Stranded assets

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1. Climate change risk - financial risks.

Stranded assets are one of the financial risks that could arise from adjusting to a lower-carbon economy.

In this context, stranded assets potentially include more polluting - or less energy efficient - resources such as fossil fuel reserves and energy-inefficient vehicles.

The related, previously valuable, assets would need to be abandoned or scrapped.

They might also turn from assets into liabilities, for example obligations or commitments to decommission obsolete or unwanted facilities.

All this will result in financial losses for the owners of the stranded assets, and potentially their suppliers as well.

2. Other financial risks.

A broader class of assets potentially at risk including, for example, assets associated with other products at risk of decline through health concerns.

Examples include tobacco and nuclear power.

Decline may occur through increased regulation, market sentiment, or both.

See also