New UN Report Calls for Responsible Financing to Power the Global Energy Transition

A new report by the UN Environment Programme (UNEP)-hosted International Resource Panel (IRP) has called for urgent reform of the global financial system, governance, and regulation of mineral exploration and mining to ensure that capital flows support a clean and equitable energy transition.

According to the report, titled “Financing the Responsible Supply of Energy Transition Minerals for Sustainable Development,” mineral extraction now accounts for 50% of annual global raw material use, up from 31% in 1970. With demand for clean energy technologies, such as solar panels, wind turbines, and batteries, rising sharply, the authors warn that responsible mining and financing practices will be critical to a fair and sustainable energy future.

Global mineral extraction has increased fivefold since 1970, and the market for critical energy transition minerals continues to expand rapidly. In 2023 alone, demand for nickel, cobalt, graphite, and rare earth elements increased by between 8 and 15 percent, while demand for lithium is projected to grow ninefold by 2050 compared to 2022 production levels.

“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 International Resource Panel. “Through sustainable finance, responsible mining can become the default, not the exception.”

The report highlights that mining, a capital-intensive and high-risk sector, depends on a mix of public and private financing across all project stages, including mine closure and upstream activities such as mineral processing, metallurgical plants, and refineries.

A survey of large-scale mining companies revealed that maintaining environmental standards is often viewed as costly, though most firms estimated it would add less than 25% to operational expenses. Importantly, most respondents agreed that strong Environmental, Social, and Governance (ESG) reporting could attract new investors, giving the financial sector leverage to promote responsible mining.

The report emphasises that improving circularity, through recycling, eco-design incentives, and green bonds, could significantly reduce the need for virgin materials. Governments, it says, can promote this shift through recycling targets, public-private partnerships, and tax incentives for recycling infrastructure. It also calls for a global database of active and former mining tailings facilities to improve transparency and safety.

Despite these measures, the scale of investment required remains immense. The International Energy Agency (IEA) estimates that achieving net zero emissions by 2050 will require investments in energy transition minerals of up to USD 450 billion by 2030 and USD 800 billion by 2040.

The report also highlights the need to improve ESG performance in artisanal and small-scale mining, recommending greater transparency, formalized licensing, capacity building, tax incentives, and better access to geological data. An international sustainability framework could further enhance access to finance and help manage environmental and social risks in this sector.

The IRP stresses the importance of rewarding responsible mining practices, not only for companies but also for local communities hosting mining operations. It recommends government-backed certification schemes, favourable fiscal policies, and improved market access to recognize and incentivize good ESG performance.

To promote responsible investment in mining, the report calls for:

• Strengthening financial institutions’ capacity to identify and fund mining projects that meet high ESG standards;
• Developing digital product passports for all mineral commodities with standardized ESG information;
• Requiring site-specific, gender-sensitive, and community-based ESG reporting by mining companies;
• Including high-ESG mining in sustainable and climate finance taxonomies;
• Linking mining investments to climate and nature-positive criteria, excluding operations in protected areas;
• Allowing companies with validated ESG transition plans access to sustainable finance;
• Using fiscal and monetary policy tools to promote responsible mining and circular metal use;
• Implementing a global ad valorem levy to fund a Mining Sustainable Development Fund supporting training, legal assistance, and innovation in developing countries; and
• Establishing a global database for mine tailings and fostering mutually beneficial partnerships between mineral-producing and importing nations.

The report contributes to ongoing international efforts, including the UN Secretary-General’s Panel on Critical Energy Transition Minerals, the International Council on Mining and Metals (ICMM)’s nature-positive mining commitment, and upcoming discussions at the seventh session of the UN Environment Assembly (UNEA-7).

Read the report here: https://www.unep.org/resources/report/financing-responsible-supply-energy-transition-minerals-sustainable-development