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07 September 2021

Nuclear energy, as an asset class, has the potential to report well against a wide range of Environmental, Social and Governance (ESG) data collection and accounting metrics, according to a new report from the Generation IV International Forum (GIF). This should allow nuclear energy to be considered as an investable asset class, thereby allowing nuclear companies and projects to access climate finance.

(Image: GIF)

The report – titled 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,” GIF said. It is intended to “provide guidance to the finance community and wider stakeholders on how nuclear assets could report against ESG.”

In the last ten years, access to climate finance – focusing on creating a positive impact on global society through ethical, socially responsible and eco-friendly value – has become a major focus of the finance industry, the report says. Against the background of the United Nations Framework Convention on Climate Change, the Kyoto Agreement, and more recently the Paris Agreement, investors have sought to integrate ethics, governance, social value and environmental concerns into their investment strategies.

ESG have been developed as a set of standards that socially conscious investors use to screen potential investments by asking companies and projects to report against them. “In other words, ESG are integrated into the investment decision-making process such that each investment is analysed for the potential level of ESG risk and impact that it may have,” GIF said. ESG are not only used for screening investment opportunities but also for assessing a company’s continuing performance.

“Inconsistency in applying ESG reporting has resulted in nuclear power having a higher hill to climb than other low-carbon energy sources,” the report says. “This report establishes not only how nuclear energy, as an asset class, has the potential to report well against a wide range of ESG; it highlights the importance of wide-ranging, consistent and standardised ESG reporting to determine the credentials of all energy companies across their lifecycles and throughout their supply chains.”

GIF says to obtain the greatest benefit from the adoption of ESG, consistency is essential, not only in terms of the ESG, but also in terms of how assets are intended to report and therefore how the investment community should assess ethics, governance, social value and environmental concerns. Requiring all companies to report against ESG in a consistent manner will allow for a level playing field across technologies, it says. In other words, ESG need to be applied consistently across asset classes.

“Nuclear, as an asset class, has the ability to report at least as well as or better than other energy sources against all these ESG,” the report says. “Key to reporting is ensuring that companies and projects are established to the highest standards, as the industry generally does, but there is also an obligation on the investor community to ask all energy companies to report on the wide range of ESG to make sure all projects are considered on a consistent open and transparent basis.

“The investment community has an obligation to ask companies to report in consistent ways to provide nuclear the opportunity of accessing climate finance and making nuclear an investable asset class.”

GIF added: “This report can be utilised by the investment community to demonstrate that nuclear should be an investable asset class, whether each company or project measures up will be a matter for ESG reporting.”

The GIF was initiated by the US Department of Energy in 2000 and formally chartered in mid-2001. It brings together 13 countries (Argentina, Australia, Brazil, Canada, China, France, Japan, Korea, Russia, South Africa, Switzerland, the UK and the USA), and Euratom – representing the members of the European Union – to work together to develop the research necessary to test the feasibility and performance of fourth generation nuclear systems, and to make them available for industrial deployment.

The six reactor technologies GIF identified for development are: the gas-cooled fast reactor, the lead-cooled fast reactor, the molten salt reactor, the sodium-cooled fast reactor, the supercritical-water-cooled reactor and the very high-temperature reactor. The OECD Nuclear Energy Agency provides GIF’s technical secretariat.

Russian state nuclear corporation Rosatom today announced that its JSC Atomenergoprom subsidiary has been awarded a score of 56/100 for its ESG performance by Vigeo Eiris (VE), part of Moody’s ESG Solutions.

The company said the latest score – which is 12 points higher than its 2020 ESG Assessment – indicates a ‘robust’ approach to integrating material ESG factors within Rosatom’s strategy and operations.

VE assesses performance across 25 ESG criteria, including environmental performance, human and labour rights, human resources management, contributing to the well-being of local communities, corporate governance and responsible business conduct. Atomenergoprom received either ‘robust’ or ‘advanced’ performance across each ESG pillar. For the majority of these criteria, Atomenergoprom’s scores improved compared with VE’s 2020 assessment.

Rosatom said the significant improvement in the ESG score has been achieved thanks to the company’s continuous efforts to making sustainable development principles part of day-to-day operations of nuclear industry in Russia.

“Contributing to the achievement of Sustainable Development Goals is our strategic priority,” said Rosatom Director General Alexey Likhachov. “The results of VE’s ESG score indicate the robust nature of our sustainable development practices. We are planning to continue further implementation of principles and best practices of sustainable development into our activities both in Russia and abroad.”

Researched and written by World Nuclear News


By ESG Magazine

ESG Magazine is one of leading ESG investments publications for ESG Funds and ESG Companies. It's based in London, UK.

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