Why were ESG frameworks previously excluding nuclear energy from MDB funding?

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ESG Frameworks Traditionally Excluded Nuclear Energy Due to Diverse Origins and Lack of Policy Alignment

ESG frameworks have historically excluded nuclear energy from multilateral development bank (MDB) funding primarily because these frameworks originated from diverse sources and, until recently, lacked explicit policy alignment that recognized nuclear power as a key component of climate action. This exclusion meant that the nuclear sector was unable to access development financing from institutions like The World Bank and regional development banks, such as the Asian Development Bank, as well as government financing. Consequently, this had a chilling effect on financial institutions, discouraging them from investing in nuclear projects and companies.
Diverse Origins of ESG Frameworks

The origins of Environmental, Social, and Governance (ESG) frameworks are varied, stemming from different ethical considerations, regulatory pressures, and investor demands over time. This heterogeneity in development meant that a unified, comprehensive approach to classifying and evaluating all energy sources, including nuclear, did not initially exist. As a result, nuclear energy, often perceived through a lens of historical concerns rather than its current role in decarbonization, was frequently left out of these evolving sustainability criteria.
Exclusion from Development Financing

The traditional exclusion of nuclear energy from ESG frameworks directly impacted its access to crucial development financing. Multilateral Development Banks (MDBs), which play a significant role in funding large-scale infrastructure projects, had policies that, until specific dates like June 10, 2025 for The World Bank and November 24, 2025 for Asian Development Banks, did not permit financing for nuclear power. This preclusion also extended to government financing initiatives aimed at promoting clean energy transitions, thereby limiting the financial avenues available to the nuclear sector.
Discouragement of Private Financial Institutions

Beyond MDBs and government funding, the absence of nuclear energy from mainstream ESG considerations also discouraged private financial institutions. Banks and investment funds that were increasingly adopting ESG principles found it challenging to justify or structure investments in nuclear power when it was not recognized as a sustainable or "green" asset class within established frameworks. This created a barrier to entry for private capital, making it more difficult for nuclear projects and companies to secure the necessary funding for development and operation.

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Why were ESG frameworks previously excluding nuclear energy from MDB funding?

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