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Fossil Fuel Stranded Assets: Divest, Engage or Hedge

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Fossil Fuel Stranded Assets: Divest, Engage or Hedge

Highlights

Trucost’s briefing note looks at how asset owners and managers are coming under increasing scrutiny to better understand and communicate their potential exposure to stranded assets, and how these concerns can be answered.

Jul. 22 2014 — Fossil fuel extractives companies form a significant portion of global stock markets – particularly in the UK and Australia – and as a consequence feature ubiquitously throughout global investment portfolios.

In addition, the supply chain reach of fossil fuels is inescapable in several other economic sectors, including primary industry, energy and transport. This exacerbates the extent to which very many investment funds, and by distillation very many more investors, are exposed to the potential consequences of fossil fuel asset stranding. Trucost’s briefing note answers questions such as: can fossil fuel companies sustain their valuations? How do investors develop an effective investment strategy? What is the best way to address risk in practice?