Ethical Investment, Uranium & Nuclear Power

Click here to download the report, Uranium mining, nuclear power & ‘Ethical’ Investment, by Frances Howe. Corporate Watch Australia. September 2008.

In this webpage:

  • Choice magazine write-up of the ethical investment report.
  • Frances Howe’s summary of her report, from The Age.
  • FoE article on the ethics of uranium mining and nuclear power.
  • Updates

There is a ‘crisis of definition’ when it comes to ethical and sustainable funds, according to a new report.

Choice Magazine
Online 09/08

A report by the not-for-profit group Corporate Watch Australia claims that “many so-called ethical funds are not necessarily ethical in the area of uranium mining”.

“Of the 18 ethical investment funds studied, just four have policies that absolutely screen out investment in uranium and nuclear power, five have no policy, seven have policies that allow for some level of investment and one is proudly pro-nuclear,” Corporate Watch says. The companies offering funds that screen out uranium are Australian Ethical, CVC Sustainable Investments, Hunter Hall Investment Management and Perpetual Investments.

The report was commissioned by environmental group Friends of the Earth, which has been campaigning against uranium mining and nuclear power for 35 years. “We consider investment in the nuclear power chain to be unethical because of the industry’s disproportionate, adverse impacts on indigenous people; the repeatedly demonstrated connection between the ‘peaceful’ nuclear chain and nuclear weapons; the legacy of high-level nuclear waste and the existence of a plethora of more benign energy production and energy-saving methods to reduce greenhouse emissions,” Friends of the Earth says.

Corporate Watch’s findings are consistent with our September 2007 article, which found that despite uranium’s controversies most ‘ethical’ and ‘sustainable’ funds invest in big uranium mining companies such as BHP and Rio Tinto. Funds justify this on the basis that the uranium is used for nuclear energy, not weapons, or that the companies chosen get less than 5% or 10% of their (enormous) overall revenue from uranium, or that they have good environmental, social or corporate governance performance.

‘Sustainable’ and ethical’ funds that invest in uranium often permit investments in industries like tobacco and gambling too. Interpretations of what’s sustainable or ethical differ; the catch-all term ‘responsible’ is now favoured by the industry’s representative body. The industry seems to view the negative screening approach to ethical investing (where problem industries are excluded from funds) as outdated and less relevant than the more mainstream ‘responsible’ and ‘sustainability’ investing, which researches and invests in companies that perform well on environmental, social, ethical and corporate governance measures. But Corporate Watch calls this a crisis of definition. It quotes the company Australian Ethical as saying “a lot of companies claiming to invest ‘sustainably’ are actually talking about financial, rather than social or ecological sustainability”.

For information about where a range of sustainable and ethical funds invest, where to find their all-important investment methodologies, as well as their investment performance, go to our ethical investing report and the Responsible Investment Association website.

Radioactive alert on ethical investment

2 September 2008, Frances Howe, The Age (business section)
One man’s ethical is another’s poison; but the adage does not apply to uranium, writes Frances Howe.

A RECENT Corporate Watch Australia survey reveals that many so-called ethical investment funds invest inuranium mining.

Some fund managers justify investment in uranium with questionable arguments about nuclear power and climate change, but the primary reason for the shift is probably BHP Billiton’s entry into the uranium industry with its 2005 acquisition of WMC Resources, which owns the Olympic Dam uranium mine in South Australia.

Of 16 ethical investment funds studied, just two allow absolutely no investment in uranium or nuclear power.
The rest either have no policy on the matter or allow limited investment in the nuclear industry – for example by allowing investment only in companies that get below a certain percentage of their income from uranium, or ruling out uranium mining but having no policy on other parts of the nuclear cycle.

Ethical investment is booming: from its origins in 1984 with a fund nicknamed “Brazil”, because you’d have to be nuts to invest in it, the sector is now worth $2 trillion worldwide. According to the Responsible Investment Association of Australasia, Australian responsible investment portfolios grew from $4.5 billion to $17.1 billion from 2004 to 2007.
However, this rapid growth is accompanied by a crisis of definition and a dilution of its original principles. The concept “ethical investment” is vaguely defined: fund managers make their own rules, and their definitions of “ethical” vary.

The sector is now more commonly called “Sustainable and Responsible Investment”. In Australia it is represented by the Responsible Investment Association of Australasia, which manages the national certification program for investment providers.

Certified companies can display RIAA’s “Responsible Investment” logo. However, there is nothing to stop any fund calling itself ethical without going through the certification process, and funds frequently do.

Many ethical investment funds use an approach known as “best of sector”. This means they do not rule out investing in any legal industry, but instead seek investment in companies that claim to be trying to improve their ethical practices. A sector cannot be ruled out on the grounds that it is simply wrong – if a company within that sector can show it is making some gesture, however tokenistic, to improve its practices, it can be included in an ethical portfolio.

Some fund managers rule out investment in companies that get more than 5% of their revenue from uraniummining or nuclear power. This means that AMP’s ethical portfolio can still include shares in BHP Billiton and Rio Tinto – the world’s fifth and third largest uranium miners respectively.

Several fund managers that invest in nuclear power cite climate change as a reason. However, little effort is made to justify the claims or to refute counter-arguments.

There is no attempt to refute the large and growing body of scientific literature that demonstrates how the expansion of renewable energy sources, coupled with concerted energy-efficiency programs, can generate major reductions in greenhouse emissions without recourse to nuclear power.

Nor have most fund managers dealt with the ethical problems associated with uranium mining and nuclear power. The uranium mining industry has a poor track record in its dealings with Aboriginal communities – failing to consult traditional owners, using divide-and-rule tactics, and ignoring sacred sites.

In the words of Yvonne Margarula, Mirarr senior traditional owner in the Northern Territory: “Uranium mining has taken our country away from us and destroyed it. Mining and the millions of dollars in royalties have not improved our quality of life.”

Similar patterns of “radioactive racism” are evident in the management of byproducts of the nuclear cycle. North American activist Winona LaDuke told the Indigenous World Uranium Summit in 2006: “The greatest minds in the nuclear establishment have been searching for an answer to the radioactive waste problem for 50 years, and they’ve finally got one: haul it down a dirt road and dump it on an Indian reservation.”

Another ethical quandary concerns the connection between nuclear power and nuclear weapons. No fewer than five of the 10 states to have produced nuclear weapons did so on the back of their “peaceful” nuclear programs. Former US vice-president Al Gore neatly summarised the problem in 2006: “For eight years in the White House, every weapons-proliferation problem we dealt with was connected to a civilian reactor program.

And if we ever got to the point where we wanted to use nuclear reactors to back out a lot of coal … then we’d have to put them in so many places we’d run that proliferation risk right off the reasonability scale.”

While ethical questions are necessarily arguable, the nuclear industry has been repeatedly and comprehensively discredited. If the ethical investment market is to retain its credibility, it must employ more rigorous and more consistent ethical screens. Further, there is a clear case for regulatory reform to ensure more transparent disclosure of investment in controversial sectors such as uranium mining and nuclear power.

Frances Howe is a researcher with Corporate Watch Australia, which monitors the social and environmental impacts of Australian corporations operating here and abroad, as well as international corporations operating in Australia.

A longer version of the above article is posted on the Online Opinion website:

What’s ethical about uranium?

Friends of the Earth, Australia

September 2008

Proponents of uranium mining and nuclear power argue that nuclear power is a necessary strategy in the battle against climate change. However, nuclear power could make only a modest dent in greenhouse emissions, it poses serious risks including WMD proliferation, and the existence of a plethora of more benign climate change abatement options obviates any need for nuclear power and does away with the false choice of fossil fuels vs. nuclear power.

Nuclear power could make only a modest dent in greenhouse emissions. A significant constraint is that, other than its military applications, nuclear power is used almost exclusively for electricity generation which accounts for 16-30% of global greenhouse emissions.

Globally, doubling nuclear power by 2050 at the expense of coal would reduce greenhouse emissions by no more than 5%. The 800-900 reactors required to achieve a doubling of nuclear output by 2050 would produce over one million tonnes of high-level nuclear waste, and enough plutonium to build over one million nuclear weapons.

The greenhouse benefits of nuclear power must be weighed against the costs and risks including nuclear weapons proliferation, the widespread and ongoing problem of ‘radioactive racism’, nuclear smuggling, the potential use of a wide variety of radioactive materials in ‘dirty bombs’, the potential targeting of nuclear plants by terrorists, the targeting of nuclear plants in national conflicts and wars (as has occurred on several occasions in the Middle East), the small risk of catastrophic accidents, the intractable problem of nuclear waste management, and the contamination and depletion of water resources.

The first two of those problems are briefly discussed here.

Weapons of Mass Destruction

Nuclear power is the only energy source with a direct – and repeatedly-demonstrated – link to the production of Weapons of Mass Destruction. In five cases, nation states have succeeded in producing nuclear weapons under cover of an ostensibly peaceful nuclear program – India, Pakistan, Israel, South Africa and North Korea. Many other countries (over 20 in total) have pursued nuclear weapons research under cover of a civil nuclear program.

Former US Vice President Al Gore said in May 2006 that: “For eight years in the White House, every weapons-proliferation problem we dealt with was connected to a civilian reactor program. And if we ever got to the point where we wanted to use nuclear reactors to back out a lot of coal … then we’d have to put them in so many places we’d run that proliferation risk right off the reasonability scale.”

The International Atomic Energy Agency’s (IAEA) safeguards system is flawed and under-resourced and provides little confidence that the proliferation risks associated with civil nuclear programs can be adequately contained. The Director General of the International Atomic Energy Agency, Dr. Mohamed El Baradei, has noted that the IAEA’s basic rights of inspection are “fairly limited”, that the safeguards system suffers from “vulnerabilities” and “clearly needs reinforcement”, that efforts to improve the system have been “half-hearted”, and that the safeguards system operates on a “shoestring budget … comparable to that of a local police department “.

Impacts on Aboriginal communities

The uranium mining industry has a poor track record in its dealings with Aboriginal communities. Racism in the uranium mining industry in Australia typically involves: ignoring the concerns of Traditional Owners insofar as the legal and political circumstances permit; divide-and-rule tactics; bribery; humbugging Traditional Owners (exerting persistent, unwanted pressure until the mining company gets what it wants); providing Traditional Owners with false or misleading information; and threats, most commonly legal threats.

Mining company Energy Resources of Australia (ERA) and the Howard government were determined to override the opposition of the Mirarr Traditional Owners to the Jabiluka uranium mine in the Northern Territory. ERA and the government were defeated by a remarkable national and international campaign led by the Mirarr. The Jabiluka mine site has been rehabilitated and the Mirarr have a veto over any future development of the mine, but ERA still hopes to mine Jabiluka at some stage in the future and it still operates the Ranger uranium mine near Jabiluka.

Heathgate Resources, owned by General Atomics, succeeded in imposing the Beverley uranium mine on the Adnyamathanha people in north-east SA in the late 1990s. The company negotiated with a small number of Native Title claimants, but did not recognise the will of the community as a whole. This strategy, coupled with the joint might of industry and government, has resulted in inadequate and selective consultation with the Adnyamathanha people.

The racism associated with the Roxby Downs uranium mine in South Australia is enshrined in legislation. WMC Resources was granted completely unjustifiable legal privileges under the SA Roxby Indenture Act. This legislation overrides the Aboriginal Heritage Protection Act, the Environment Protection Act, the Water Resources Act and the Freedom of Information Act. The current mine owner, BHP Billiton, refuses to relinquish the legal privileges.

Ethical solutions to climate change

Nuclear power generates fewer greenhouse emissions than fossil fuels per unit of energy output. However, nuclear power is more greenhouse intensive than most renewable energy sources. For example, the 2006 Switkowski report states that nuclear power is three times more greenhouse intensive that wind power per unit of electrical output.

There is tremendous scope to use a wide range of renewable energy sources and energy efficiency measures to reduce greenhouse emissions. For example, the Australian Ministerial Council on Energy has identified methods to energy consumption and greenhouse emissions in the manufacturing, commercial and residential sectors by 20-30% with the adoption of commercially-available technologies with an average pay-back time of four years.

For comparison, the Switkowski report estimates that the construction of 25 nuclear power reactors in Australia by 2050 would reduce emissions by 17% compared to business-as-usual, assuming that nuclear power displaces black coal. Twenty-five reactors would produce 45,000 tonnes of high-level nuclear waste and enough plutonium to build 45,000 nuclear weapons.

A significant and growing body of scientific literature details how the systematic deployment of renewable energy sources, coupled with energy efficiency policies and technologies, can generate major reductions in greenhouse emissions – without recourse to nuclear power. Moreover, a number of renewable energy sources can supply reliable base-load power including geothermal, hydro, bioenergy and solar with storage.

Sorry, We’re Sending Your Money To The Arms Dealers

By Nicholas Taylor

18 Jan 2010

Sorry, We're Sending Your Money To The Arms Dealers

This week over a million Australians lost the choice to prevent their super being invested in things like cluster bombs and cigarettes, writes Nicholas Taylor

Australia’s largest superannuation fund, which invests more than $30 billion on behalf of 1.4 million working Australians, has this week quietly removed its ethical exclusion policy.

Simply put, the door is now open for Australian Super to invest in “vice”.

Previously excluded from the fund’s “sustainable” options were companies deriving more than 5 per cent of their revenues from the “manufacture or sale of alcohol or tobacco, the operation of gaming facilities or the manufacture of gambling equipment, uranium extraction or the manufacture of weapons or armaments”.