Why stranded assets?: A research story in three eras (with playlist)
- stephanielwalton
- 3 days ago
- 8 min read
As anyone who has ever interfaced with a PhD student will know - ask them about their research at your own peril. If not careful (or if you're incredibly lucky, depending on your proclivities), you may find yourself in a surprise seminar about the 'nature of the radius of a circle' at the pub or learning that there is such a thing as the 'social sciences of snakebites' (both real conversations I have been in). 'Tis every PhD's sacred task to learn how to talk about their work in such a way that avoids the eye-glaze of the listening party.
Writing academic papers does not prepare you for this. We're trained to write for other academics - not actual humans. Actual humans respond best to stories, not arguments.
I'm almost two years into this PhD and have learned that my (back)story is actually pretty important in explaining my research to people. Spoiler: I don't come from a finance background. Yet here I am, interloping through the realms of finance talking about finance-y things. I arrived at sustainable finance through a side door - chomping at the bit to talk about all this stranded asset stuff I was learning. Once I was in the room, I realized that most of the front-door people thought about stranded assets really differently. This was great - so many interesting conversations to be had! But also, I didn't do a great job of communicating my research because I just assumed everyone had the same experiences as me and that we'd be in the pocket from the moment 'stranded assets' was muttered.
Oh, not so! Many a blank stare was served. Many a "that's not an issue" was uttered.
Again - great! Many interesting conversations! But I learned I had to precisely clarify, even to myself, how I see stranded assets, why I see them that way and how that's different than others.
So that's what this is. My own little stranded assets tale. It is not, I warn you, a post about what stranded assets are. If you'd like something scholarly on that, I'd recommend our perspectives piece. This is about how I came to care about stranded assets, in a most un-scholarly format - complete with musical playlist and gifs for vibe setting.
The Peggy Olson Era
We're going to take it all the way back to 2014. Obama was president. Blank Space was on loop. Sweet potato fries were on every menu. I had moved to New York City from Austin, TX two years before to make a career in advertising, boldly embarking upon my Peggy Olson era.
After a time spent slogging it out in the SEO mines of a low-tier marketing agency, I landed a big job at a not-low-tier agency. I showed up on my first day and was told that my client would be the National Cattle and Beef Association, who had hired my firm to reverse the troubling decline in beef consumption among red-blooded Americans. I was in charge of writing content for a promotional website extolling all the benefits of eating red meat every day. Bright-eyed and eager to impress my manager with all of my Cannes-winning ideas, I pitched doing a series - "Meet the Ranchers" or whatever. They said, "We're not allowed to talk about production. It invites questions." Workin' for the clampdown!
Somewhere around, I dunno, 2016, a career in advertising felt less...fulfilling. I finally left behind the Man Men life after the idea of creating another Instagram influencer campaign for bad whiskey launched me into existential despair about art, work and the meaning of life under late capitalism that only the West Wing Weekly could lift me out of.
On repeat.
The Alison Roman Era
Now it's 2022. I am one masters degree, one academic paper, one pandemic and two babies deep into my Alison Roman era.
I'm solidifying my formerly-suppressed identity as both a lover of food and learner of food systems. I'm doing crazy things like roasting whole chickens for fun on a weeknight and shilling out student loan money for over-priced chili crisp whilst shotgunning Marion Nestle, Tim Lang and Jennifer Clapp. We're feeling hopeful 👏🏼 We're feeling energized 👏🏼
After my masters, I was lucky enough to get a job at the Centre for Food Policy where I basically did a second masters in food policy and then some. I began to solidify my knowledge of what food production in its current form is doing to the planet and to people. I thought back on that "We're not allowed to talk about production. It invites questions," statement. The multi-million dollar campaign to convince people that it is good and healthy to eat red meat every day started to take its place in my baby framework on the politics and economics behind what we eat.
I worked on a few projects where we literally listed and ranked all of the policies available to transition to sustainable and healthy food systems. Turns out there are lots! No shortage of ideas! Problem was - none of these policies - with the exception of a reformulation policy here or a farm subsidy there - were being implemented in such a way as to make an actual difference. Where was the meat tax? The antitrust regulation? The funding for agroecology research? Even modest public procurement policies were barely to be found.
Corinna Hawkes, who I'll forever be grateful to, gave me a chance to run wild with my own research project - a rare privilege for a research assistant. Her one prompt: "We know enough about the problems. Focus on the people who are enacting solutions and what they need." I decided to spend some time accosting food producers to answer some of my questions.
I specifically spoke to farmers, millers and bakers who are re-introducing diversity into grain farming to improve resilience and yield stability without relying on pesticides, herbicides and chemical fertilizers - a tough job considering that grain farming is kind of famously un-diverse. I was really nervous because I was an American who didn't own a Barbour Bedale or Hunter wellies so I was sure the British farming and food community would quickly suss out that I was inserting myself where I obviously don't belong. However, the good food folk welcomed me onto their farms and into their bakeries warmly. Much excellent sourdough was eaten.
It became apparent from our conversations that the people working in this space were swimming against a very powerful tide even while, in small but powerful ways, they were turning it. They shared some of their challenges with me which you can read about here.
But one particular bit that stuck with me was farmers describing how, if you sell grain in a commodity market, it's all about economies of scale. Enormous, monumental scale. Like, it is almost impossible to wrap your mind around how much grain the world produces in a year. At a farm level, this means you have to grow enough of the same type of grain to fill a 29-tonne truck at a minimum (because of low commodity prices, farmers have to grow tonnes and tonnes and tonnes of grain to break even). These trucks go to those big grain processing facilities that you either see in pictures among rolling green fields or in real life where they either look like they will someday house all of civilization or are the site of an unsolved murder.
Some of this grain goes to shipping ports and bulk carriers to go around the world. (Truly, I have now spent as much time watching bulk carriers filling up with grain as I have trying to keep up with It's Always Sunny.)
This made me wonder...if we need to make all these changes to food systems in not only how we grow, but what we grow, what does that mean for all these big hulking tangible things that have been built to 'do' our food systems as they currently are? What happens to those things then when we, say, eat less meat or shift away from monocultures? How do we get them to stop doing the things they're currently doing and start doing the things we need them to do? And why, when they know they need to do them, are they not? And not only are they not doing them - why are they working so hard to make sure no policy would ever materialize and no consumer shift would every take place that would make them change - hiring lobbyists and 24 year-old naïve copywriters to get people to eat more red meat?
The food producers spoke a lot about 'lock in.' A lead! I did what all researchers actually want to spend their day doing - reading, alone at home with no meetings and no one bothering me.
I embarked on a sacred period of excavatory reading. Along many circuitous routes I travelled. Into many a dead end. Down many a Google Scholar wormhole and Research Rabbit race. Until I came upon it - carbon lock-in, committed emissions, stranded assets.
The Jo March Era
When I first came across the term 'stranded assets,' it felt kind of like this.
Or like this.
I had been wanting to do a PhD for a while. Had even applied to a few places but nothing quite felt right and I didn't really like my proposals. I was on the lookout for a topic that simultaneously answered my questions whilst opening up a hundred more - and stranded assets was that.
'Stranded assets' makes the link between these big chunky tangible assets and the transition of these giant systems. It clarifies what's gotta happen to the assets - you gotta phase 'em down. This very much applies in food systems where our business-as-usual diets are overshooting planetary boundaries and we have got to produce less of some things.
'Stranded assets' also answers the question of whyyyyy firms are not making the kinds of investments we need them to - going deeper than 'because corporate greed.' It revealed the complex webs of financial obligations between firms, banks, asset managers, shareholders, depositors and investors that is as complex as the food system and ultimately reveals that all of us are impacted by this problem.
And it reveals that one very persnickety and challenging question that lies waiting and grumbling beneath all of these cranky debates - who is going to pay for all of this? From the firm's point of view, it's definitely not gonna be them! Hire the lobbyists. Hire the 24-year old copywriter. Kill the change you don't want to see in the world.
I kept coming across Ben Caldecott, who was on almost every paper about stranded assets. Looked him up. He's at Oxford! I could simultaneously scratch this stranded assets itch whilst living in a kinda pretty town. A series of small miracles made it all work out and now we're doing the thing.
The point of all of this is to say - when I talk about stranded assets, it is with the lens of three critical starting points:
(1) Stranded assets aren't something that could happen. They're something that must happen.
(2) Policy change (what the Money People call 'transition risks') are not exogenous to firms. Firms make them endogenous by hiring the lobbyists and the copywriters. They neutralize risk.
(3) In discussions on food policy, we tend to presume the polluter will pay. This is a pretty big presumption.
So there you go - a research journey in three eras.
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