Stranded assets are an emerging risk management teams should be exploring to ensure they are making the most effective use of their investments.
A stranded asset is an investment that has become useless or worthless. It’s a concept that has currency at the moment due to emerging climate change risks.
In fact, it’s a particularly live topic given the debate around AGL’s potential closure of its Liddell coal-fired power station in the Hunter Valley.
As a recent report by insurer Lloyd’s, Stranded assets: the transition to a low carbon economy, explains, “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 an increasingly high profile.”