Clean energy transition: UN calls for overhaul of global mining finance

The United Nations Environment Programme (UNEP) has called for reforms in the financial system, governance, and regulation of mineral exploration and mining to driving sustainable investment and ensure fair, clean energy transition.

UNEP made the call in a new report, ”Financing the Responsible Supply of Energy Transition Minerals for Sustainable Development”, which was released on Thursday.

The report hosted by its International Resource Panel (IRP), warned that mineral extraction now accounted for 50 per cent of all global raw materials use, up from 31 per cent in 1970.

This, it said, underscored the urgent need for responsible financing, as demand for clean energy minerals accelerated.

The report stressed that financing responsible mining would be central to achieving net-zero emissions with the global market for key minerals, including lithium, cobalt, nickel, graphite, and rare earth elements expanding rapidly.

It estimated that investments of up to $450 billion would be needed by 2030, rising to $800 billion by 2040 to meet climate goals.

”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.

”Through sustainable finance, responsible mining can become the default, and not the exception,” said Janez Potočnik, Co-Chair of the IRP.

The report outlined a comprehensive set of reforms from linking mining finance to Environmental, Social, and Governance (ESG) performance, to promoting circularity and recycling infrastructure that reduces reliance on virgin materials.

The report among others recommended integrating responsible mining into global sustainable finance taxonomies.

It also recommended creating a digital product passport for all mineral commodities with ESG data.

The report also called for an establishment of a Mining Sustainable Development Fund through a global levy on companies.

It called for strengthening of ESG capacity in artisanal and small-scale mining through local licensing, transparency, and access to finance.

It also encouraged government-backed certification and incentives to reward companies and communities practicing responsible mining.

The report also urged global collaboration between mining host nations and importing countries, emphasising mutual benefit and equitable resource governance.