Some 200 business actors at a meeting in Switzerland, organised by the reinsurance giant Swiss Re, toasted Russia's key ratification of the emissions-cutting Kyoto treaty on Friday with champagne.

Barely a few years ago such a greeting would hardly have been imaginable.

While Kyoto was being negotiated in the 1990s, the financial world was more likely to side with the defence of cheap, oil and coal-based energy, as industry clashed with environmentalists bent on stopping pollution and lobbied against governments seeking regulation.

Instead, mainstream business executives at Swiss Re's meeting centre outside Zurich were discussing finance for renewable energy sources like wind farms and new markets designed to cut emissions of polluting carbon dioxide.

"Business has recognised that the lack of a global framework was not a solution," said Andrei Marcu, president of the International Emissions Trading Agency (IETA), a Geneva-based grouping of major corporations seeking to develop the carbon "cap and trade" mechanism that Kyoto opens up.

Climate change is increasingly accepted as a reality, a costly business risk -- either through the damage it can cause or the threat of litigation -- as well as a business opportunity, according to the executives.

"Many companies in the United States are facing the nuns with the guns in the picture," US corporate lawyer Ricardo Nogueira said, referring to an advert used by Greenpeace in its campaigning and the risk of litigation on pollution.

"But these nuns have been joined by investors, most importantly by US state pension funds," he added.

Shareholders, led by the huge pension funds, are taking an increasingly long term view and climate change is regarded as a risk weighing on investment revenue, said Rory Sullivan of Insight Investment.

"Climate change is a business risk. We expect companies to take appropriate measures to manage the risk," he added.

With global temperatures increasing at the fastest rate seen in 1,000 years, Swiss Re has recorded sharp growth in the economic and insurance losses caused by natural catastrophes over the past 15 years.

Its executives say that global warming fuels the "five Ds": destruction, discomfort, death, disease, and dislocation in the long terms as people flee or emigrate from disaster-prone areas.

"Most of the big risks end up on the balance sheet of reinsurers," said Christian Mumenthaler, who will become Swiss Re's new chief risk officer in January 2005.

Apart from paying out billions of dollars for damage caused by storms and flooding, or health problems generated by heatwaves, the insurance business also sees litigation looming against companies that might shirk emissions controls.

The Zurich-based reinsurer vowed to put pressure on companies -- where executives are often insured against liability claims -- to make proper disclosure of their carbon emissions.

Fund managers were more guarded about investment in renewable energy projects like wind farms, criticising their small size -- they only account for up to three percent of energy capacity in the cleanest countries -- and warning that they could not slacken the demand for profitable returns.

"As fund managers, our opinion does differ from wind farm managers in terms of the risks and returns," said Andrew Lee, renewables investment manager at Englefield Capital.

But the interest is growing, according to the European Bank for Reconstruction and Development, which is setting up funds for clean energy in eastern Europe.

"From our point of view there is a much stronger interest in renewable energy than 12 months ago," said EBRD principal banker Gunilla Nilsson.

Swiss Re is also preparing a fund for energy efficiency projects in Europe, aimed at institutional investors.

"For the market it sends the signal that perhaps institutional investors, who historically have not invested in infrastructure projects like renewables, for the first time will go in there," said Christopher Walker, the company's emissions risk specialist.

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