Nuclear Power and ESG: Can They Play Together?
Environmental, social, and governance, or ESG, factors have become important considerations for investors and asset managers. Nuclear power in particular can be a controversial and confusing topic with respect to ESG factors. Sustainalytics, a leading global ESG and corporate governance analytics firm, has joined Morningstar Research Services to present a comprehensive ESG analysis of nuclear power, including a look at carbon emissions intensity, waste management, operational management, public safety, worker safety, and regulatory oversight.
- Market underappreciates nuclear’s positive ESG attributes. Nuclear power holds several important ESG advantages over other energy sources. Its low-carbon emissions profile makes it a critical contributor to meeting state and federal environmental policy goals. And nuclear’s strict oversight has helped it become one of the safest methods of baseload power generation for employees and the public. However, nuclear also presents significant ESG risks such as radiation exposure, long-term waste management, and high water usage.
- Sustainalytics: Sorting nuclear operators by ESG factors. Sustainalytics identifies three primary ESG issues that can help investors differentiate utilities with nuclear exposure: carbon intensity, waste management, and operational incidents. Its analysis highlights the substantial gap in performance that exists among U.S. utilities on these attributes. We view Exelon, PG&E, and Xcel Energy as best-in-class nuclear operators with strong waste management practices and long records of safe operations. By operating their nuclear fleets in a safe and reliable manner with good oversight, these top-tier utilities enhance their overall ESG profile.