What can the government do to encourage companies to take care of the environment?
The purpose of government is to safeguard Rights, and that would include safeguarding the environment. However, it's not the purpose of government to encourage or discourage companies to do anything. Having many country's governments agree to sign the Kyoto Protocol is fine, but it hardly presents a solution, since governments, like our own in the US, by whim have chosen to ignore it.
The only effective means to safeguard the environment is for companies and consumers to minimize pollution; that is (and forever will only be) accomplished by the market. Companies must produce "environmentally friendly" and consumers must purchase the same. When "friendly" products and practices can compete with current polluting practices, change will become apparent. For example, the Prius, despite the higher cost, was purchased by people wanting to effect change; Toyota can't make enough of them because the demand is so high. When people perceive there's a value in safeguarding the environment, and are willing to pay the additional costs of doing so, the "friendly" practices will predominate.
It requires people to put their money where their mouth is, though.
As far as government is concerned, they should prosecute those who defile the environment. Whatever standards are imposed, they must take into account that this transition will not happen overnight.
In answering this question, we need to acknowledge that there are roughly three types of businesses. Some companies are neutral when it comes to the environment. Others actually benefit the environment. And there are some that harm the environment. When it comes to these companies, the government can do a few things.
First, the government has the right to pass laws to protect the environment. In fact, the government can also work with other nations and pass international laws and agreements. This type of action is important, because many companies are international. The Kyoto Protocol is one of these initiatives to help in the area of global warming.
Second, the government can create various types of incentives to give reasons for companies to actively think of ways to help environmental causes. For example, the government can give tax breaks for companies that use more green technology. There are several builders in my area that are putting up new buildings that are LEED gold certified.