In Depth - Sustainable Investment Management - Nuclear Energy Policy

Summary

Given that there are proven efficiency and renewable technologies that already exist and do not include a long list of risks like those associated with nuclear power, Portfolio 21 firmly believes that investments should be made in creating a sustainable future through energy use reduction and renewable energy projects, not through expanding nuclear power generation.

Problems with Nuclear Power

Portfolio 21 is very concerned about the health and environmental costs associated with nuclear energy and about the serious risks posed by this technology. Given the growing attention to global warming, some people and organizations have chosen to support nuclear power as an energy source that is free of greenhouse gas (GHG) emissions. However, Portfolio 21 believes that nuclear power is not a sustainable solution to global warming issues, and that the costs and risks associated with this technology by far outweigh the low-carbon aspect of nuclear power generation.

Clearly, nuclear power poses significant problems including the risk of catastrophic failure, risks associated with the transportation of radioactive materials and waste, as well as the problems of nuclear waste storage that remains deadly for thousands of years. From an economic perspective, nuclear power would not be attractive were the true costs of accident insurance, waste storage, and decommissioning old reactors incorporated into the price of this energy (these issues currently receive significant subsidies or are paid for outright in the U.S. by the federal government). Additionally, there are serious social justice issues as lower income communities are disproportionately affected by the location of power generation facilities. And finally, there is the issue of security and the fact that nuclear power facilities (and waste transports) provide easy targets while nuclear fuel refinement leads to radioactive materials that can be used for weapons purposes.

Data provided by Dave Lochbaum, of the Union of Concerned Scientists confirms the health, safety and environmental risks, as well as economic risks, associated with investments in nuclear power. Specifically, Lochbaum notes that the Nuclear Regulatory Commission and its predecessor, the Atomic Energy Commission, have licensed a total of 130 nuclear power reactors in the United States . Fifty-one (51) times, a U.S. nuclear power reactor has had to remain closed for at least one year to restore safety levels to the minimum level. Of course, this begs questions regarding safety issues at these reactors in the days and weeks they operated prior to these extended shutdowns, but beyond this, these extended shutdowns cost many billions of dollars and in some cases almost bankrupted companies. Lochbaum points out that these extended shutdowns have occurred steadily from the 1960s through the 1970s, 1980s, 1990s, and now this decade, so there is little reason to expect the future to be fundamentally different. Clearly, a 51 of 130 chance of safety violations and financial meltdown does not seem a prudent investment and further supports our position against nuclear power.

When making an investment selection, we recognize that some companies have extremely diversified business activities but we seek to avoid investing in companies with significant involvement in nuclear power due to our position on this issue. As a result, during our detailed research process, we ask this question: how dependent is the company in question on nuclear power industry revenues?

Investment Guidelines

In consideration of the costs and risks associated with nuclear energy, Portfolio 21 will invest according to the following guidelines.

Portfolio 21 will not invest in companies that generate a significant proportion (more than 5%) of revenues from nuclear energy business.
When examining the ownership structure of a potential investment, we will tolerate partial ownership of a candidate company by a nuclear power company as long as the nuclear power company does not exert egregious influence over the candidate company to further the nuclear energy industry agenda.

While we feel these limits ensure that a potential investment is not dependent on nuclear power revenues, it is important to note that even this low tolerance level regrettably doesn't necessarily exclude companies that may play significant roles in the nuclear power industry, due to their overall size. In these cases Portfolio 21 clearly communicates our position on nuclear power and encourages the company to take a broader perspective and consider the risks associated with this business in conjunction with the company's larger sustainability strategy.