Why Are ESG Funds Fighting Against Climate Change Solutions?
Vehement opposition to nuclear energy has been a core tribal marker for 40 years, despite the consensus among scientists that it must be part of the solution to climate change. But that could be on the verge of a change. The asset management industry could play an important role in that change – but, first, it must end the practice of excluding nuclear energy from ESG and SRI mandates.
I’ll review the history of nuclear energy and the opposition to it, before I turn to central question of how asset managers can play a role in solving the climate change crisis.
The truth about nuclear radiation
Nuclear energy has more than an 80-year history, starting from when Otto Hahn and Fritz Strassman first produced nuclear fission in Berlin in 1938. It was then an incredibly short time before its first “practical” use – in atomic bombs dropped on Hiroshima and Nagasaki in August 1945.
After the war, there was a major push to turn nuclear energy toward humanitarian goals. President Eisenhower delivered a speech titled “Atoms for Peace” to the United Nations General Assembly in December, 1953. An “Atoms for Peace” U.S. postage stamp was printed (costing three cents). The intention was to help the world appropriate nuclear energy for electric power instead of weaponry.
Nuclear energy for power production was, at first, embraced by the scientific-environmental movement – which disdained a foremost alternative to it, large hydroelectric dams, because of their destruction of natural habitat.
But eventually, fear of radioactive fallout from atomic bomb testing blended into a fear of radioactive emissions from nuclear power plants, and turned environmentalists against nuclear energy.
Fear of nuclear radiation was entirely rational when little was known about its effects. The assumption was that if a radiation dose of five Sv (Sv stands for sieverts, the measure of nuclear radiation) would kill 5,000 out of 10,000 people who receive it, then a dose of 50 mSv (millisieverts), or one-hundredth as much, would kill one-hundredth as many people – 50 out of 10,000. Thus, the same amount of radiation, even if widely dispersed, would kill the same number of people.
This was called the linear-no-threshold assumption (LNT). It assumed that the percentage of a population dying from nuclear radiation would be proportional to the dose, and that there would be no threshold below which nobody would die.