Saturday, August 28, 2021
The fund industry is divided
How green is nuclear power?
From Stefan Schaaf
Sustainable financial investments are becoming increasingly popular with investors. The EU Commission disputes whether atomic energy should also be considered sustainable. The German fund industry is also divided.
The use of nuclear power to generate electricity is controversial in terms of sustainability. Some point to the low level of carbon dioxide emitted during the fission of uranium, while others point to the associated risks in the event of accidents and the unsolved question of the final storage of nuclear waste. Within the European Union, the rift runs between the nuclear country France and the exit country Germany. In its taxonomy for sustainable investments, the EU Commission has so far excluded the decision on whether nuclear power should be defined as sustainable and is planning to present the relevant detailed rules in the form of a delegated legal act in the autumn.
But there is also a form of atomic split in this country, namely within the fund industry. This is shown by an open letter from the Sustainable Investment Forum (FNG), in which more than 200 members say they are “committed to more sustainability in the financial sector”. According to the information, FNG members include banks, corporations, rating agencies, financial advisors, scientific institutions and private individuals. The FNG recently sent a letter to the EU Commission in which it opposes “a categorization of nuclear power as a sustainable economic activity” in EU regulation. The letter has almost 50 signatories, including the German industry giants Deka Investments and Union Investment.
However, two prominent names are missing from the list: Of the top four German fund companies, Deutsche Bank subsidiary DWS and Allianz Global Investors did not sign the letter. This may also have something to do with the fact that both operate a large international business, while Deka and Union mainly serve the German market.
In its letter, the FNG emphasizes that the EU’s efforts towards sustainable finance would be in danger if the Commission classifies nuclear power as a sustainable economic activity, contrary to the recommendation of its own group of experts. Should this happen, operators of nuclear facilities could be included in ESG funds, which are based on the EU taxonomy. “At least since the nuclear disaster in Fukushima in 2011, but also because of the unsolved problem of storing nuclear waste, nuclear power has been in conflict with sustainability,” says the letter dated August 19. Many important European labels for sustainable financial products, including one from France, exclude nuclear energy.
DWS is waiting
“We therefore appeal to follow the recommendations of the Technical Expert Group on Sustainable Finance and not classify nuclear power as a sustainable economic activity,” the letter said. It has been signed by a number of FNG members and a number of organizations coordinated by Triodos Bank. In addition to Deka and Union, the 47 signatories include the fund companies Acatis, Kepler Fonds, LBBW Asset Management and Raiffeisen Capital Management.
Of the large providers in Germany who are also members of the FNG, DWS and AGI, among others, have not signed. While the DWS is still observing the development according to its own information, the Allianz subsidiary AGI does not rule out atomic energy in sustainable investments.
According to a spokeswoman, the DWS has checked its participation in the FNG letter. Because: The assessment of nuclear power as an economically sustainable activity appears “within the taxonomy to be difficult to understand”. DWS wants to wait and see what happens at the EU level. “We are analyzing further developments in the interests of uniform European unification.”
AGI, on the other hand, is behind the letter as a FNG member, according to a spokesman, but did not want to position itself in the foreground as a signatory. “We are not excluding nuclear energy,” said a spokesman when asked by “Capital”.
In the rejection of nuclear power, the signatories of the letter can be sure that a large majority in Germany are on their side: 82 percent of the population in Germany think that nuclear power does not belong in sustainable investments. That was the result of a representative survey by the polling institute Forsa on behalf of the Finanzwende initiative.
This text appeared first at “Capital”.