There's no doubt that sustainability has become the new buzzword for business but is there substance to this word or is it a meaningless catchphrase?

The answer lies somewhere between the two. In the words of Richard Lambert, head of the CBI "the past decade or two has been an unsettling period in the history of capitalism". We are in a situation at the moment where climate change (and environmental resource constraints) have exposed the ultimate 'market failure' in the global economy.

That means that the amount of degradation a product causes to the environment via the carbon it emits, the land it erodes, or the water used in its production is not properly reflected in the price of the product.

What this means at the consumer level is that the cheapest product cannot be counted upon as the best for the environment. Consumers go for the cheapest products and businesses go for the cheapest production processes and the environment gets the bum deal.

Sir Nicholas Stern's climate change review laid these facts down in black and white from the perspective of climate change in July 2005 with the added incentive that climate change would wipe out our economy if we didn't sort out the problem. And some work is now being done to rectify the matter.

The environment has been mentioned in first days of the Conservative and Liberal Democrat coalition probably more than in any other election, although whether talk leads to action is still to be seen.

Unfortunately time is no longer on our side, with some conservationists, such as Canadian environmental legend David Suzuki, pointing out that we're past the 59th minute of the eleventh hour and progressive business organisations like the Aldersgate group saying this government is our last chance at avoiding dangerous climate change.

Ray Anderson, reformed polluter and founder of Interface Inc., the world's largest manufacturer of modular carpet, claimed last year that the aim of a sustainable business is to "take nothing, do not harm".

But, he pointed out that under business as usual:

Negative environmental impact = population x affluence x technology (dirty).

Anderson suggests that the way for business to become more sustainable is to alter the impact of technology, so the equation becomes:

Impact = population x affluence technology (clean)

That's what we need to achieve in the next five years, via clean tech and green business investments and this will require leadership from the top of both politics and business and need to make tough spending decisions.

As much as some businesses sustainability departments would like to believe otherwise, the purpose of a company's existence is to make money, especially those publicly traded companies that have obligations to shareholders.

On the whole, businesses and government are now playing a game of chicken whereby neither can afford to incur the bulk of the costs of the step change needed to turn our economy from business as usual to 'green' but both know it is the only direction to go in the long run. So, sooner or later governments will legislate and businesses will explore new areas to make money as opportunities arise in green sectors.

The shared UK principles of sustainable development, set out in March 2005, are a good indicator of the legislative direction of the UK government on environmental sustainability until now.

These are the five principles and how they roughly translate to business at the moment:

1 Living within environmental limits

Businesses showing environmental credentials more likely to get planning permission and government contracts, government investment in low carbon energy sources like Carbon Capture Storage and renewable energy, zero carbon housing regulations, investment in an electric car infrastructure.

2 Ensuring a strong, healthy and just society

Training in green jobs, flood defences for low-lying residential areas.

3 Achieving a sustainable economy

Support for the polluter pays principle, Encouraging energy and resource efficiency through mandatory schemes like the Carbon Reduction Commitment (http://www.environment-agency.gov.uk/business/topics/pollution/98263.aspx).

4 Using sound science

Companies will be expected to track and measure environmental impacts and report carbon emissions as well as climate change impacts to government.

5 Promoting good governance

Improving the government-business relationship via funding and consultations from bodies such as the Carbon Trust.

The name sustainable business may seem like a misnomer, as big businesses are destined to have some kind of negative impact on the environment.

But increasingly, with climate change and peak oil output looming, environmental sustainability for business is a case of trying to figure out how to still make money whilst avoiding a global catastrophe, and future-proofing business to do without key resources in the future on which our society is currently reliant.

Two of the biggest environmental hotspots for the UK are energy production and consumerism. Even if a step change in technology cleans up energy production, there's still the 'affluence' part of the equation:

Environmental impact = population x affluence technology

Of course, hard economic times are good at lowering consumption now, but recession is not a long-term environmental strategy.

So yes, businesses and governments know they need to be more sustainable to survive in the long run, but they have to do it in the framework of a debt-ridden economy and a democratic society that currently puts little economic value on the environment.