Framing Stranded Asset Risks in an Age of Disruption
Publication Date:
Jan 01, 2018
Region:
This project aims to understand which assets could become economically stranded as a result of the transition to a more sustainable economy and related disruptions. It also aims to develop a pragmatic framework for the financial industry to use when assessing stranded asset risks.
The key conclusions of the work are as follows:
- Stranded assets are a major economic issue that deserves more attention.
- The timeline of the sustainability transition makes it highly relevant for the financial industry to look carefully at stranded asset risk now.
- The European electricity industry has suffered impairments of €130 billion in the last 6 years alone, and has many insights to offer on how fast and non-linear the change can be also in capital-intensive process industries.
- The project has identified up to ~€750 billion of assets in Europe exposed to significant risk of becoming stranded over the coming 10 years, in three industries: automotive, apparel, and further electricity write-offs.
- To frame and understand these risks, the financial industry needs to move well beyond current ESG approaches. A new methodology has been developed that we believe better captures the risks in the example industries studied.
Links:
