Stranded Assets: Developments in Finance and Investment

Stranded assets created by environment-related risk factors have become a major concern, influencing global environmental change. This book discusses how to manage exposure to these risks, reduce their negative consequences, and internalize them in corporate strategy. It also provides insights into investor strategy and decision-making.

\n Format: Paperback / softback
\n Length: 174 pages
\n Publication date: 31 March 2021
\n Publisher: Taylor & Francis Ltd
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The issue of "stranded assets" created by environment-related risk factors has gained significant attention, significantly impacting various pressing topics related to global environmental change. This topic encompasses a wide range of considerations, including managing investment exposure to environmental risks, understanding the financial stability implications of stranded assets, exploring strategies to mitigate their negative consequences, integrating stranded asset risk into corporate strategy, supporting civil society campaigns for rapid decarbonization, and designing decarbonization plans at the governmental, corporate, and investor levels.

This book offers valuable insights into the relevance of stranded assets for investor strategy and decision-making, as well as those interested in understanding and influencing financial institutions. It was originally published as a special issue of the Journal of Sustainable Finance and Investment, highlighting the latest thinking on this important topic.

Managing Stranded Assets:

Stranded assets refer to financial assets that become worthless or have reduced value due to environmental factors. These assets can include fossil fuel reserves, infrastructure projects, and other assets that are no longer economically viable in a low-carbon or sustainable economy. Managing stranded assets is crucial to avoid financial instability and ensure the long-term viability of the financial system.

One approach to managing stranded assets is through divestment. Financial institutions and investors can sell these assets to entities that can utilize them more effectively or to entities that are willing to take the environmental risk. This can help to reduce the financial burden on these assets and promote the transition to a more sustainable economy.

Another approach is through investment in sustainable assets. Financial institutions and investors can allocate their capital to projects that align with environmental sustainability goals, such as renewable energy, energy efficiency, and sustainable agriculture. This can help to create new markets and drive economic growth while reducing environmental impact.

Financial Stability Implications:

Stranded assets can have significant financial stability implications. For example, if a large number of fossil fuel reserves become stranded, it can lead to a decline in energy prices, which can have a negative impact on economic growth and job creation. Similarly, if infrastructure projects become stranded, it can lead to a decline in public services and infrastructure quality.

To address these financial stability implications, policymakers and financial regulators need to develop policies and regulations that promote the transition to a sustainable economy. This can include measures such as carbon pricing, subsidies for sustainable investments, and regulations that encourage financial institutions to manage their environmental risks.

Reducing Negative Consequences:

Stranded assets can have negative consequences for individuals, communities, and the environment. For example, if a coal mine becomes stranded, it can lead to job losses and economic hardship for the local community. Similarly, if a coastal infrastructure project becomes stranded, it can lead to environmental degradation and loss of biodiversity.

To reduce the negative consequences of stranded assets, policymakers and financial institutions need to develop strategies that address unemployment, lost profits, and reduced tax income. This can include job training programs, economic development initiatives, and tax incentives for sustainable investments.

Internalizing Stranded Asset Risk:

Stranded asset risk is not only a financial risk but also a social and environmental risk. Financial institutions and investors need to internalize this risk into their decision-making processes. This can include developing risk management strategies that consider the environmental and social impacts of their investments.

In addition, financial institutions and investors need to engage with stakeholders, including civil society organizations, to understand the social and environmental risks associated with their investments. This can help to develop more sustainable and socially responsible investment strategies.

Designing Decarbonization Plans:

The transition to a low-carbon economy requires the development of decarbonization plans at the governmental, corporate, and investor levels. Governments need to develop policies and regulations that promote the transition to renewable energy, energy efficiency, and sustainable agriculture. Corporations need to develop sustainable business models and reduce their carbon footprint. Investors need to align their investments with environmental sustainability goals and develop strategies that support the transition to a low-carbon economy.

In conclusion, the issue of stranded assets created by environment-related risk factors has gained significant attention, significantly impacting various pressing topics related to global environmental change. Managing stranded assets, understanding the financial stability implications, reducing the negative consequences, internalizing stranded asset risk, and designing decarbonization plans are crucial steps towards a sustainable and resilient future. This book provides valuable insights into these topics and offers a comprehensive understanding of the challenges and opportunities associated with stranded assets.

\n Weight: 340g\n
Dimension: 173 x 244 x 17 (mm)\n
ISBN-13: 9780367529994\n \n