As we move towards an emission trading regime, there is one important question that companies need to sort out: who actually takes responsibility?

Business faces the prospect of increased legal action and regulatory burdens. But companies are still in the process of formulating the job to handle climate change. It is a critical point because global warming is not just an environmental issue, and the person in charge will need to have a handle on all areas across the business. Climate change is also a financial and accounting event because carbon trading, credits and offsets have the potential to create significant intangible assets and liabilities, which would have a massive impact on balance sheets. And it is potentially a tax and insurance issue. There are also questions about its legal ramifications. What impact, for example, will an emissions trading scheme have on contracts? Or for that matter, litigation?

Businesses don't have departments or experts who are across all these issues and few can nominate exactly where the responsibility lies. Experts say that in decentralised organisations, where there is a flat chain of command, there could be issues about getting information quickly enough to the right places, including the board. Furthermore, in a decentralised structure where no single person or department is clearly in charge of environmental issues, businesses can be prevented from taking in the full picture of the threats they face, their cumulative liabilities and the opportunities that are opened up with, for example, the trading of permits creating a buoyant new commodity market.

The result might be a piecemeal approach that enables companies to identify isolated problems and business opportunities. But it will stop them taking into account the larger picture.

It's an issue highlighted in a 2008 Economist Intelligence Unit study which found widespread agreement that the ultimate responsibility for reputational risk lay with the chief executive officer.

But there was no consensus on environmental risk. Only one in four of the 320 executives surveyed said the chief executive officer was responsible and just under 20 per cent said responsibility lay with the chief risk officer. Not having clear lines of accountability can leave companies with potential problems in such areas as strategy and managing the supply chain. The Economist Intelligence Unit study found companies had significant gaps when it came to dealing with partners and parties in the supply chain. With no single party taking responsibility for environmental risk management, less than one quarter of respondents to the survey considered themselves to be proficient at working the supply chain to ensure that suppliers were energy efficient, and just over a quarter considered themselves to be successful at conducting due diligence of their suppliers' environmental performance. A similar blind spot was strategy, for exactly the same reason. Under an emissions trading scheme, companies will have to forecast and hedge their carbon risk as part of their plans for growth because growth plans might well have an impact on their greenhouse gas emissions. But who would take charge of this?

These are issues that I examine in a piece I wrote here.