Canadian-American writer John Vaillant has won this year’s £50,000 Baillie Gifford prize for his book Fire Weather: A True Story from a Hotter World, which judges said was both “exceptional” and “terrifying”.

Vaillant’s book tells the story of the wildfires that struck Fort McMurray in Alberta, Canada in 2016, while taking in the connected histories of the oil industry and climate science. It is the first book on the topic of the climate emergency to win the prize, the UK’s most prestigious honour for non-fiction, since it started in 1999.

Fire Weather is “very well researched, meticulously told” and “highly relevant for our times”, said Frederick Studemann, judging chair and Financial Times literary editor. It is of “great literary merit” and “forces you to ask some questions of yourself”, he added.

“It’s deeply, deeply moving to have literate people who love the word attend to your work with that degree of concentration and devotion,” Vaillant said after finding out that he won. He hopes Fire Weather will help readers “see and attend to the undeniable and really lethal connection between our appetites and ambitions” and “our blithe exploitation of fossil fuels, which even as we use it to maintain our status quo, is destroying our status quo”, he added. “We are in a very precarious place right now, and I want to say that in a way that is empowering and activating, not alienating or dispiriting”.

Vaillant’s win comes in a year when Baillie Gifford, the investment management company that sponsors the prize, faced criticism for its investments in the fossil fuel industry. In October, more than 150 authors and industry professionals signed a letter calling on the company to divest from oil, coal and gas projects.

In August, more than 50 authors including Zadie Smith, Ali Smith and last year’s winner of the Baillie Gifford prize, Katherine Rundell, called on the Edinburgh book festival to drop the company as a sponsor if it did not stop investing in the fossil fuel industry. Based on calculations by media outlet the Ferret, Baillie Gifford has up to £5bn invested in corporations that profit from fossil fuels.

“We’re obviously aware of the events in Edinburgh,” said Studemann, highlighting that though the investment firm has been the primary sponsor of the prize since 2015 (before that the award was known as the Samuel Johnson prize), it has no say in the judging process. “It was up to Baillie Gifford to make its case in answer to various challenges that were put to it. Did we then because of this say, ‘Oh we must go and choose a climate change [book]’? No.” He said that he feels “no loyalty” and “no responsibility” to Baillie Gifford.

At the prize ceremony, Nick Thomas, a partner at Baillie Gifford, said that the company has “reflected on the criticism” and “talked about it a lot”. He denied allegations of “greenwashing”, and added that the company’s level of investment in the fossil fuel industry is “very low” with 2% of the money they oversee being invested in that sector compared to an 11% industry-wide average. “Even that 2% number is a big overstatement — it is mostly made up of very indirect fossil fuel activity, like counting Tesco because they sell petrol on their forecourt”.

Asked about Baillie Gifford’s investments, Vaillant said that “we’re totally enmeshed with the petroleum industry and, rather than feeling guilty, let’s understand it and let’s have an honest conversation about it. And one of those honest conversations is: you can’t have profits and happy shareholders and believe that the things that are making them happy and profitable don’t have real impacts on the physics and chemistry of this earth in ways that make it burn worse and more intensely than it ever has in human history”.

Vaillant’s book triumphed over five others on the shortlist: Time to Think by Hannah Barnes, Red Memory by Tania Branigan, Revolutionary Spring by Christopher Clark, Time’s Echo by Jeremy Eichler and Mr B by Jennifer Homans. Each of the shortlisted authors will receive £5,000, raised from £1,000 to mark the prize’s 25th anniversary.

Judge and journalist Tanjil Rashid said that Vaillant combines a “forensic investigative voice” with one that resembles a “philosopher of human nature” who is “dwelling on the nature of fire and the dark nature of humanity”.

Alongside Studemann and Rashid on the judging panel were Ruth Scurr, writer and historian; Andrew Haldane, chief executive of the Royal Society of Arts; Andrea Wulf, historian and author; and Arifa Akbar, theatre critic for the Guardian.

Previous winners of the award include Antony Beevor, Jonathan Coe and Hallie Rubenhold. Last year, Rundell won the prize for her book Super-Infinite: The Transformations of John Donne.

• This article was amended on 17 and 29 November 2023. An earlier version misspelled John Vaillant’s name in the headline, and referred incorrectly to fires having ravaged Canada’s “prairies”.

• Fire Weather by John Vaillant (Hodder & Stoughton, £25). To support the Guardian and Observer, order your copy at guardianbookshop.com. Delivery charges may apply.