Banks are backing research looking at which investments are at risk of losing value because they could be replaced by ‘greener’ technology or jeopardised by their link with carbon-heavy sectors.
Academics at the University of Oxford say they want to help businesses and policy-makers avoid an investment “bubble”, caused by investments in assets that might become “stranded”, the term for being devalued or written off.
Researchers believe the effects of “over-exposure” to fossil fuel investments could be “even more severe and wide-ranging” than the recent financial crisis.
The international supply chain for agriculture is the first sector to be put under the microscope by the four-year research programme at the Smith School of Enterprise and the Environment, likely to be followed by transport, power generation and real estate.
Ben Caldecott, a Visiting Fellow at the Smith School and Head of Policy at investment group Climate Change Capital said: “Regulators need to figure out how to make the transition from the old high-carbon economy and carefully deflate a bubble in environmentally unsustainable assets.”
The Chairman of the Committee on Climate Change is due to give a lecture at the SSEE about adapting to the new economic landscape.
John Gummer, Lord Deben will say today: “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.”