The topic of ‘stranded assets’ created by environment-related risk factors has risen up the agenda dramatically, influencing many pressing topics in relation to global environmental change. For example: how best to manage the exposure of investments to environment-related risks so that financial institutions can avoid stranded assets; the financial stability implications of stranded assets and what this means for macroprudential regulation, microprudential regulation, and financial conduct; reducing the negative consequences of stranded assets by finding ways to address unemployment, lost profits, and reduced tax income; internalising the risk of stranded assets in corporate strategy and decision-making, particularly in carbon intensive sectors susceptible to the effects of societal action on climate change; underpinning arguments by civil society campaigns attempting to secure rapid decarbonisation to reduce the scale of anthropogenic climate change; and designing decarbonisation plans developed by governments, as well as companies and investors.
Taken as a whole, this book provides some of the latest thinking on how stranded assets are relevant to investor strategy and decision-making, as well as those seeking to understand and influence financial institutions. This book was originally published as a special issue of the Journal of Sustainable Finance and Investment.
Table of Contents
Introduction: stranded assets and the environment Ben Caldecott
1. Investment consequences of the Paris climate agreement Howard Covington
2. Blindness to risk: why institutional investors ignore the risk of stranded assets Nicholas Silver
3. Transition risks and market failure: a theoretical discourse on why financial models and economic agents may misprice risk related to the transition to a low-carbon economy Jakob Thoma and Hugues Chenet
4. Social and asocial learning about climate change among institutional investors: lessons for stranded assets Elizabeth S. Harnett
5. Assessing the sources of stranded asset risk: a proposed framework Bob Buhr
6. Climate change and the fiduciary duties of pension fund trustees – lessons from the Australian law Sarah Barker, Mark Baker-Jones, Emilie Barton and Emma Fagan
7. Game theory and corporate governance: conditions for effective stewardship of companies exposed to climate change risks Lucas Kruitwagen, Kaveh Madani, Ben Caldecott and Mark H.W. Workman
8. A comparative analysis of the anti-Apartheid and fossil fuel divestment campaigns Chelsie Hunt, Olaf Weber and Truzaar Dordi
Ben Caldecott is founding Director of the Oxford Sustainable Finance Programme in the Smith School of Enterprise and the Environment at the University of Oxford, UK. He is a leading authority on sustainable finance and investment with a considerable international reputation. He has pioneered key concepts in his field, including the concept of ‘stranded assets’ and is the leading academic researcher in this area internationally.