Legal & General has ruled out helping to fund the new Sizewell C nuclear power plant, dealing a blow to EDF as it seeks backers for the £20bn project.

EDF is in negotiations with the government about taxpayer support for the planned plant in Suffolk but will also need institutional investors, which it argues can make stable returns over the decades of a reactor’s life.

L&G has not spoken publicly about its plans but in a written response to a pension-holder, one of its investment service consultants said: “I have had it confirmed that Legal & General will not be investing in the Sizewell C nuclear power plant.” L&G declined to comment further.

It comes after Aviva Investors expressed concerns about the potential ESG (environmental, social and governance) risks of nuclear power. It said the ESG impact of nuclear was “far from clear at this time.”

The government is relying on nuclear power to help reach its legally binding target of cutting carbon emissions to net zero by 2050, but investors also need to get comfortable with radioactive waste management, water usage, and the remote but catastrophic risks of a nuclear accident.

L&G, which has more than £1trn assets under management, has invested more than £1.3bn towards low-carbon energy sources such as solar panels and ground source heat pumps.

EDF’s discussions over financing for Sizewell C come at a critical time for the UK’s nuclear sector. Most of the UK’s ageing reactors are set to come offline by 2030, but the only replacement plant currently being built is Hinkley Point C in Somerset, by EDF and its Chinese partner CGN.

Critics argue large scale nuclear power plant have had their day given the growing competitiveness of wind and solar plants, and emerging technologies such as small-modular nuclear reactors. L&G’s boss Nigel Wilson reportedly described Hinkley in 2016 as a “£25bn waste of money”.

But backers insist large plants are a much-needed source of reliable, low-carbon energy. Sizewell C has previously stressed the plant will “vast amounts of very low-carbon energy” with a small footprint compared to other sources of sustainable energy. It adds nuclear is “one of the safest forms” of producing electricity, and the project will bring thousands of jobs and significant investment into Suffolk.

Stop Sizewell C, which is campaigning against the proposed plant in Suffolk, said: “Nuclear giga-watt projects are categorically not green […] They are expensive and slow to build, with overruns almost guaranteed… Compared to responsibly delivered renewable energy there is no contest.”

Read more: Sizewell C – the £20bn nuclear question

One of Britain’s biggest investors has cast doubt over whether it would back new nuclear power stations due to environmental concerns.

Aviva Investors said nuclear’s ESG (environmental, social and corporate governance) impact was “far from clear at this time”, even as the Government backs the technology to help cut carbon emissions.

Its comments highlight the challenge facing French state power giant EDF as it seeks finance for the planned £20bn Sizewell C reactor in Suffolk. EDF is in talks with the Government over public backing, but will also need to attract institutional investors.

Nuclear power does not generate carbon dioxide but investors also need to be comfortable with the management of nuclear waste, water usage, and the remote but catastrophic risk of a nuclear accident.

In response to queries from investors, Aviva Investors said: “As you are probably aware, the UK Government is looking at expanding nuclear capacity as part of its efforts to achieve net-zero emissions by 2050.

“We consider the potential ESG impact in all of our investment decisions. However, the ESG impact of nuclear is far from clear at this time and we are not actively involved in any such investments.”

A spokesman for Sizewell C said there was a “compelling ESG case for nuclear” given its vast production of low-carbon energy.

He added: “It is one of the safest forms of producing electricity, with a good track record in managing radioactive waste. The social benefits of Sizewell C include thousands of jobs, 1,500 apprenticeships and huge investment in the regional economy.”

The campaign group Stop Sizewell C said Aviva was “right to be concerned”.  The Sizewell C site is particularly sensitive as it is within an Area of Outstanding Natural Beauty, next to the Minsmere nature reserve, and takes in part of the Sizewell Marshes, designated a site of special scientific interest.

A Stop Sizewell C spokesman added the social benefits would be “severely undermined locally” by EDF’s plans to bring to Sizewell workers currently building EDF’s Hinkley Point C plant in Somerset.