Unjust minerals: investing in the changes needed for a just transition in the mining sector

Published on August 20, 2024

Authors: Antonina Scheer, Nick Robins

Institutional investors Energy Industry Global Financial instruments and strategies Policy Regulation

Two specialists examining coal at an open pit. Photo: agnormark/iStock

Unjust-minerals_investing-in-the-changes-needed-for-a-just-transition-in-the-mining-sector.pdf

Extraction is at the heart of the just transition challenge: both a just phaseout of coal mining and a just expansion of mining for minerals critical to the low-carbon transition are required. The scale and complexity of this task requires informed and proactive investor participation in shifting the mining sector towards more sustainable and equitable practices.

This report takes forward a sector-specific approach to elaborate the priorities for a just transition in the mining sector and the levers that investors have at their disposal to drive action.

Key messages

The economic transformation needed to reach net zero emissions is precipitating a fall in demand for coal and setting off a dramatic acceleration in demand for energy transition minerals (ETMs).
The decline of the coal sector will impact the livelihoods and regional economies that are dependent on it, while ETM mining presents one of the most crucial tasks ahead for the just transition: avoiding a trade-off between the expansion of mineral production for global climate action and the achievement of positive local outcomes.
To reduce the substantial social and environmental impacts of mining, mineral demand must be firmly managed and existing responsible mining standards and laws strengthened and applied in a time-bound and rapidly-evolving context.
There is a need for investors to fulfil their role in supporting a just transition out of coal mining and into ETM mining. A just transition agenda for investors would build on three priorities: respecting communities; protecting workers; and developing local economies.
Investors have two main levers at their disposal to advance a just transition: dialogue and capital allocation. Figure 1 below shows how investors can identify and harness these in their interactions with governments, companies and state-owned enterprises (SOEs).

Figure 1. A framework of investor leverage points to drive a just transition in mining

Recommendations for investors

Institutional investors should make public commitments on how they will support a just transition, both out of coal and into ETM mining.
Investors should deepen their engagement efforts with mining companies on the just transition with approaches that are informed by data on socio-environmental risks and tailored to particular companies, regions and commodities.
As holders of sovereign debt, investors should share their expectations for just transition policies with governments and engage in dialogue and advocacy to achieve their implementation.
Investors should communicate to SOEs their expectations for action on the just transition in a way that is joined up with their sovereign engagement.
Investors should advocate that companies and governments invite trade unions, Indigenous Peoples and representatives of local communities to the decision-making table in the design and implementation of just transition strategies for the mining sector.
Investors should identify opportunities to promote a just transition in mining along value chains, for example with processing companies, manufacturers of electric vehicles, banks and insurers.
Investors should support the implementation of high-integrity responsible mining standards, draw on just transition commitments and frameworks for the global minerals value chain, and contribute to their development to ensure consistency internationally.
Investors should explore opportunities to contribute to regional economic development, including through partnerships: a model similar to the Just Energy Transition Partnerships could help deliver targeted finance and action for a just transition in mining.