As global awareness intensifies around the urgent need for food systems that are both health-promoting and environmentally sustainable, a persistent challenge has emerged: entrenched economic and financial structures hinder transformative change. The dynamics of current food systems often create a financial lock-in, where firms and financial institutions face significant disincentives to alter their practices, primarily because the transformations required to establish sustainability risk rendering existing assets obsolete. This phenomenon, known as asset stranding, presents a formidable barrier to innovation and adaptation within the agricultural and food production sectors. In a recent Perspective article published in Nature Food, Walton, Mehrabi, Fanzo, and colleagues articulate the profound implications of asset stranding and illuminate strategic pathways for overcoming this political-economic constraint to foster food systems transformation.
Asset stranding arises when investments and infrastructure that have long supported conventional food production suddenly lose value or become liabilities amid shifting market demands, policy interventions, or technological disruptions. Within food systems, these assets range from large-scale industrial farming equipment to land dedicated to monoculture, from livestock operations reliant on high greenhouse gas emissions to supply chains optimized for fossil fuel dependency. The financial and operational inertia vested in these assets locks stakeholders into existing models, promoting a status quo that often overlooks urgent environmental and health priorities.
The magnitude of asset stranding in food systems is compounded by the sector’s fundamental complexity. Food production is deeply interconnected with social, economic, and environmental systems, where changes in one domain reverberate across others. For example, policies attempting to reduce carbon footprints in agriculture may impose costs that devalue livestock farms reliant on methane-intensive practices. Similarly, consumer shifts toward plant-based diets, though gradual, erode the long-term profitability of facilities dedicated to animal agriculture, threatening the viability of existing capital stock and prompting financial institutions to reconsider their risk exposure.
Financial institutions, in particular, are caught at the heart of this conundrum. Banks, investors, and insurers have traditionally underpinned the growth and expansion of conventional food production systems by financing asset acquisition and operational costs. As environmental concerns mount and regulatory landscapes evolve, these same institutions face mounting pressure to divest from assets that are unsustainable or likely to become stranded. However, premature divestment without strategic transition mechanisms risks destabilizing local economies and communities dependent on these assets, underscoring the intricate balance between environmental responsibility and socio-economic welfare.
The authors argue that addressing the stranded assets problem proactively represents a unique lever for disrupting the lock-in of the food system’s financial architecture. By identifying which assets are at risk of obsolescence and mapping the pathways for their responsible phase-out or repurposing, stakeholders can foster a more adaptable financial environment conducive to sustainable innovation. This approach calls for a paradigm shift from reactionary to anticipatory financial planning, where foresight and collaboration between public and private sectors preemptively shape transition strategies.
In their analysis, Walton and colleagues highlight several sectors within the food system where asset stranding is imminent or already underway. The livestock sector, heavily implicated in greenhouse gas emissions and land degradation, serves as a bellwether case. With increasing regulatory pressures and shifting consumer preferences, assets tied to intensive animal agriculture—including specialized equipment, feed production facilities, and real estate—may face rapid depreciation. Similarly, fossil-fuel-dependent elements of agricultural supply chains, such as tractors and machinery reliant on diesel, processing plants, and transport networks, risk obsolescence as renewable energy integration becomes both necessary and economically advantageous.
Technological innovation plays a dual role in this context. While emerging technologies such as precision agriculture, alternative proteins, and carbon sequestration offer promising avenues for decoupling food production from environmental harm, their adoption challenges legacy asset bases. Farmers and firms invested heavily in traditional technologies may struggle to pivot without coordinated support mechanisms, heightening vulnerability to asset stranding. Hence, technology-driven transformation must be paired with financial strategies that enable asset retirement, resale, or repurposing to minimize economic disruption.
Policy frameworks are pivotal in mediating the intersection of asset stranding and food systems transformation. Effective policies can incentivize sustainable practices by pricing externalities, such as greenhouse gas emissions or water usage, thereby adjusting asset valuations to reflect environmental costs accurately. However, such regulations need careful design to avoid abrupt asset devaluations that could precipitate economic instability. Policy instruments that support just transition pathways, including retraining programs, financial compensation, and phased regulatory timelines, help mitigate social and economic dislocations.
Moreover, the dissemination of transparent information regarding asset risk is essential for enabling sound investment decisions. Enhanced reporting standards on environmental, social, and governance (ESG) criteria empower investors and lenders to assess the resilience and sustainability profiles of food system assets critically. This transparency accelerates capital reallocation toward regenerative agriculture, diversified crop systems, and more resilient supply chains, fostering an environment where stranded assets are identified early and managed responsibly.
An emergent theme in the article is the importance of cross-sectoral collaboration to navigate stranding risks. Food systems do not operate in isolation; their transformation implicates energy, transport, finance, labor markets, and international trade. Multi-stakeholder platforms that bring together farmers, investors, governments, researchers, and civil society can co-create transition pathways that balance economic viability, environmental sustainability, and social equity. By sharing risks and benefits, these coalitions reduce the financial burden on any single actor, enabling collective progress toward systemic change.
The authors also emphasize the critical role of innovation finance instruments tailored to the unique challenges of food systems transitions. Green bonds, impact investing, and blended finance mechanisms can mobilize capital for asset repurposing or retirement, providing incentives for early movers. These instruments can bridge gaps between traditional finance, often risk-averse and short-term focused, and the longer-term, systemic nature of food systems investments. Developing robust metrics to measure transition progress further enhances investor confidence and informs adaptive management of stranded assets.
Importantly, Walton et al. caution against simplistic narratives that frame asset stranding solely as a loss or threat. While stranded assets represent sunk capital, they also open windows of opportunity for transformation. Abandoned or underutilized lands, processing facilities, and supply chain nodes can be repurposed for emerging sustainable practices—such as agroforestry, community-supported agriculture, or renewable energy production—if supported by innovative policies and financial instruments. Thus, asset stranding need not signify a dead-end but rather a potential pivot toward regeneration.
A forward-looking financial architecture would integrate asset stranding assessments into routine risk management. Scenario analysis and stress testing that incorporate environmental variables equip financial institutions to anticipate future disruptions and align portfolios with sustainable pathways. This integration advances the broader agenda of embedding sustainability into economic systems rather than treating it as an external constraint or regulatory burden.
Furthermore, the article recognizes the heterogeneity across global food systems, cautioning that asset stranding dynamics differ according to geography, scale, and socio-economic context. For example, commodity export-oriented countries may face different risks and opportunities compared to smallholder-dominated regions. Tailoring solutions to these diverse contexts is critical to ensure equitable transitions that do not exacerbate existing inequalities or marginalize vulnerable populations.
In conclusion, addressing asset stranding in food systems is both a formidable challenge and a profound strategic opportunity. The intricate web linking financial capital, technology, policy, and social systems necessitates a sophisticated, multi-dimensional response. By proactively confronting stranded assets, stakeholders can disrupt entrenched financial dependencies and catalyze transformative innovation. This shift is urgent and essential for reimagining food systems that nourish populations while safeguarding planetary boundaries.
Walton, Mehrabi, Fanzo, and their co-authors thus call for a concerted global effort to integrate stranded asset management into food system governance and finance. Doing so will help unlock new pathways of resilience and sustainability, steering humanity toward a future where food security and environmental integrity coexist harmoniously. The longevity and health of the planet depend on such visionary, collaborative endeavors now.
Subject of Research: Asset stranding in food systems and its implications for sustainable food systems transformation.
Article Title: Asset stranding could open new pathways to food systems transformation.
Article References:
Walton, S., Mehrabi, Z., Fanzo, J. et al. Asset stranding could open new pathways to food systems transformation. Nat Food 6, 440–445 (2025). https://doi.org/10.1038/s43016-025-01170-7
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