By Nicole Zhu
Governments of nations worldwide face rising costs in healthcare, education, and economic stimulus. Now, countries are pouring millions and even billions into the newest category of expenditures: climate change. The pressure has trickled down to corporations and businesses, who now more than ever feel the crunch of a rapidly changing environment.
Even as American policymakers debate whether or not climate change exists, governments from the city of Miami to the state of Texas have begun “future-proofing”: spending money on projects designed to protect residents from “changing future weather patterns,” as one Texas report said. For Texas, which is still rebuilding from the devastation wreaked by Category 4 Hurricane Harvey in 2017, this means paying for citizens to elevate homes, buy out residences in high flood-risk areas, and build pre-emptive barriers against potential storm surges. In Miami, also recently hit by brutal hurricanes, lawmakers passed a $400 million “Miami Forever Bond,” to build multi-million pump stations, redesign miles of shoreline to protect against flooding, and revamping the city’s stormwater system.
This new kind of due diligence by governments has meant major changes for how corporations operate, as lawmakers tighten regulations to force businesses in line with new future-proofing policies. In Florida, for example, building codes are stricter than ever, and companies nationwide have been feeling public pressure to switch to renewable energy or adopt greener practices.
But since then, climate change has directly bankrupted its first company: California’s largest utility firm, PG&E. Valued at $25 billion only three months before it declared bankruptcy in January 2019, PG&E was on the hook for billions in liabilities and lawsuits stemming from wildfires caused by its electrical equipment. California law also deemed PG&E responsible for fire prevention and held the utility company accountable for any fires caused by its equipment, whether due to negligence or not. The fall of one of California’s largest utility companies exemplifies the rising risk businesses face by physical damage from climate change—and, as The Wall Street Journal said, might be the first “climate change bankruptcy,” but certainly won’t be the last.