Oxford launches research program to identify high-carbon sectors and assets that could become stranded
The University of Oxford’s Smith School of Enterprise and the Environment launched a new four-year research program to help businesses and policy-makers identify high-carbon sectors and assets that could be significantly devalued or written off—i.e, stranded. Assets become stranded for a number of different reasons: they can be supplanted by greener alternatives or technological innovations, or in sectors experiencing change due to new regulations or resource constraints.
The program is being supported by Aviva Investors, Bunge Ltd, Climate Change Capital Ltd and HSBC Holdings plc, with non-financial partners including the Carbon Tracker Initiative, Trucost and WWF-UK.
The first project will focus on the international supply chain for the agricultural sector, examining methods of transportation and production. Other studies, to be commissioned as the program develops, are likely to include transport, power generation, real estate and a range of commodities.
Through the program, the researchers will better understand and inform current policy debates, particularly around issues like systemic risk and financial regulation. They aim to create new, robust tools to actively understand and manage the risks of asset stranding. They will also conduct analyses of investor portfolios to build an understanding of risk exposures and develop relevant best practice case studies to inform decision-making.
Investors continue to deploy hundreds of billions of pounds into polluting and unsustainable sectors. In many cases these investments will not be worth what investors think. Climate change, scarcer resources, and new disruptive technologies will reduce value and strand assets. If investors better understand the risks of investing in these assets they will be attracted to greener alternatives and see them as better business propositions and safer places for their funds. The program is doing the further research necessary to help underpin this vital transition.— Rt Hon John Gummer, Lord Deben, Chairman of the Committee on Climate Change