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Stranded Assets

The transition to a low carbon economy

23 Feb 2017

Stranded assets are defined as assets that have suffered from unanticipated or premature write-downs, devaluation or conversion to liabilities. In recent years, the issue of stranded assets caused by environmental factors, such as climate change and society’s attitudes towards it, has become increasingly high profile.

Changes to the physical environment driven by climate change, and society’s response to these changes, could potentially strand entire regions and global industries within a short timeframe, leading to direct and indirect impacts on investment strategies and liabilities.

The report, part of Lloyd’s emerging risk report series, looks at actual and potential examples of how stranded assets caused by societal and technological responses to climate change could affect assets and liabilities in the insurance and reinsurance sector. The study aims to increase the understanding and awareness of these issues in the industry.

To do so, it analyses the following eight asset-stranding scenarios in various business sectors:

The report sets out a number of key actions that companies including insurers, could take in their role as investors to identify and mitigate stranded asset risks