Which term describes the value reduction applied to non-sustainable assets?

The term that accurately describes the value reduction applied to non-sustainable assets is the Brown Discount. This concept reflects the reduced market value or return on investment that non-sustainable assets face as investors increasingly prioritize sustainability and responsible investing. As environmental, social, and governance (ESG) criteria become more significant in investment decisions, assets that are seen as harmful to the environment or society tend to lose value. Investors anticipate potential future liabilities, stricter regulations, and reputational risks associated with non-sustainable practices, leading to a discount on the valuation of such assets.

In contrast, the other options do not directly relate to the value reduction of non-sustainable assets. The Green Premium refers to the extra cost or value associated with sustainable assets, while Capital Expenditure and Operational Expense pertain to financial metrics and expenditures related to a company's investment and operational costs, rather than valuations linked to sustainability issues.