Oxford University report warns investors of “stranded” agricultural assets risk

Investors have been warned about the risks of “stranded” agricultural assets in a new report from the University of Oxford.

The 109-page report, entitled Stranded Assets in Agriculture: Protecting Value from Environment-Related Risks, comes to three main conclusions.

The first is that environment-related risk factors are material and can strand assets throughout the agricultural supply chain. “The amount of value potentially at risk globally is significant,” it says. Under an extreme scenario, the team calculates losses could run into trillions of dollars.

Secondly, the problem is being exacerbated by the current agricultural boom, which is being driven by high commodity prices and poor investment returns elsewhere that is pushing farmland values to record highs.

The final conclusion is that understanding the issue can help investors, businesses and policy makers to develop effective risk-management, thus improving resilience and minimising value at risk.

‘Stranded assets’ means those unexpectedly or prematurely devalued. It has been widely used to refer to fossil-fuel related investments in the wake of Bill McKibben’s 350.org campaign and the ‘Unburnable Carbon’ work of the Carbon Tracker Initiative.

The new report comes from a new programme headed up by former Climate Change Capital Head of Policy Ben Caldecott, who is now Head of Government Advisory at Bloomberg New Energy Finance.

The Stranded Assets Programme at the University’s Smith School of Enterprise and the Environment was established in 2012. It is supported through donations from Aviva Investors, CCC parent Bunge, HSBC, the Rothschild Foundation and WWF-UK. Non-financial partners include Standard & Poor’s, Trucost, Carbon Tracker Initiative, and the Asset Owners Disclosure Project.The Programme is advised by a high-level panel chaired by leading investment academic Professor Gordon Clark, Director of the Smith School.

Consultative Panel:

Vicki Bakhshi (F&C)
Philippe Benoit (International Energy Agency)
Robin Bidwell (ERM)
David Blood (Generation)
Yvo de Boer (KPMG)
James Cameron (CCC)
Kelly Clark (Tellus Mater Foundation)
Sian Ferguson (Sainsbury Family Charitable Trusts)
Charles Godfray (Oxford Martin Programme)
Ben Goldsmith (WHEB Ventures)
Catherine Howarth (ShareAction)
Michael Jacobs (Children’s Investment Fund Foundation)
Roland Kupers (LEAD International)
Bernice Lee (Chatham House)
Jeremy Leggett (Carbon Tracker Initiative)
Michael Liebreich (Bloomberg New Energy Finance)
Nick Mabey (E3G)
Richard Mattison (Trucost)
David Nussbaum WWF-UK
Stephanie Pfeifer (Institutional Investors Group on Climate Change)
Julian Poulter (Asset Owners Disclosure Project)
Nick Robins (HSBC)
Paul Simon (Family Office of Lord Stanley Fink)
Paul Simpson (CDP)
James Stacey (Earth Capital Partners)
Simon Upton (OECD)
Steve Waygood (Aviva Investors)
Michael Wilkins (Standard & Poor’s)
Dimitri Zenghelis (Grantham Institute)