Bursting the carbon bubble; Investigating the impact of the carbon bubble frame on the financial sector

Abstract

In existing literature, no consensus has been reached yet on the effectivity of fossil fuel divestment. Considering the influential 2018 Taskforce on Climate-related Financial Disclosures report that recommends financial institutions to take the stranded assets risk into account, it seems that the financial sector has now adopted the carbon bubble or stranded assets narrative. This study explores how this impact has been realized. It uses process tracing to test three theoretical explanations: the theory of competing ideas, legitimacy theory and network theory. During the case study, it became clear that the stranded assets narrative has only caused a minor shift in language in the financial sector. Investments in the oil and gas sector however remain intact. Strong evidence has been found to confirm that the theory of competing ideas explains this limited effect. Some indications for legitimacy theory have been found as well. Unfortunately, this research has not been able to test network theory substantially, leaving this as a subject for future research.