After PG&E’s Climate-Driven Bankruptcy, Who’s Next?

When PG&E Corp. filed for Chapter 11 early today, it marked not just one of the largest utility bankruptcies in history – it’s also one of the first tied to climate change. PG&E, owner of California’s largest electric utility, made the move after estimating that it faced a $30 billion liability from two years of wildfires whose intensity has been blamed by state officials on worsening droughts linked to global warming. Fire victims suing PG&E say it didn’t adapt quickly enough to the increased risks created by more persistent hot, dry weather. The bankruptcy filing points to the danger that warming could pose for many companies. Those risks aren’t always obvious, and assessments of them are often buried deep within securities disclosures. Is it time for them to move beyond the fine print to become an active market concern?

In PG&E’s case, they shouldn’t have been. Ever since the 2017 wildfires in northern California’s wine country, the company has repeatedly warned that climate change is raising the risk of catastrophic fires in the state, as frequent drought and invasive, warm-weather pests decimate the state’s forests. The company’s ex-CEO Geisha Williams, who stepped down, called it the new normal and said that utility companies were bearing the costs of climate-fed fires. The company’s critics had dismissed those warnings as a scare tactic intended to pressure the state government into changing California’s wildfire liability rules, something the legislature in Sacramento refused to do.