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For the oil company ConocoPhillips, a warming climate means risks for the annual construction of an ice road that brings heavy equipment and supplies to its facility on the edge of Alaska鈥檚 National Petroleum Reserve.

For energy companies in the Gulf region from Houston to New Orleans 鈥嬧�� home to key refineries for gasoline and other US fuels 鈥嬧�� it means heightened risks of storm and flood damage.

And聽amid litigation over devastating wildfires, warming is cited as a key factor tipping PG&E, California鈥檚 largest electric utility, into a bankruptcy filing last week.

These are all signs of how, when it comes to a changing climate, the energy industry is facing more than just political pressure to transition toward cleaner, lower-emission power supplies. It鈥檚 also facing direct physical effects and financial risks.

Given the industry鈥檚 central role in an expected global transition toward a low-carbon economy, this rising attention to risks has big implications. It may create more urgency for a switch to green energy.

鈥淲e're going through a very significant pivot around business and climate change, because up to now the conversation has been almost entirely about 鈥榃hat is the impact of business on the climate?鈥� 鈥� says Joel Makower, chairman of GreenBiz Group in Oakland, Calif., which promotes environmentally sustainable business practices. 鈥淣ow the conversation is shifting to, 鈥榃hat is the impact of climate change on business?鈥� 鈥�

For everyone from CEOs to corporate shareholders and employees to consumers filling gas tanks or paying electric bills, he says, the concern may become: 鈥淗ow do you operate in a world where with fairly increasing certainty we鈥檒l be seeing more extreme weather, more droughts, more floods, hurricanes etc.?鈥�

The PG&E case is now Exhibit A 鈥� with a twist.

Is corporate liability too strict?

As the giant utility enters court-overseen bankruptcy proceedings, the spillover effects of climate change may slow California鈥檚 move to low-carbon power. Bankruptcy will likely disrupt the company鈥檚 plans to bring in rising amounts of renewable power to help the state meet its ambitious goals to address climate change. With those targets growing costlier to reach, electric utility ratepayers or taxpayers could be the ones to ultimately pick up the tab.

The connection between PG&E鈥檚 bankruptcy and climate change isn鈥檛 simple or universally agreed. Wildfires are a longstanding feature of the region it serves, and the company is being sued for the alleged role of its equipment in causing some of the fires. Moreover, California has a strict liability standard that, unlike in other states, can leave a company liable even if no negligence on equipment operation or brush-clearing is proved.

Still, the persistence of drought conditions in much of the state and two epic wildfire years are viewed by many scientists as features of a shifting global climate.

鈥淧G&E is a wake-up not just for energy companies but for all companies,鈥� says Nancy Meyer, director of business engagement at the Center for Climate and Energy Solutions (C2ES) in Washington. 鈥淭he physical risks of climate change are here and now. Companies are trying to figure out how to better quantify and report and manage those kind of risks.鈥�

The resulting costs pose questions not only for corporations but for the rest of society.

When companies are asked to bear the costs of climate change, they have an incentive to guard their own future. But is there a point at which help from outside is warranted?

Some environmentalists have raised that question in PG&E鈥檚 case.

鈥淰ictims鈥� interests aren鈥檛 served by pushing utilities into bankruptcy, because that will convert wildfire sufferers into one more class of frustrated creditors pursuing inadequate funds. The same goes for utility customers, who always end up paying more in the aftermath of bankruptcies,鈥� Ralph Cavanagh of the Natural Resources Defense Council wrote in the run-up to PG&E鈥檚 bankruptcy filing. 鈥淎nother substantial casualty could be billions of dollars of funding for PG&E鈥檚 nation-leading clean energy initiatives, which are designed to help fight the effects of climate change, like these tragic wildfires.鈥�

He urged reform of what he called California鈥檚 鈥渏udge-made law鈥� on strict liability, but also called for a broader rethink of 鈥渉ow we design our communities and insurance systems to reduce both individual and collective exposure.鈥�

Spreading the costs

Others say that, at the very least, there鈥檚 a troubling irony in PG&E鈥檚 predicament. Even leaders on environment, social, and governance (ESG) practices aren鈥檛 immune from damaging climate effects.

鈥淧G&E has a good record when it comes to ESG ... and yet they still find themselves victim to physical impacts of climate change, which are very systemic in nature,鈥� Ms. Meyer says 鈥淪o as we start seeing more and more physical impacts of climate change, to some extent it鈥檚 going to be very difficult for the corporate community to bear all of those costs.鈥�

To some extent, the risks have long been known.

鈥淩efineries, offshore facilities, those kinds of major plants are designed with a long life span,鈥� says Sabrina Watkins, who spent a decade as head of sustainability at ConocoPhillips before retiring a few years ago. 鈥淎nd we included climate change considerations in that analysis so that the facilities鈥� design would be robust to potentially changing conditions.鈥�

鈥淐ertainly electric utilities have been on the forefront of this work,鈥� she adds, noting how some power suppliers are adapting to prospects for changing rainfall patterns in their hydropower systems, alongside risks such as storms or wildfires.

Also, oil-industry CEOs have shown increasing willingness to discuss climate change and even to sign on to some 鈥渃arbon pricing鈥� policies designed to nudge Americans away from fossil fuels.

Sustainability advocates say the oil and gas industry needs to do much more to address physical risks.

鈥淥f all industries, the utility industry and the fossil-fuel industry should realize that they are exposed,鈥� says Rachel Cleetus of the Union of Concerned Scientists in Washington. 鈥淎nd they are also in the driver鈥檚 seat and helping make the transition to a clean energy future.鈥�