Everyone is investing in green — here’s what they are missing

Mitigating the effects of a changing climate has taken center stage in the financial community. Whether under the label of impact investing, environmental social governance (ESG) investing or a handful of other phrases, the urgency of addressing carbon emissions is becoming clear.

The chorus of action by Wall Street, banks around the globe and investors signals a fundamental shift in how investment decisions will be made. It is encouraging to see the most prominent players in the investing community recognize the importance of this existential threat. 

Reimagining how the financial sector can help shape an environmentally sustainable economy requires thinking differently about what investors should value and avoid. A focus on climate change provides clarity on the challenges we are facing and the opportunities to overcome them. With this renewed purpose, we must reconsider the role of nuclear energy.

Demand for carbon-free energy technologies is set to rise as we move to a more decarbonized economy, requiring substantial investments in new energy technologies. We will need growth in wind and solar, and progress on battery storage. But these technologies only provide part of a solution.

As a complement to these sources, nuclear power, our nation’s largest producer of carbon-free energy, can enable a transition to a low-carbon future as quickly and as affordably as possible. That means we will need investments to maintain today’s nuclear plants and to commercialize advanced nuclear energy technologies already under development.

We have a lot to build on. Today’s nuclear plants are demonstrating unprecedented efficiency, while helping our nation avoid more carbon emissions annually than the equivalent of 100 million passenger vehicles. Four nuclear reactors have received license renewals to operate for 80 years, with many more expected to follow. The timeline for advanced nuclear deployment is on our side to make a dent in carbon emissions.

Dozens of companies, many typifying a Silicon Valley enterprise, are already developing the next generation of nuclear technology. For nuclear energy to realize its promise, we will need to marshal private capital, which is what the financial sector can do very well. Yet, when it comes to securing Wall Street funding, there is still work to be done in destigmatizing nuclear energy. The investment community should champion all types of climate-friendly, carbon reduction investments equally — but that is not quite what we are seeing.

Despite the momentum in socially-conscious investing, antiquated ESG filters place a critical component of our climate solution at a clear disadvantage. Some ESG frameworks encourage investment in fuels we must move past, while discounting value in solutions essential to overcoming our climate challenges. Outdated ESG filters put up barriers to nuclear energy, placing our nation’s largest source of carbon-free energy in the same class as weapons. These financial scorecards from 40 years ago do not light the way to the carbon-free economy of the future.

Instead of considering old metrics, companies and investors should look to the broad consensus supporting the expansion of nuclear energy. Bipartisan policymakers, scientists, environmental groups and intergovernmental agencies, like the United Nations’ Climate Panel and the International Energy Agency, all view nuclear energy as essential to addressing our climate crisis. These groups have supported policies that preserve existing nuclear plants, while calling for even more nuclear power in our transition to a clean energy future. 

Federal investment, growing customer interest and strong policy signals make nuclear energy and nuclear technology innovation a smart investment. Policies like clean energy standards and zero-carbon commitments have passed state legislatures, signaling the value nuclear energy delivers in realizing a cleaner energy future. The federal government is investing in new nuclear to overcome first-of-a-kind costs, committing billions of dollars to demonstration projects that will deploy small modular reactors and other advanced nuclear designs.

Customer interest grows as energy companies steadily commit to zero-carbon pledges. They see advanced nuclear energy as essential to reaching their carbon reduction goals, while recognizing its potential to clean up transportation and industrial processes through carbon-free hydrogen and process heat production.

The momentum to address climate change is here. It is time to take a fresh look at how ESG investing can lift barriers to investments aimed at protecting our environment. If done correctly, climate-tech investing can help move the needle, and propel emerging sectors in carbon-free technologies that will be responsible for supporting hundreds of thousands of jobs for our country.

As we transition to an increasingly carbon-free electricity grid, nuclear energy must be a key player, alongside wind and solar. Without private-sector financing, nuclear energy will have a limited role in helping overcome our climate challenges. Experts agree that without nuclear energy, we hinder our ability to crush carbon emissions, making the road to a clean energy future much longer and vastly more expensive for us all.  

Maria Korsnick is the president and CEO of the Nuclear Energy Institute.