Dexia AM’s SRI analysis acknowledges that any benefits of nuclear power in terms of mitigation of climate change and security of supply are counterbalanced by significant safety, environmental and security risks. That's why in our SRI analysis, the best-in-class approach favours companies that:

-  have a good diversification of their energy activities and focus
   on renewable energies

-  manage well the question of safety and waste management
   at all stage of the nuclear production cycle


Based on this analysis, we limit our SRI universe to the top 35% companies of each sector that perform the best in these areas. As an example in the utilities sector, we prefer to avoid companies that have a large concentration in nuclear power. Following the recent nuclear disaster in Japan, it is clear that accidents statistically unlikely can materialise and cause massive havoc. Several countries are reviewing their stance towards nuclear power, especially Germany that has just started a 3-month shutdown of old nuclear power plants before deciding on potential life extensions. This is a negative event for E.ON and RWE, both companies not included in our SRI universe. The Japanese accident is reinforcing our view that it is better not to invest in companies very exposed to nuclear power and without the best environmental, social and governance performances, such as Tepco (Tokyo Electric Power) that was already absent from our SRI universe. The negative market reaction towards nuclear is counterbalanced by a significant exposure to the renewable energy segment. Companies such as EDP Renovaveis or Verbund, included in our SRI universe, will continue to benefit, as well as solar or wind equipment manufacturers such as Vestas and Solarworld. This tragic event shows the importance of energy diversification and the move towards sustainable renewable energy.