- The spectacular collapse of PG&E, which filed for bankruptcy protection on Tuesday, just become the biggest corporate victim of a rapidly changing climate.
- Reinsurance firm Munich Re called the fire the world’s most expensive natural disaster of last year, Reuters reported, and the company estimates total losses from it at $16.5 billion.
- PG&E’s huge liabilities for California wildfires demonstrate the increasing dangers of climate change to businesses which don’t adapt to a rapidly heating planet.
The spectacular collapse of PG&E, which filed for bankruptcy protection on Tuesday, just become the biggest corporate victim of a rapidly changing climate.
The series of fires that has claimed thousands of acres of California land and caused hundreds of deaths has now all but destroyed the San Francisco-based utility, buckling under about $52 billion in debt. PG&E has seen about 75% of its market capitalization wiped out, its CEO step down, its bonds rated junk and its liabilities, some say, balloon to over $30 billion.
Reinsurance firm Munich Re called the fire the world’s most expensive natural disaster of last year, Reuters reported, and the company estimates total losses from it at $16.5 billion. While investigators are still probing whether PG&E equipment started the fires, the company may be legally liable even if not found negligent.
PG&E shareholder BlueMountain Capital Management fired back at the company, saying in a statement that it was “deeply disappointed” that the board “has ignored calls from multiple parties to abandon its reckless and irresponsible plan to file for bankruptcy.”
PG&E was cleared last week of responsibility for one of several wildfires in 2017, which on Thursday sent the stock soaring more than 70% amid raised hopes that liabilities might be also limited relating to last year’s California fire. That 2018 fire, dubbed Camp Fire, was the deadliest wildfire in California’s history.
Today’s bankruptcy plans sent PG&E stock down more than 4% in premarket trading.
A wake up call for other companies
PG&E’s fate is a troubling sign for businesses which could meet the same outcome, and the saga has turned into a wake up call to other businesses affected by the fallout from global warming.
“The physical risks posed by climate change are both indiscriminate and unpredictable,” said Jeanne Martin, senior campaigns officer at ShareAction.
Investors are increasingly eager to get better visibility of the risks. A recent survey by global environmental impact non-profit CDP found that 85% of companies are citing physical climate risks as factors in their decision making.
Risks come in many forms
But it’s not just extreme weather events like fires and hurricanes — the risks come in many forms. While not as severe an outcome as PG&E, the possibility that governments are forced into drastic shifts in policy as a result of climate change could put some industries under increased threat.
Commodity giants like Shell, BP, and Glencore are among those at risk from climate-driven demand for more ecological energy sources, according to ShareAction.
Another threat: the possibility of highly polluting companies being found liable for their role in climate change and the exacerbation of extreme weather. For example, The Philippines Human Rights Commission is investigating the responsibility of 47 ‘Carbon Major’ companies for climate-related human rights impacts.
“PG&E is unlikely to the be the last company to fall victim to climate change unless we reduce the systemic risk it poses,” said ShareAction’s Martin.