Despite prominent environmentalist opinions that low greenhouse gas emissions of nuclear power eclipse its problems, socially responsible investment funds still screen nukes out. By William Baue
In his
presentation at the
Institutional Investor Summit on Climate Risk in May, Harvard University professor and
National Commission on Energy Policy co-chair John Holdren stated that nuclear power might be a valid energy alternative to mitigate climate change. Greenpeace founder Patrick Moore said the same thing in
testimony before the Congressional Subcommittee on Energy and Resources. So did
Whole Earth Catalog founder Stewart Brand in an
article in the May edition of
Technology Review from Massachusetts Institute of Technology (MIT), and Gaia theorist James Lovelock in a May
op-ed in
The Independent.
Climate change is significantly altering the landscape of environmentalism, to the degree that former nuclear power opponents are shifting to supporting it due to its minimal emissions of greenhouse gases (GHGs), the primary cause of climate change. Socially responsible investment (SRI) firms have traditionally screened out companies involved in nuclear power.
One sign of SRI community recognition of the increasing complexity of the nuclear question is the June 1 announcement by SRI research firm KLD Research & Analytics increasing the number of nuclear power involvement
ratings criteria from three to six. KLD's existing criteria identify owners and operators of nuclear power plants, ownership of over 20% of nuclear power companies, and over 50% ownership by nuclear power companies. New criteria cover construction and design of nuclear power plants, production of nuclear power fuel and key parts, and nuclear power service providers.
This change upped the number of companies listed in the KLD Nuclear Power Involvement Report (which forms the basis of many SRI firms' nuclear screening decisions) from 69 to 104. Much of this increase comes from the supply chain, as 17% of the companies fall into the nuclear power fuel and key parts suppliers category.
"We need a more comprehensive view of the nuclear power industry as the potential for the construction of new plants in the U.S. develops and investor interest develops with it," said Eric Fernald, KLD's director of research. "Three major drivers have increased public interest and debate about nuclear power in recent years: a bolder nuclear power industry, global environmental and energy concerns, and a friendlier regulatory and political framework."
Indeed, in a January
Wall Street Journal interview, U.S. President George Bush threw his weight behind nuclear power as an alternative to coal-burning plants that spew GHGs into the atmosphere. However, not all environmentalists have lined up behind Moore, Brand, and Lovelock in embracing nukes.
"Nuclear power is a dangerous energy source that creates more problems than it solves," said Dan Becker, director of the global warming program at the Sierra Club. "Switching from dirty coal plants to dangerous nuclear power is like giving up smoking cigarettes and taking up crack."
Sierra Club Mutual Funds, which focuses primarily on environmental responsibility, has been discussing the complexity of nuclear issues in-depth, according to Garvin Jabusch, director of sustainable investing there. However, the firm shows no sign of jumping on the pro-nukes bandwagon.
"Nuclear energy is a double-edged sword: we are cognizant of the argument that nuclear power minimizes greenhouse gas emissions, but we still cannot overlook the fundamental problem of what to do with the spent plutonium," Jabusch said. "We have no plans to change our nuclear screening criteria, which are quite stringent in excluding companies involved in nuclear power development, manufacturing, or operations."
While several SRI funds, such as the
Winslow Green Growth Fund (ticker: WGGFX) and the
New Alternatives Fund (NALFX), similarly focus on environmental responsibility, they invest primarily in small-cap companies that are unlikely to be involved in nuclear power. The Sierra Club funds hold large-caps and hence have greater exposure to companies involved in nuclear power, adding weight to its anti-nuke stance.
Likewise for
Portfolio 21 (PORTX), an international fund focused on sustainability whose screening criteria look at environmental liability, according to firm chair Carsten Henningsen.
"Until there's a practical solution for nuclear waste disposal, we believe the liabilities from nuclear power pose an enormous risk to both the environment and shareholders," Henningsen said. "Also, nuclear is not cost effective, if you apply the full cost of waste disposal and decommissioning plants, as well as the potential environmental liabilities of accidents."
KLD adds worker and community radiation exposure, potential contribution to nuclear weapons proliferation, and terrorist targeting of nuclear plant to the list of problems, and also points out that mining, milling, and enrichment of uranium contributes to global warming.
"The cost effective and practical solutions are conservation and renewable energies; if we invest in conservation and renewables the same investment dollars and time required to build a nuclear power plant, we're going to be in a much healthier and safer position," Henningsen added.
He also points out that SRI screens do not exist in a vacuum, but rather fulfill client demand to avoid exposure to certain corporate practices (such as nuclear power) or increase exposure to other practices (such as renewable energy.) Portfolio 21 has received no client requests to review or alter its nuclear screen, according to Henningsen.
--------
This article has been reprinted courtesy of SocialFunds.com. It was first published on June 9, 2005.
