WNA – Nuclear Energy and Sustainable Finance

The World Nuclear Association (WNA) today (12/20/21) published an examination of the issue on its website.

WNA’s publication of this document becomes a globally significant touchstone for all other advocates for nuclear energy to assess how they might approach the issue.  Here is a summary and a link to the full document – Nuclear Energy and Sustainable Finance

Summary

• Increasingly, jurisdictions are taking policy and regulatory steps to enhance the role of the financial system in the transition towards low-carbon and sustainable economies.

• These regulatory actions focus on three broad themes: disclosure, risk management and the mobilization of capital. There is a move towards mandatory disclosure internationally.

• Over 20 countries have either implemented or are currently developing taxonomies. Some of the taxonomies issued to date specifically include nuclear energy while others currently exclude it. Many taxonomies under development intend to align with the EU taxonomy for sustainable activities.

• The ongoing evolution of environmental, social and governance (ESG) criteria presents both opportunities and risks to the nuclear industry.

• Multiple international initiatives are working to help mobilize capital for the sustainability transition by seeking to harmonize ESG standards and reduce market fragmentation. Some of these are likely to result in major changes to non-financial reporting and risk assessment by financial institutions

GEN IV Forum Report

The WNA effort is the latest assessment of the relevance of ESG reporting. In September of this year the the Generation IV International Forum (GIF) published a report on the topic of nuclear energy as an asset class.

The report said that nuclear energy has the potential to show up positively against a wide range of Environmental, Social and Governance (ESG) data collection and accounting metrics. This should allow nuclear energy to be considered as an investable asset class, thereby allowing nuclear companies and projects to access climate finance.

The report – Nuclear Energy: An ESG Investible Asset Class – was produced by a finance industry taskforce set up in 2020 by GIF’s Economic Modelling Work Group. “The report has been produced by the finance community for the finance community. It is intended to provide guidance to the finance community and wider stakeholders on how nuclear assets could report against ESG.”

See this summary of the GEN IV report and its significance in this World Nuclear News report from September 7, 2021

U.S. Lags Behind UK and EU Counterparts

While the U.S. nuclear energy industry has contributed its expertise to these efforts, it has not independently engaged with financial rating agencies nor pro-actively taken action to assess the potential for ESG reporting for nuclear energy utilities, developers of advanced nuclear reactors, or their respective supply chains.

On October 23, the financial wire service Market Watch reported that while the potential for ESG reporting exists, investors remain on the fence about it. Despite concerns about costs, and the usual litany of fears, uncertainties, and doubts, Market Watch reported that, “nuclear power’s track record over the past decade has been excellent. Finally, with respect to its carbon credentials, nuclear competes with every low- and no-carbon source available.”

The wire service also reports that regulatory updates may encourage ESG investors on a global scale. The U.S. nuclear energy industry could be left behind in terms of access to ESG capital flows if firms are not positioned to present their ESG credentials to investors.

The announcement this week that Qatar’s sovereign wealth fund will invest 85 million pounds ($112.12 million) is a clear signal that these types of investors are placing their bets on nuclear energy.

Barclays says the EU taxonomy for sustainable activities, a classification system Europeans are developing, could bring “more clarity on nuclear energy’s role in the green transition, which may help build a stronger consensus among investors still unsure about the nuclear power sector from an ESG perspective.”

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