What do assets termed as "stranded" signify for a company?

Stranded assets refer to those that have experienced a significant decline in value or utility due to various factors, often related to changes in market conditions, regulations, or technological advancements. When a company holds stranded assets, these assets may no longer generate expected returns or serve their intended purpose, leading to financial losses. This situation typically arises in contexts where companies invest heavily in energy or resources that become obsolete or heavily regulated, such as fossil fuel reserves in the wake of a transition to renewable energy sources.

In contrast, the other options describe scenarios that do not align with the concept of stranded assets. For instance, assets performing exceptionally well or appreciating rapidly would not be termed stranded, as these assets maintain their value and contribute positively to a company's finances. Likewise, assets required for future investments imply ongoing or potential revenue generation, which is distinct from the notion of being stranded. Understanding what stranded assets signify is crucial for risk management and strategic planning in sustainability contexts.