Views from ...
IFTF report provides project-based insights to decision makers and policy planners
Aurélie Faure, FORATOM Investment Framework TF Coordinator
The Investment Framework Task Force (IFTF) report provided final recommendations to project developers, decision makers and policy planners that guide the design and the implementation of new capital investments and scenarios in the European nuclear energy sector. On this occasion, the Task Force dedicated work triggered new dialogue with the financial community.
The IFTF final report reflects on the ways whereby the industry addresses its intrinsic new build project risks and therefore supports understanding of where financing priorities would be expected to be concentrated in future projects. Having reviewed recent new build financing in 8 EU countries and the United Kingdom, the IFTF benchmark analysis provides examples of efficient risk-based approach to the financing of new projects also in the view of a shared stakeholders’ approach. The report can be used in support of reflections on ways to increase investors and policy makers risk understanding and risk awareness of various issues such as industrial execution, financing arrangements, political risk factors.
As a first key recommendation, the IFTF found that any large project credential lies around the solidity of its investment rating. This means that financing acts as the backbone of a project, with project execution milestones and targets (along cost reduction objectives) also indirectly providing long-term guarantees of success.
Among the other recommendations made in the report, IFTF members found that a stable and long-term investment framework for EU based nuclear energy can optimize the distribution and allocation of risks for the sake of all stakeholders with a view to protect consumer value for money.
Under the EU’s Renewed Sustainable Finance strategy, new financial product disclosure regulations for asset managers and financial market participants are coming into force along with an EU wide corporate non-financial reporting obligation. The Corporate Sustainability Reporting Directive (renamed from the Revised Non-Financial Reporting Directive – 2014/95/EU) sets up an EU sustainability reporting framework whereby corporations are expected to report notably on the metrics and methodologies they use and that indicate how their plans and projects on the table progress towards achieving the long-term climate neutrality objectives signed under the Paris Agreement (Environmental taxonomy alignment along the EU taxonomy classification). In this respect, FORATOM continues to reiterate its call for a scientifically based policy approach to investments with reference to a ‘scenario based’ and ‘technology neutral’ assessment to the viability of future nuclear new build.
|Definition of sustainable finance: Sustainable finance can be defined as the trend that incorporates sustainability into the financing of capital markets. Meanwhile, sustainable finance is like the two sides of a coin. The first side stands under the internal process of organisations, where sustainable finance requires (or provide the mandate to) corporations, banks and multilateral organizations to develop risk-based screening tools than incorporate environmental, social and governance factors. The second side relates to the disclosure of information to investors and to external communities. While it cannot be seen as a single asset class or category supporting project development, sustainable finance will have some implications on the way capital is provided to projects, such as large infrastructures.|