Financing the mining rethink for a just clean energy shift

Financing the mining rethink for a just clean energy shift | Photo: Albert Hyseni

The transition to clean energy is inextricably bound to minerals such as lithium, cobalt, nickel, copper and rare earths, and yet the way those minerals are sourced and financed often replicates older patterns of extraction, inequality and environmental harm. In October 2025, the International Resource Panel (IRP) of the UN Environment Programme released a landmark report, Financing the Responsible Supply of Energy Transition Minerals for Sustainable Development, urging a deep reform of current financial systems and regulatory regimes in mining. The message is urgent, a just and sustainable clean energy future cannot be built on extractive injustices.

The challenge at scale

Meeting demand for energy transition minerals will require massive investment, not only in exploration and extraction, but also in refining, recycling and creating resilient supply chains. The report argues that simply expanding mining under existing norms will exacerbate environmental degradation and social inequities, especially in mineral-rich developing regions.

Projections suggest that demand for many critical minerals could increase three to sixfold by 2030–2040. Without systemic reform, the cost of that surge may fall disproportionately on communities already vulnerable to resource dependence, land dispossession, water stress and weak governance.

The IRP emphasises that scaling supply must go hand in hand with managing demand, through efficient design, substitution, reuse and recycling, often described as circular economy strategies.

What the IRP proposes

The IRP’s core proposals aim to embed responsible mining within the architecture of sustainable finance. Key elements include:

·       Integrating mining into sustainable finance frameworks: This would mean that private capital, public banks and development finance institutions adopt stronger environmental, social and governance (ESG) criteria specific to mining operations.

·       Global transparency tools and digital product passports: These would allow traceability of minerals along the value chain, improving accountability and supporting responsible sourcing.

·       Creation of a global “Mining Sustainable Development Fund”: The idea is to pool resources to support capacity building, rehabilitation, environmental safeguards and benefit sharing in countries hosting mining operations.

These reforms are not cosmetic, they require rethinking who bears risk, reshaping incentives and correcting power imbalances in global supply chains.

Why reform matters

1.     Legitimacy for the green transitionIf the clean energy shift is perceived as benefiting only extractive corporations and bypassing local people, it risks political backlash. Ensuring that extraction respects human rights, the environment and community interests is essential to maintain social licence.

2.     Risk mitigation and capital mobilisationMining projects face large technical and social risks. Stronger transparency, harmonised standards and predictable governance attract investors by reducing uncertainty and reputational risk.

3.     Equitable development outcomesResource-rich nations must not be confined to exporting raw ore. Value addition, technology transfer, regulatory capacity and fair contracts are essential to convert mineral wealth into inclusive development.

4.     Environmental and climate coherenceWithout strong reforms, increased mining could drive deforestation, water depletion, biodiversity loss and carbon emissions, undermining climate goals.

5.     Demand control and resilienceEven with best practices in mining, demand must be managed through circular economy measures, reuse and efficiency, to reduce pressure on virgin resources.

The obstacles ahead

·       Fragmented regulation and standards: Mining governance is dispersed across national laws, regional regimes and voluntary standards. Aligning them is complex.

·       Power imbalances: Large multinationals and consuming states often wield far more influence than host communities, making equitable benefit sharing difficult.

·       Data and traceability gaps: In many supply chains, critical information remains opaque, making enforcement of ESG standards weak.

·       Upfront cost burdens: Higher standards often entail additional capital, which may deter investments if returns are uncertain.

·       Time horizon mismatch: Investors sometimes seek quick returns, whereas mining and rehabilitation require long horizons, creating tension with green finance models.

A way forward

To make the IRP’s vision real, several steps deserve priority:

·       Harmonised global standards and certifications: Build interoperable ESG standards anchored in mining’s particular risks.

·       Support for regulatory capacity in mining nations: Through training, technology and institutional strengthening.

·       Pilots of digital product passports and traceability systems: To test scalable models and build trust.

·       Design of the mining fund with incentives and safeguards: So funds are used effectively and equitably.

·       Consumer and investor alignment: Demand for responsibly sourced minerals must be matched by procurement and capital policies.

·       Promotion of mineral circularity: Through product design, recycling infrastructure and secondary markets.

The IRP report delivers a potent warning, the clean energy future will not be credible unless the “front end”, how we source the minerals, is reoriented. Reforming finance, regulation and accountability in mining is not optional, it is foundational to a just and sustainable transition.

For those seeking further insight, the UNEP portal on critical energy transition minerals offers background on principles and global governance efforts, while the IEA’s Global Critical Minerals Outlook provides demand and supply projections.

Link to the UNEP / IRP report:

“Financing the Responsible Supply of Energy Transition Minerals for Sustainable Development”→ https://www.unep.org/resources/report/financing-responsible-supply-energy-transition-minerals-sustainable-development (UNEP - UN Environment Programme)