Good morning. The wildfires ripping through California have destroyed thousands of homes and killed dozens. As officials worry more wind might worsen the weeklong battle, another is being fought over the role of nations and industry in confronting more frequent and severe disasters fuelled by climate change.
In the news
Canadian sawmills are bracing for U.S. tariffs on top of lumber duties.
A bond sell-off continues on strong data and massive U.S. deficits.
BMO has agreed to pay $40-million to the SEC after giving clients inaccurate information about mortgage-backed bonds.
Barrick is urging investors to reject a ‘mini tender offer’ from a Toronto investment firm.
On our radar
- U.S. producer prices are out this morning, but tomorrow’s December Consumer Price Index release is the more important report on Wall Street this week.
- Statistics Canada reports manufacturing sales data tomorrow.
Firefighters from Mexico cut a containment line at the Palisades fire in Los Angeles.David Ryder/Reuters
In focus
Why ‘climate change’ is finding new life as ‘risk assessment’
The wildfires blazing through California are bringing attention to dramatic shifts in the way industries and nations are dealing with the effects of climate change on the environment and the economy.
A United Nations-backed coalition aimed at aligning the world’s largest asset managers with global climate goals suspended activities yesterday after BlackRock, its biggest investor, announced it was leaving. And last week, JP Morgan became the sixth of America’s biggest banks to exit the UN-backed “Net Zero Banking Alliance.”
Wall Street is lowering its environmental profile as firefighters brace for a new round of wildfires, which are being blamed on high winds, unseasonably warm temperatures, and forests weakened by virtually no precipitation – all conditions experts say have been accelerated by climate change.
Donald Trump, who has vowed to pull the United States out of the Paris Agreement, a UN treaty that set targets around carbon emissions, will be inaugurated as president in less than a week. He has also vowed to rescind the Biden administration’s signature Inflation Reduction Act, which includes billions of dollars of new spending, tax cuts and credits that were aimed at reshaping the country’s industry around a “clean energy” future.
If the U.S. pulls out of the global agreement, some climate experts have warned, major economies such as China might feel reduced pressure to submit more stringent climate plans to the UN this year.
President Joe Biden is briefed on the wildfires across Los Angeles during a meeting in the Oval Office.Susan Walsh/The Associated Press
Rhetoric meets the real world
But Angela Carter, the Canada Research Chair in Equitable Energy Governance and Public Policy at Memorial University in St. John’s, said Trump might find his campaign rhetoric running into a wall of real-world resistance. The Biden initiatives spurred billions in private spending and created more than 330,000 jobs, with more expected as projects ramp up. More than 3.5 million people in the U.S. work in the clean-energy sector, said Prof. Carter, who has an expertise in the politics surrounding Canadian energy and international approaches to climate policy.
“It would be very difficult, I think, to pull the rug out from underneath these people who have now been benefiting from what they call ‘climate jobs’ in the U.S.,” she said. “So maybe it’s easy for Trump to call the climate crisis a hoax, but more difficult in the communities that are actually facing the effects of it.”
Major international energy companies are also increasingly paying their investors dividends to avoid having their assets stranded on projects that might have resulted in a larger payday in the past.
“So on the one hand, you have oil companies saying one thing and perhaps pressuring governments to give them a last kick of the can from reserves that are cheap and easy,” she said. “But they also know that the long game has shifted.”
‘This is just risk management’
Mike Williams, vice-president of climate and performance engineering at RWDI Inc. and co-founder of ClimateFirst Building Solutions, based in Guelph, Ont., said many of his clients have embraced that shift. Increasingly, Williams said, decision makers are no longer even addressing climate change on those terms: These are companies and investors seeking to protect their assets.
“If we can actually translate that onto your specific building systems and then put a dollar estimate on it – like ‘Hey, you’ve got $2-million of climate-change risk exposure’ – that’s a different conversation.”
ClimateFirst and RWDI, which helped design the Burj Khalifa to withstand the effects of wind and other climate risks, are working with a growing list of clients who are hiring its scientists and engineers to perform full climate-risk screening. “We’re starting to do this across portfolios of hundreds of buildings. And it’s not just wildfires – it’s extreme wind, extreme heat, extreme precipitation.”
Both Williams and Prof. Carter said reframing the issue around jobs, dollars and the economy might spur a resistance to political leaders aiming to roll back the climate initiatives of their predecessors. (A disclosure: I worked with both Williams and Prof. Carter in communications roles between my stints at The Globe. Smart people who have the misfortune of still being on my contact list!)
“This is just risk management,” Williams said. “This is just about good business practice.”
In California, dozens of people are dead or missing, and powerful winds are threatening to spark new fires. Much of the destruction has been in wealthy areas.
Even so, research published last week shows low-income communities in California are at a greater risk of suffering the consequences of wildfires. Sebastian Reining, a researcher at the Climate Action Research Lab at the University of Freiburg in Germany, said investments in wildfire preparedness tend to increase after catastrophic events and “never before them.”
With insurance companies drawing headlines for pulling out of higher-risk areas, and media beaming images around the world of familiar faces who have lost their homes, Reining said he’s hopeful business leaders and policy makers are pressed to work more proactively.
Reframing climate-change initiatives and policies in economic terms “might resonate better than this abstract global threat of climate change,” he said. “There are some buzzwords that people will jump on you for saying. And the ocean warming by one degree or two degrees – that is quite an abstract conversation.”
A homeowner digs in the ashes of their home as some return to Jasper, Alberta.AMBER BRACKEN/The Canadian Press
Canada’s at-risk regions
In a report released yesterday, the Insurance Bureau of Canada captured the cost in very real terms. Natural-disaster claims in 2024 hit a record $8.5-billion, and certain regions in the country might be at risk of becoming uninsurable, the industry association said.
“As we watch the devastating wildfires in California where insurability of homes is at real risk, Canada’s property insurers are raising the alarm that regions of Canada could potentially face similar challenges,” the report said.
As Canada nears a federal election, Conservative Party Leader Pierre Poilievre is showing a significant lead in polling. If elected prime minister, he has vowed to roll back many of the Liberal Party’s climate policies, including a controversial tax on carbon emissions.
But Trump and other leaders might find more pushback than they anticipated if they take aim at initiatives that have been proven to create jobs. Neither is it a guarantee that countries will slow down their clean-energy ambitions: Renewable power is becoming cheaper than fossil fuels, indicating a broader transition toward a low-carbon economy. “There’s a momentum in place where countries are seeing the benefits of the transition in economic terms,” Prof. Carter said.
Charted
Meet the market’s new tech darling
Move over, Nvidia Corp. The new tech darling is … BlackBerry Ltd.? Shares in the Canadian cybersecurity company – formerly known as Research In Motion Ltd., whose wireless communication devices were ubiquitous before the arrival of the iPhone – have been on a tear for more than two months, David Berman writes.
Bookmarked
On our reading list
On the line: After a dreadful 2024 for Canada’s telecoms, investors shouldn’t expect much more over the next 12 months.
In the mail: Canada Post says a 25-per-cent stamp-price increase is in effect.
On the battlefield: When Canada and the U.S. went to war (in books, movies and comics).
Morning update
U.S. stock index futures rose as investors awaited fresh inflation numbers and corporate earnings, along with the approach of Donald Trump’s second presidential term.
TSX futures were up.
Overseas, the pan-European STOXX 600 was up 0.51 per cent in midday trading. Britain’s FTSE 100 was down 0.12 per cent, Germany’s DAX gained 0.78 per cent and France’s CAC 40 increased by 1.05 per cent.
In Asia, Japan’s Nikkei slumped 1.83 per cent, touching a six-week low as investors shed chip stocks and worried about a possible Bank of Japan interest rate hike. Hong Kong’s Hang Seng was up 1.83 per cent.
The Canadian dollar traded at 69.47 U.S. cents.