6 min read

Should We Go Nuclear?

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Hello there, and cheers to those setting an OOO message for Monday’s US federal holiday — Rev. Dr. Martin Luther King, Jr. Day. We hope everyone can find a way to celebrate the national day of service in honor of the African American civil rights leader and Nobel Peace Prize winner.

More than half a century since his untimely death, corporate America still has a long way to go towards improving the Black experience in the workplace. This is despite promises to the public to do better and study after study showing that companies that lead on diversity and inclusion outperform on everything from innovation to quarterly earnings.

At the present time, there are only four Black CEOs on the Fortune 500 list. A Washington Post analysis found just 8% of the senior leaders in the 50 biggest public companies are Black, and less than 1% of all VC funding — the jet fuel that helps innovators scale and can be the breeding ground for the next generation of Fortune 500 companies — went to companies with Black founders. And the pipeline of future leadership opportunities can look bleak when reading research that shows Black workers aren’t promoted from entry-level positions at the same rate as others, opening leadership opportunities to others and expanding the wealth and opportunity gaps across society.

If you’re an investor who prioritizes diversity, equity, and inclusion, targeting corporations that demonstrate a real commitment to improving working conditions, creating equal opportunities, and sharing workforce data may be a winning formula.

Our friends at JUST Capital have a resource that helps you track corporate initiatives. You can look for workplaces that get the best reviews from employees and have diverse leadership and boards. Explore funds focused on racial diversity policies, like the NAACP Minority Empowerment ETF, or those that exclude industries like private prisons. As an investor, remember that you can be an engaged shareholder by voting on proposals demanding action or disclosures on issues you hold dear. A bit closer to home, you can also have an impact by supporting and promoting local businesses run by Black entrepreneurs.

We’ll leave you with this from Dr. King himself: "Our lives begin to end the day we become silent about things that matter."

What we’ve been thinking of

Turo, aka the Airbnb for cars, has filed to go public. The company, which has seen its revenue break some speed limits, claims it’s carbon neutral, offsetting 100% of the emissions from trips by investing in greenhouse gas-reducing projects.
A genetically-modified pig heart was transplanted into a human for the first time this week, a medical breakthrough if all goes well. Shares in the firms that developed the organ and a new drug used (United Therapeutics and Kiniksa Pharmaceuticals) jumped.
JUST Capital and CNBC have released a new ranking of public companies displaying the best business behavior towards all stakeholders – workers, communities, the environment, customers, and shareholders.
Tastes like chicken? After faux beef, the race is on to develop the best plant-based nuggets and tenders. Reviews of KFC’s new Beyond Meat bucket suggest the flavor is easier to recreate than the texture. Tweet us your hot take.
Weeks after Capital One announced it would stop charging overdraft fees, Bank of America has said it will reduce theirs from $35 to $10 beginning in May. Banks raked in $15.47 billion from overdraft and non-sufficient fund fees in 2019 and are under pressure to change.

The climate transition isn’t (nu)clear-cut

Humankind has been harnessing the energy released when atoms are split for many decades. This process, known as nuclear fission, creates heat, which converts water into steam that turns electric generator turbines. The result is carbon-free power that doesn’t rely on the weather. Today it’s used in many countries, making up a major share of electricity production in a few, like France (70%) and Slovakia (53%).

But images of mushroom clouds and radioactive spills are still haunting for many. Fear around nuclear science has existed for decades due to its use in weapons and disasters like those at Chernobyl, Three Mile Island, and Fukushima. Germany decided in 2011 to close all 17 of its nuclear plants by 2022, and other European nations like Belgium, Switzerland, and Spain followed with similar phase-out policies. Other major concerns with going nuclear include the radioactive waste, risk of cyberattacks, and the copious amounts of water used. It’s also on the expensive side, costing $131 to $204 a megawatt hour compared to $26 to $50 per MWh for wind energy or $126 to $156 per MWh for solar towers.

However, public opinion is starting to shift once again with energy prices skyrocketing and the growing urgency to reduce carbon emissions. Roadmaps to reach net-zero by 2050 call for increasing use of nuclear power. The EU recently proposed labeling it “green” to drive investments, and Biden’s economic plan embraces it. (The US government also wants you to know The Simpsons got a few things wrong.) The greatest growth in this area is expected in Asia, where most of the reactors under construction are found.

Innovation is also growing as attitudes evolve. A new generation of smaller modular reactors, or SMRs, aims to reduce costs, and fundraising for startups working on nuclear fusion, which provides zero-waste energy, has ramped up lately.

The science is complicated, and the path forward for nuclear power in the climate transition is not clear. But if you do want to include nuclear power in your sustainable portfolio, remember that ESG and sustainability funds tend to avoid it because it’s so divisive. For example, the MSCI USA ESG Leaders Index and MSCI USA SRI Index (and funds tracking them) leave it out completely.

Here’s a complete list of nuclear reactor operators and owners in the US, including public companies like EDF, Exelon, Duke Energy, and Dominion Energy. Many SMR specialists (including TerraPower and X-Energy) aren’t listed yet, but NuScale revealed plans to go public via SPAC, so we’ll keep an eye out for that for you.

Investors can also gain exposure through uranium, although as with most mining, there are separate ESG concerns there. The North Shore Global Uranium Mining ETF and Global X Uranium ETF are among the top performers of 2021, returning 79% and 58% respectively, and the VanEck Uranium+Nuclear Energy ETF covers uranium and the nuclear power industry.

Keeping the faith in investing

Graphic of "18" with dollar signs behind it.

18. That’s how many faith-based ETFs are now sold in the US, according to Bloomberg. Although this is an extremely small subset — there are over 2,500 ETFs listed in the US — it’s made a noteworthy climb from 11 in mid-2020. Religiously responsible funds, marketed to investors who want their assets to be compliant with holy teachings and doctrines, have seen a bump in interest along with ESG investing.

Most of these funds apply negative screens, leaving out industries and sectors that may be considered sinful. In this way, faith-based investing is not incredibly different from a values-based approach. In fact, the Quakers are often cited as one of the earliest practitioners of socially responsible investing, since they forbade profiting from the trafficking of enslaved people in the late 18th century.

Since religious texts are interpreted in many ways, funds can look very different depending on the portfolio manager. Sometimes providers rely on third-party organizations for the criteria. For example, the FIS Knights of Columbus Global Belief ETF and the S&P 500 Catholic Values Index adopt the investing guidelines of the United States Conference of Catholic Bishops (USCCB). Halal investment funds aimed at Muslims may be approved by a private advisory like the Shariyah Review Bureau ("SRB") or adhere to guidelines from the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). And a number of Jewish federations, synagogues, and individuals came together to create the JLens Network to meet their needs to marry Socially Responsible Investing with their values and Jewish community advocacy goals.

You can read our short guide on faith-based investing here.