Bearing, overstretching, or shifting climate risk: How private financial actors keep endangered assets afloat

Climate change and climate policy can contribute to assets suddenly losing value, thereby destabilizing the financial system: a phenomenon referred to in the literature as stranded assets (e.g., production facilities and financial investments). This article analyzes the strategies private financial actors use to counter this phenomenon. It shows that banks and institutional investors have so far hardly applied higher risk premiums for potential stranded assets – contrary to the expectations of politicians and financial regulators. Although awareness of climate risks has certainly increased, financial actors are exploiting the long time horizons until these risks materialize and continue to invest in these potentially vulnerable assets.

The article is commented on by: 
John Morris, Nottingham University, and
Moritz Leiner, Urgewald

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The event will be held in English.