occurred was, therefore, slow to be received here.

Global giants such as Shell, Monsanto, DuPont, General Electric, Suncor Energy, Johnson & Johnson and many more attended the conference and were active in it. They engaged participants with formal presentations on what they were doing to prepare for a world beginning to transition itself out of burning fossil fuels for energy. For some it was simply an effort to position themselves as part of the solution rather than the problem in the hope of staving off tougher regulatory responses like taxes. Others recognised they were participating in a fundamental shift in the business they were in.

Climate change is the most significant and powerful environmental issue to ever exert influence over the economy. It is an issue that will shape policy for decades to come. Markets are already being influenced, as products with high carbon content such as coal and oil lose favour.

From 1990 to 1997, coal and oil use increased just over 1 per cent a year, while solar-cell sales expanded at about 15 per cent a year and rose more than 40 per cent in 1997. At the same time, products and services which absorb carbon, like forest plantations, will have reduced costs. Similarly, products and services that help customers reduce their own carbon emissions, like lightweight materials in cars, will have an advantage in the marketplace. There will be a market for trading in greenhouse emission credits. Indeed, designs for such a trading system are being put together now in Canberra and most other capitals around the world. By being proactive in climate change, companies are helping to influence those designs in ways that suit the market and themselves.

Since the Buenos Aires conference, I have briefed many of Australia's top senior executives on the implications of the meeting. While there is undoubtedly an awakening to the new competitive engagement by business in climate change responses, there is also a view that congressional opposition within the United States to the Kyoto Protocol will see serious action delayed for years to come. This is a risky approach.

Nowhere has government been more active in harnessing support from big business for action on climate change than in the US. The results of that activity were on display at Buenos Aires. This year, the Clinton administration will concentrate on engaging medium-size companies in preparing for the new climate-change-sensitive global economy. It is a deliberate approach and the strategy that lies behind it is to override congressional opposition with the support of business and the community. The intention is to turn climate change from a negative political issue to a positive one in time for the presidential elections next year, when Al Gore will use the issue to consolidate his core support base and to differentiate himself from the Republicans. Adding to this movement is the introduction into Congress of bipartisan legislation that seeks to reward companies for early action to reduce their greenhouse emissions. This is having two significant effects. First, it is dividing Republicans just when the private sector is questioning the party's opposition to action on climate change. Second, the promise of such legislation is encouraging companies to examine how they can profit from reducing emissions and from investing in clean technology.

Congressional opposition is built on concern that the developing world is not yet being asked to commit to any greenhouse reductions.

The corporate shift that is taking place is having an interesting and important side effect. Until now, the global environment movement has moved with a unity of purpose in lobbying for governmental and business action on climate change. Faced now with signs that business is actually beginning to act, that unity is beginning to fracture. Some groups, such as the US-based Environment Defence Fund and the Nature Conservancy, see opportunities not only for speedier climate protection by supporting and working with industry, but also other environmental benefits like increasing forest cover and biodiversity protection through carbon sink investments.

Others, like Greenpeace, are not nearly as ready to put aside their traditional suspicion of business by embracing the corporate action of leading companies. Perhaps they see their own moral authority on the issue as threatened. More likely they have deep memories of concerted efforts by business to duck growing concern for environmental issues through the 1980s and early '90s by corporate greenwashing.

At Buenos Aires, the signs of change were everywhere. The most significant was the corporate world showing its potential to actually drive action on climate change. Such a shift would have been unthinkable just two years ago. Today, it is profound in its implication. In Australia, some companies and industries have realised they have a vested interest in acting now. Those are the companies that are urging the Government to consider rewarding early movers. If the Government were troubled by our trade competitiveness, it would do well to listen.