Impact Cords: This Week's Moves (No. 1) January 11, 2025
Welcome to our Cordes Foundation weekly roundup of developments in #impinv and #sustainablebusiness. This week has been dominated by unprecedented climate events and shifting institutional commitments.
Los Angeles Faces Historic January Wildfires
The most significant story this week comes from Los Angeles, where unprecedented winter wildfires are causing catastrophic damage. Current estimates from AccuWeather suggest economic losses could reach between $135 billion to $150 billion, potentially making this one of the costliest natural disasters in U.S. history.
According to new data from the Copernicus Climate Change Service, scientists are attributing this unusual timing to "hydroclimate whiplash" - a rapid shift from wet conditions to extreme drought in a matter of months. The implications for insurance markets are particularly concerning, with California's state-sponsored insurance program, FAIR, facing potential exposures of $5.89 billion in Pacific Palisades alone.
Wall Street's Climate Retreat Continues
Major financial institutions are stepping back from formal climate commitments. Morgan Stanley became the latest to exit the Net-Zero Banking Alliance, following similar moves by Citigroup and Bank of America. Bloomberg reports that global banks provided $680 billion in fossil-fuel loans and bond deals in 2024, up from $667 billion in 2021 when NZBA was created.
Tech's Energy Paradox Drives Innovation
We're seeing fascinating developments in the intersection of technology and clean energy. A Department of Energy report reveals that data centers will account for up to 12% of U.S. electricity consumption by 2028, triple what data centers consumed in 2023. This challenge is spurring unexpected innovation in clean energy solutions.
Positive Developments
Despite these challenges, there are encouraging signs. New York has established a pioneering "Climate Superfund" law aimed at collecting $3 billion annually from fossil fuel companies to fund resilience projects. Meanwhile, Sightline Climate reports that climate tech investment, while down 14% from last year, remains resilient at $30 billion annually, with particularly strong interest in energy innovation. Investment in geothermal energy nearly tripled to $558 million last year, while nuclear investment almost doubled to $1.9 billion.
Looking Ahead
We'll be closely monitoring the evolution of the Los Angeles fires and their impact on insurance markets. Additionally, we're watching for potential ripple effects in the financial sector following this week's institutional departures from climate commitments.
This convergence of events underscores that climate change isn't a future consideration - it's actively reshaping markets and communities today. The question is no longer whether to adapt, but how quickly and effectively we can do so.