6 October 2020.

As wildfires burn across the US’ West Coast, could the link between climate change and the fires see a spike in responsible investment interest across the US as seen following Australia’s 2019/20 bushfire season?

Two crises with common threads

Similar to Australia’s Black Summer fires over 2019/2020, the US West Coast experienced preconditions of drought, low rainfall and high temperatures in the months and years leading up to the disaster, making the fires difficult to control.

While some were quick to blame forest management for the severity of the fires, experts made the argument that the main obstruction to hazard reduction were weather preconditions and a combination of other factors.

The prevailing factor causing the severity of both disasters was climate change.

In Australia, the devastation wrought by the fires spurred an increase in investor demand for responsible investment. Given the two crises are very similar, could they see similar aftermaths? That is, investors taking back control and driving climate action by investing responsibly and sustainably.

Similar preconditions for fire

According to climatologist and wildfire expert at University of California Merced (UC Merced), Leroy Westerling, climate change has made the US’ current blazes more severe than in previous years.¹

Westerling has spent more than two decades studying wildfires and the weather that drives them, and believes that vegetation yet to burn such as dead trees and brush from recent droughts fuel the fires.

He points to a combination of factors linked to climate change that is spurring the blazes across the region, making it more difficult for emergency crews as they battle the flames.

“The western US has seen less rain and snowfall in recent years, which means forests dry out quicker when the summer heat comes,” and that means the fire season is longer "because [the forest] dries out earlier".

Looking at Australia’s bushfire preconditions, The Journal of Safety Science and Resilience recently conducted research into the Impact of Australia’s catastrophic 2019/20 bushfire season on communities and environment.²

Similar to the US fires, Australia's bushfire season occurred during a period of record breaking temperatures and extremely low rainfall.

Looking at the preconditions of Australia’s Black Summer fires, the Bureau of Meteorology determined 2019 was Australia's warmest and driest year on record.

²

Muddying the climate change link

In US politics, presidential candidate Biden recently condemned President Trump as a ‘climate arsonist’ when the president acknowledged the severity of the fires, though blamed the disaster on ‘bad forest management.’³

Similar to Trumps claims that the main issue of US’ fires was due to forest management issues, early this year Rural Fire Service Commissioner Shane Fitzsimmons faced similar discourse in Australia.⁴

Fitzsimmons was of the view that the main obstruction to hazard reduction was weather conditions.

“Hazard reduction burns are particularly fraught at times of heightened fire risk,” he said.

Will these similar crises see a similar aftermath?

Grappling with the harsh reality of Black Summer fires, Australia saw the impacts of climate change on its doorstep.

In the months following the horror bushfire season there was a marked increase in responsible investment as many linked the severity of the fires to climate change and wished to reduce their exposure to contributing sectors and companies.

According to the Responsible Investment Association of Australia (RIAA)’s annual Benchmark Report, in 2019 Australia’s responsible investment market grew by 17%, totalling $1,149 billion in assets under management.⁵

Retail investor demand was a driver for 24% of responsible investment funds, up from 21% in 2018 and respondents of the survey cited external events, including the bushfires, climate strikes and increasing public awareness of climate risk, as a driver of growth in retail demand.

This growth reflects the changing preferences of consumers, as another RIAA study released earlier this year found the overwhelming majority of Australians now expect their savings (87%) to be invested responsibly and ethically.

U Ethical Investors Chief Investment Officer James Cook believes that it’s a pivotal time for the US: amid a pandemic calling for more investment in healthcare and looming election where climate change discussions and votes are on the table - all the while the US West Coast burns.

“In a heavily polarised debate, we have the White House placing responsibility on individual States and their respective land management practices versus a broad-based collective concerned about the impact of global warming and the generation of drought and tinder dry conditions which have literally fanned the flames.

“With rapidly growing fund inflow to responsible investment funds globally, it does appear that investors also harbour concerns over global warming with the expectation that fund managers, and the companies they invest in, all incorporate robust risk mitigation measures to counter the effects of climate change.

“This will result in capital the world over proving much more circumspect in where it chooses to invest.

As the US continues to tackle its blazes, Australia prepares for another bushfire season ahead that is hopefully not as perilous as the last.

It’s clear that with the undeniable climate change link in both crises, the time for climate action is now.

References:
¹https://www.aljazeera.com/news...
² https://www.sciencedirect.com/...
³ https://www.theguardian.com/us...
⁴ https://www.theguardian.com/au...
⁵https://responsibleinvestment....