FRAMING STRANDED ASSET RISKS IN AN AGE OF DISRUPTION

The report argues that the sustainability transition creates 'creative destruction' where new technologies and business models render existing assets economically unusable. It proposes a three-step methodology: identifying disruptions and scenarios, testing for negative growth dynamics, and mapping asset-type implications. Applying this to Europe, the authors identify up to €750 billion in assets at risk across three sectors. The European electricity sector serves as a historical case study, having suffered €130 billion in impairments between 2010 and 2015. In the automotive sector, up to €243 billion is at risk due to the combined impact of electric vehicles, autonomy, and car sharing. The apparel industry faces risks primarily in real estate and intangible brand value due to e-commerce and supply-chain ESG issues. The report concludes that traditional ESG analysis is insufficient and must be integrated with financial value assessments to capture non-linear disruption risks.

• The European electricity industry experienced massive asset stranding between 2010 and 2015, with impairments totaling €129 billion and seven of the top ten power utilities losing an average of 65% of their share price from 2010 to 2016.
• In the European automotive industry, up to €243 billion in asset value is exposed to significant risk of becoming stranded, particularly in a scenario involving the rapid growth of shared electric self-driving cars.
• The automotive sector is being disrupted by three simultaneous trends: electric vehicles (EVs), driverless vehicles, and car sharing services. EVs are becoming cost-competitive on a total-cost-of-ownership basis, and battery costs decreased by 77% between 2010 and 2015.
• The European apparel industry's stranded asset risks are primarily concentrated in real estate and intangible assets (brand and growth expectations), with total enterprise value for the top 10 companies at €351 billion.
• The apparel industry faces significant supply-chain risks, notably in cotton production, where 57% of global production occurs in areas with 'high' or 'extremely high' water stress.
• The European utility sector remains at high risk, with an estimated €300-500 billion of assets potentially stranded. This is driven by the fact that new solar and wind installations in some regions are already cheaper than the running costs of existing coal and gas plants.
• The report proposes a new financial methodology to replace legacy ESG approaches, which often fail to capture the 'spiraling negative growth dynamic' where sustainability trends and business disruptions reinforce each other.

APA

Stockholm Environment Institute (n.d.). FRAMING STRANDED ASSET RISKS IN AN AGE OF DISRUPTION. https://www.sei.org/wp-content/uploads/2018/03/stranded-assets-age-disruption.pdf

Chicago

Stockholm Environment Institute. FRAMING STRANDED ASSET RISKS IN AN AGE OF DISRUPTION. n.d. https://www.sei.org/wp-content/uploads/2018/03/stranded-assets-age-disruption.pdf.

Wikipedia

{{cite report |author=Stockholm Environment Institute |title=FRAMING STRANDED ASSET RISKS IN AN AGE OF DISRUPTION |url=https://www.sei.org/wp-content/uploads/2018/03/stranded-assets-age-disruption.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{stockholmenvironmentinstitutendframing, author = {{Stockholm Environment Institute}}, title = {{FRAMING STRANDED ASSET RISKS IN AN AGE OF DISRUPTION}}, institution = {Stockholm Environment Institute}, url = {https://www.sei.org/wp-content/uploads/2018/03/stranded-assets-age-disruption.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }