Decarbonizing capital : Investment, divestment and the qualification of carbon assets
(2021) In Economy and Society 50(3). p.494-516- Abstract
Private investment capital is now widely regarded as strategically significant to the governance of climate change. A dedicated and dynamic carbon finance sector has emerged that features techniques and practices for decarbonizing capital, facilitating investment in low-carbon projects and enterprises or enabling divestment from high-carbon firms and sectors. We bring together and develop the concepts of ‘qualification’ and ‘assetization’ to analyse how decarbonizing capital is proceeding. With specific reference to green bonds and the equities of fossil fuel corporations, we show how investment and divestment entail the qualification of things as assets with more-or-less specific carbon properties. But the qualification of assets as... (More)
Private investment capital is now widely regarded as strategically significant to the governance of climate change. A dedicated and dynamic carbon finance sector has emerged that features techniques and practices for decarbonizing capital, facilitating investment in low-carbon projects and enterprises or enabling divestment from high-carbon firms and sectors. We bring together and develop the concepts of ‘qualification’ and ‘assetization’ to analyse how decarbonizing capital is proceeding. With specific reference to green bonds and the equities of fossil fuel corporations, we show how investment and divestment entail the qualification of things as assets with more-or-less specific carbon properties. But the qualification of assets as ‘low-’ or ‘high-carbon’ is also shown to be contingent, contested and compromised, featuring contrasting modalities of qualification that are decarbonizing capital in uncertain and incomplete ways.
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- author
- Langley, Paul ; Bridge, Gavin ; Bulkeley, Harriet and van Veelen, Bregje LU
- publishing date
- 2021
- type
- Contribution to journal
- publication status
- published
- subject
- keywords
- assetization, decarbonization, divestment, investment, qualification
- in
- Economy and Society
- volume
- 50
- issue
- 3
- pages
- 23 pages
- publisher
- Routledge
- external identifiers
-
- scopus:85106036059
- ISSN
- 0308-5147
- DOI
- 10.1080/03085147.2021.1860335
- language
- English
- LU publication?
- no
- additional info
- Funding Information: To qualify as low-carbon assets, green bonds are commensurated and differentiated in relation to other assets through two main sets of qualifications. The first centres on how projects are turned into a particular kind of asset – i.e. a bond. In this respect, a green bond is qualified in much the same way as a ‘brown bond’. Green bonds are issued against the full balance sheet and earnings potential of the issuer, such that investors do not demand the ‘risk premium’ usually placed on low-carbon projects that are financed on a non-recourse basis (Christophers, ). The asset qualities of green bonds are thereby produced through the same metrological devices and collectively agreed standards (i.e. bond ratings) mobilized for brown bonds. What is not at issue, then, is whether the specific investment project or projects to be funded are capable of generating a future income stream, acting as collateral and bearing debt. Revealingly, while Moody’s are presently the only one of the three main rating agencies (the others are Standard & Poors (S&P) and Fitch) to rate green bonds, their ratings solely relate to financial processes (i.e. management of proceeds, disclosure and reporting). A green bond can thus get a high rating from Moody’s regardless of ‘how green the projects funded by the green bonds are’ (G20 Green Finance Study Group, , p. 25). Publisher Copyright: © 2021 Informa UK Limited, trading as Taylor & Francis Group.
- id
- 6449b219-c339-40b5-94de-08ad4296f5b4
- date added to LUP
- 2022-10-20 09:31:45
- date last changed
- 2022-10-21 15:42:38
@article{6449b219-c339-40b5-94de-08ad4296f5b4,
abstract = {{<p>Private investment capital is now widely regarded as strategically significant to the governance of climate change. A dedicated and dynamic carbon finance sector has emerged that features techniques and practices for decarbonizing capital, facilitating investment in low-carbon projects and enterprises or enabling divestment from high-carbon firms and sectors. We bring together and develop the concepts of ‘qualification’ and ‘assetization’ to analyse how decarbonizing capital is proceeding. With specific reference to green bonds and the equities of fossil fuel corporations, we show how investment and divestment entail the qualification of things as assets with more-or-less specific carbon properties. But the qualification of assets as ‘low-’ or ‘high-carbon’ is also shown to be contingent, contested and compromised, featuring contrasting modalities of qualification that are decarbonizing capital in uncertain and incomplete ways.</p>}},
author = {{Langley, Paul and Bridge, Gavin and Bulkeley, Harriet and van Veelen, Bregje}},
issn = {{0308-5147}},
keywords = {{assetization; decarbonization; divestment; investment; qualification}},
language = {{eng}},
number = {{3}},
pages = {{494--516}},
publisher = {{Routledge}},
series = {{Economy and Society}},
title = {{Decarbonizing capital : Investment, divestment and the qualification of carbon assets}},
url = {{http://dx.doi.org/10.1080/03085147.2021.1860335}},
doi = {{10.1080/03085147.2021.1860335}},
volume = {{50}},
year = {{2021}},
}