Decarbonizing capital: Investment, divestment and the qualification of carbon assets

Paul Langley, Gavin Bridge, Harriet Bulkeley & Bregje van Veelen (2021)

Economy and Society, Online first

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 ‘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.

Extract: “In contrast with the quantitative framing of private investment capital that prevails in climate change governance, we will critically analyse decarbonizing capital as an economy of qualities and qualifications. Informed by findings from our fieldwork with specialist practitioners of carbon finance, we will argue that the contingent processes of decarbonizing capital entail relatively discrete qualifications of assets with more-or-less specific carbon properties. To this end, we will draw on a body of literature that interrogates, more widely, ‘how capital obtains the qualities that distinguish it’ (Pistor, 2019, p. 12). This includes: juridical provisions that serve to ‘code’ capital as a legal category replete with certain ‘attributes’, such as protected and convertible ownership claims and rights to pecuniary returns (Pistor, 2019); and, prospective valuation devices that figure the future uncertainties of investment capital creation and allocation (Chiapello, 2015; Muniesa et al., 2017; Nitzan & Bichler, 2009). More specifically, we will bring together and develop the concepts of ‘qualification’ and ‘assetization’ to extend this literature, and to analyse the ‘becoming rent’ of decarbonizing capital. We advance the qualification concept in its broadest sense, working with the productive tension between different elaborations offered by the research programme of economization and convention theory (Callon et al., 2002; Diaz-Bone, 2017).” (p. 4)

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