Stranded assets in palm oil production: a case study of Indonesia

Report

Caldecott et al. (2013) outlined how different environment-related risks could affect agricultural assets in different ways and on different time scales. These risk factors could be a result of the physical environment, driven by climate change, ecosystem service loss and land degradation, and water scarcity. Economic drivers include political and regulatory change, as well as issues of environmental and social responsibility. They also proposed a typology of different assets in agriculture: natural assets (e.g. farmland water); physical assets (e.g. crops, farm infrastructure); financial assets (e.g. farm loans); human assets (e.g. management practices) and social assets (e.g. networks). Their research found that environment-related factors are material and have the potential to create a significant number of ‘stranded assets’ in the agricultural supply chain. Stranded assets are assets that have suffered from unanticipated or premature write-downs, devaluations, or conversion to liabilities.1 In this working paper we focus on the environment-related risk factors that can cause asset stranding in the national context of Indonesia’s oil palm industry. We have attempted to review what we feel are the most pressing environment-related concerns as well as the international financial efforts to bring greater transparency to the sector. This is an industry that requires close inspection and at times may seem impossible to differentiate, but there are some credible actors making serious efforts to improve th

Authors: Morel, A; Friedman, R; Tulloch, D; Caldecott, B

• Publication status: Published
• Peer review status: Peer reviewed
• Publisher: Smith School of Enterprise and the Environment
• Host title: Stranded assets in palm oil production: a case study of Indonesia
• Journal: Stranded assets in palm oil production: a case study of Indonesia
• Publication date: 2016-07-08
• Keywords: stranded assets; palm oil; SBTMR