Policy Report No. 3: Shielding financial balance sheets against stranded assets

Resource Description:

This report examines the financial risks associated with stranded assets in Colombia, particularly in the context of a low-carbon transition and climate impacts. It focuses on public development banks and evaluates how climate risks affect asset valuation and risk management.

Key Insights:

1. Highlights agriculture, energy, and infrastructure as sectors vulnerable to physical and transition climate risks
2. Reviews Colombia’s legal and regulatory frameworks for asset impairment, risk classification, and portfolio management
3. Analyzes two case studies of Colombian development banks to assess current practices
4. Recommends strengthening climate risk management and integrating climate factors into credit risk assessments

Why This Matters:

Public development banks play a central role in financing national development. Proactively addressing stranded asset risks helps protect public investments and maintain financial stability in the face of climate change.