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Stranded assets are "assets that have suffered from unanticipated or premature write-downs, devaluations or conversion to liabilities".[1] Stranded assets can be caused by a variety of factors and are a phenomenon inherent in the 'creative destruction' of economic growth, transformation and innovation; as such they pose risks to individuals and firms and may have systemic implications.[2] Climate change is expected to cause a significant increase in stranded assets for carbon-intensive industries and investors, with a potential ripple effect throughout the world economy.[3][4]
The term is important to financial risk management in order to avoid economic loss after an asset has been converted to a liability. Accountants have measures to deal with the impairment of assets (e.g. IAS 16) which seek to ensure that an entity's assets are not carried at more than their recoverable amount.[5] In this context, stranded assets are also defined as an asset that has become obsolete or non-performing, but must be recorded on the balance sheet as a loss of profit.[6]
- ^ "Stranded Assets Programme". Smith School of Enterprise and the Environment. 25 March 2014. Archived from the original on 27 March 2014. Retrieved 11 April 2014.
- ^ Background Briefing, UNEP Inquiry into the Design of a Sustainable Financial System (PDF), United Nations Environment Programme, June 2014, archived from the original (PDF) on 2014-10-06, retrieved 2014-07-09
- ^ Cite error: The named reference
Brownwas invoked but never defined (see the help page). - ^ Cite error: The named reference
Rezaiwas invoked but never defined (see the help page). - ^ "IAS 16". Deloitte. 9 July 2014. Retrieved 9 July 2014.
- ^ "Stranded Asset". Business Dictionary. Archived from the original on 13 April 2014. Retrieved 11 April 2014.
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