Investors Set Six Tests for Mining Transition
A balance is needed between supplying minerals for clean–energy technologies and managing coal’s decline, according to a collaborative initiative.
Guidance from the Global Investor Commission on Mining 2030 on assessing environment and social impacts will be developed into action plans over the next 12 months.
Released on the eve of last week’s PRI in Person conference, a report from the collaborative investor-led initiative outlined six foundational priorities for investors targeting an environmentally and socially responsible mining sector that can simultaneously meet global demand for minerals and the goals of the Paris Agreement.
These priority areas will be developed into detailed action plans and implementation strategies that are intended to be unveiled at the next PRI in Person event in Brazil. Mining 2030 is set to consult on the draft action plans at the Mining Indaba conference in South Africa in February 2025, as part of its stakeholder engagement.
Adam Matthews, Chief Responsible Investment Officer at the Church of England Pensions Board (CoEPB), said asset owners had so far failed to reflect the importance of the sector to their wider climate goals in mandates to managers.
“The penny is dropping for investors that we’ve really got to look differently at this sector,” he told ESG Investor. “These six strands are going to really deep dive into what the explicit role that investors have is.”
Mining 2030’s recommendations prioritise areas where investors have the greatest potential to make a positive impact at scale and set foundations for them to better understand the mining ecosystem and the levers they can pull to shape the industry and its value chains.
The six priorities include aligning investor expectations of companies with global and industry standards, ensuring demand-side companies align with these expectations and work towards circularity and traceability, encouraging regulation to reinforce investor expectations, and identifying and reducing mining-related conflict and its drivers.
“If implemented effectively and at scale these interventions would make a significant contribution to addressing some of most significant negative social and environmental impacts of the business” said Rory Sullivan, CEO at advisory firm Chronos Sustainability.
Chronos acts as the secretariat for Mining 2030, with Sullivan its project director and Gemma James, Chronos’ Head of Biodiversity and Nature, the initiative’s project manager.
A significant, complex sector
Launched in 2022, Mining 2030 seeks to develop a consensus about the role of investors in establishing a socially and environmentally responsible mining sector by 2030, as well as collectively working to develop sector-wide standards and encourage best practices.
It has been backed by investors representing US$15 trillion in AUM, including Allianz Investment Management, Brunel Pension Partnership, the CoEPB, Scottish Widows, Swedish National Pension Funds AP1-4, and Ninety One.
The initiative’s report noted the world will fail to achieve net zero targets without a sufficient supply of metals and minerals for clean energy technologies and a managed decline of coal production.
Matthews described the sector as “hugely strategically important” but “deeply challenged”. “As investors who are owners and providers of capital to the sector we’ve got to work with it to ensure that it can grow to meet the critical mineral demands,” he added.
The International Energy Agency has estimated that the annual demand for transition minerals for renewable energy production will triple, rising from around 10 million metric tonnes currently, to over 30 million tonnes by 2050.
The industry underpins up to 45% of the global economy considering both its direct contribution and that made to other industries. It also plays a principal role in the economies of 81 countries home to half of the world’s population, providing infrastructure and employment as well as supporting education and skills development.
However, mining’s Scope 1 and 2 greenhouse gas (GHG) emissions are estimated to account for between 4-7% of global GHG emissions, and as much as 28% when Scope 3 emissions are considered.
Mining companies have also been linked to a surge in human rights-related abuses in their extraction of key critical minerals – including copper and lithium – with International NGO the Business and Human Rights Resource Centre’s transition minerals tracker identifying more than 630 allegations of human rights abuse since 2010, with 91 in 2023 alone.
Matthews noted the mining sector faces “enormous complexity” due to many of the new mines needed to meet critical mineral demand being adjacent to or on the land of indigenous peoples, in water distressed areas, or in countries with weaker governance than others. To mitigate this issue, Mining 2030 has attempted to bring together mining groups and stakeholders potentially affected, with Matthews taking a leading role as chair.
“Adam has brought together a huge investor base, as well as indigenous groups, other stakeholders, governmental groups, and, importantly, mining companies within the committee,” said George Cheveley, Portfolio Manager at Ninety One. “There had been some scepticism in the past about what exactly we were going to achieve, but as things have progressed, we’ve seen more people get involved. The number of mining companies who have joined has increased which is very encouraging.”
Separately, the International Council on Mining and Metals – an industry body whose members make up a third of the global mining and metals industry – has launched new Tools for Circularity designed to help mining and metals companies improve their circularity. One of the Mining 2030’s report’s six foundational priorities is ensuring demand-side companies work towards circularity and traceability.
These tools highlighted the “significant” opportunities to boost material efficiency and minimise waste while creating new financial, social and environmental value based around the remining of tailings and utilisation of by-products, which would help draw inflows from sustainability-focused investors.
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