Stranded Assets Developments in Finance and Investment
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.
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