The Washington, D.C.-based Worldwatch Institute says a more sustainable global economy is emerging as corporations and countries move to combat climate change. So why are the same members of the corporate empire that caused global warming now taking steps to mitigate it?

Not surprisingly, it’s because climate-change damage is undermining their wealth.

Investors are pouring cash into clean energy, carbon trading, and environmental and energy-related hedge funds, Worldwatch said in its annual State of the World 2008 report, while some of the world’s biggest companies have announced breakthrough environmental initiatives in the past two years.

And, in a dramatic about-face, huge corporations were actually pressing the U.S. Congress to pass laws regulating greenhouse emissions, something that would have been unthinkable even two years ago.

Companies have also awakened to the fact they could actually make money out of becoming more environmentally friendly. The chemical giant DuPont saved billions by cutting greenhouse gas emissions by 72 per cent below 1991 levels by 2007.

The report, summarized by UK’s Telegraph newspaper, said clean technology is the third most popular destination for venture capital behind the internet and biotechnology.

Among other hopeful signs, 54 banks, representing 85 per cent of global private-project finance capacity, have endorsed the Equator Principles, a new international standard of sustainability investment.

Worldwatch also noted the World Bank has calculated that 39 countries have lost five per cent or more of their wealth because of unsustainable logging, depletion of non-renewable resources, and damage from carbon emissions. For 10 countries, the decline ranged from 25 to 60 per cent.

The report calls for major reforms of government policy to steer investment away from destructive activities, such as the extraction of oil and gas, and toward environmentally sustainable industries, if global economic collapse is to be averted.

Sounds like a good start.