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Explained: The Relationship Between Climate Change and Wildfires

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The relationship between climate change and wildfires explained

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How Climate Change is Influencing Wildfires

Each year, thousands of wildfires burn through millions of acres of land around the world.

We’ve already seen the mass devastation that wildfires can bring, especially in places like Australia, Serbia, and California. But new research by the UN indicates that things might get even worse by the end of the century. By 2100, the frequency of wildfires could increase by up to 50%.

What’s causing this influx of wildfires around the world? Below, we dig into how climate change is impacting wildfires—and how in turn, wildfires are impacting climate change.

Climate Conditions That Support Wildfires

Before diving in, it’s worth going over the basics of wildfires, and how they get started in the first place. An area’s vulnerability to wildfires, also known as its fire regime, depends on three major conditions: its atmosphere, vegetation, and ignitions.

① Atmosphere

Atmosphere plays a big part in how sensitive an area is to wildfires. For instance, wind can increase oxygen supply in an area, which would help fuel a wildfire, and may even transfer embers to new locations.

② Vegetation

Vegetation is also a huge factor in whether or not an area is vulnerable to wildfires. A region with drier vegetation may catch fire more easily, and an area with more forest or shrubs provides more fuel for potential blazes.

③ Ignitions

An area that’s close to volcanic activity, or prone to lightning storms may be more susceptible to wildfires. However, human activity like campfires or faulty equipment can also trigger fires, so popular areas for camping or logging may be at higher risk as well.

While these conditions vary depending on the location, in general, fire regimes are being impacted by climate change, which is causing an influx in the duration and intensity of wildfires around the world.

The Fire Climate Feedback Loop

Since the 1850s, global surface temperatures have risen by about 1.0°C (1.8°F).

These increased surface temperatures have had far-reaching impacts on our climate—in the Northern Hemisphere, warmer temperatures have led to less snow, earlier arrival of spring, and ultimately longer, drier fire seasons.

These longer fire seasons have led to an influx of wildfires. But here’s the kicker—wildfires emit tons of carbon. In 2021, wildfires around the world emitted an estimated 1.76 billion tonnes of carbon into the atmosphere, which for context, is more than double the annual emissions from the entire country of Germany.

This carbon gets trapped in our atmosphere and contributes to rising surface temperatures. In other words, more carbon creates more wildfires—and more wildfires create more carbon.

Extreme Weather Events Are Rising In General

It’s not just wildfires that are growing in frequency and intensity because of climate change—droughts, heatwaves, and floods are also becoming more common around the world.

This year, temperatures reached all-time highs across Europe, which wrecked havoc across the continent, impacted infrastructure, and even took lives.

Experts warn that this may become the new normal. To help mitigate risk, governments, policymakers, and companies need to band together to create safeguards and establish proper preventative measures.

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Visualized: An Investor’s Carbon Footprint, by Sector

Which sectors are the largest contributors to emissions? From energy to tech, this graphic shows carbon emissions by sector in 2023.

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Visualized: An Investor’s Carbon Footprint, by Sector

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The following content is sponsored by MSCI
Visualized: An Investor’s Carbon Footprint, by Sector

Visualized: An Investor’s Carbon Footprint, by Sector

In the quest for a sustainable future, investors can play a crucial role in shaping our planet’s destiny.

Understanding the carbon emissions in different sectors is a key way to make environmentally and financially conscious decisions and help make a positive impact on the planet.

This infographic, sponsored by MSCI, looks at carbon emissions by sector.

Types of Carbon Emissions

Unsurprisingly, industries heavily reliant on fossil fuels and energy-intensive processes, like energy, materials, and industrials, have significant carbon footprints. In contrast, service-based and technology industries are traditionally less carbon-intensive.

To get an accurate picture of a sector/industry’s carbon footprint, it’s important to look up and down their value chain. Here is how policymakers categorize carbon emissions:

  1. Scope 1: Generated directly by the organization and within its control e.g., on-site fuel combustion and internal industrial processes.
  2. Scope 2: Indirect emissions from energy use, such as purchased electricity, heat, or cooling.
  3. Scope 3: Indirect emissions, but different from Scope 2 emissions. These are emissions that the company does not directly control such as the emissions produced from a supplier or emissions generated from the use of its sold product.

Only looking at all three scopes of emissions can we arrive at a complete picture of a sector’s carbon footprint.

Volume of Carbon Emissions, by Sector

The following table breaks down the greenhouse gas emissions for each sector by scope. A sector’s carbon footprint is expressed in metric tons of CO2 equivalent for every $1 million in financing.

In other words, here’s how much of a climate impact a one million dollar investment has in each of the following sectors.

The total figure represents the weighted average carbon emissions of each sector’s constituents as of August 10, 2023:

SectorScope 1
Scope 2
Scope 3
Total
Energy263.327.22827.53118.0
Materials298.482.81349.21730.4
Utilities461.416.0405.5883.0
Industrials32.68.3425.1466.0
Consumer
discretionary
5.09.0372.2386.2
Consumer staples16.512.4276.4305.3
Information
technology
2.05.879.387.1
Health care1.82.470.975.1
Financials4.01.158.363.4
Real estate1.45.946.854.0
Communication
services
0.64.740.545.8

Represented by tCO₂e/USD million EVIC. EVIC is the enterprise value including cash.

Understanding carbon footprint profiles can help investors evaluate the risks faced by carbon-intensive industries, such as future regulations and reputational challenges.

MSCI’s climate metrics empower investors to make responsible investments and drive meaningful change.

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Download MSCI’s Climate Metrics Report.

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