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The financial system underpinning mineral exploration and mining must be reformed to ensure responsible investment and a fair clean energy transition, according to a new report from the UN Environment Programme’s International Resource Panel (IRP).
With minerals now accounting for 50 per cent of global raw material extraction, up from 31 per cent in 1970, demand for energy transition minerals such as lithium, cobalt, nickel and rare earths is soaring. Lithium demand alone is projected to be nine times 2022 levels by 2050.
“The demand for minerals and metals needed for the energy transition requires a mining industry that contributes to sustainable development while respecting human rights and the environment,” said Janez Potočnik, Co-Chair of the IRP. “Through sustainable finance, responsible mining can become the default, not the exception.”
The report, Financing the Responsible Supply of Energy Transition Minerals for Sustainable Development, calls for reforms in finance, governance and regulation to steer capital towards operations meeting high environmental, social and governance (ESG) standards. Mining is a capital-intensive and high-risk industry, but surveys show ESG compliance would add less than 25 per cent to operating costs and could attract new investors.
Key recommendations include:
· Embedding mining that meets ESG standards in sustainable finance taxonomies.
· Developing a digital product passport for minerals with ESG reporting.
· Using fiscal and monetary policy tools to support responsible mining and recycling.
· Establishing a global mine tailings database and a Mining Sustainable Development Fund financed by a global levy.
· Expanding ESG frameworks to cover artisanal and small-scale mining through licensing, technical support, and local participation.
The IRP stresses that circularity—through recycling, eco-design, and green bonds for recycling facilities—could reduce demand for virgin materials but will not eliminate the need for new mining. According to the International Energy Agency, achieving net zero by 2050 still requires up to $450 billion in mining investment by 2030, rising to $800 billion by 2040.
Crucially, the report urges governments to reward responsible mining practices through certification, fiscal incentives, and better market access, ensuring benefits flow not only to companies but also to host communities.