Mining Finance ESG Safeguards Fall Short, Says New Report

Forests & Finance

Mining finance ESG safeguards are failing to keep pace with transition-metal demand, warns a new assessment of global lenders and investors. Mining finance ESG safeguards scored poorly across 30 major institutions that back copper, lithium and cobalt projects. Mining finance ESG safeguards also lag on deforestation, indigenous rights, tailings and climate alignment, despite multi-billion-dollar funding flows.

Findings: weak policies amid rising transition-metal finance

Banks and investors supplied $493bn in loans and underwriting from 2016–2024, with an additional $289bn in bonds and shares. However, the coalition’s 34-point framework shows an average ESG score of only 22pc. Environmental protections rank weakest at 17pc, signalling systemic policy gaps. Only 13pc of institutions have clear zero-deforestation rules. None maintain robust tailings storage requirements, despite recent disasters and chronic liabilities. Social safeguards average 19pc, reflecting thin protections for indigenous rights and community consent. Few financiers require Paris-aligned transition plans. Most lack clear mine-closure and reclamation standards tied to finance.

What financiers must change now

Lenders should hard-wire comprehensive due diligence and public disclosure across entire corporate groups. They should require mineral supply chain traceability and independent monitoring with grievance transparency. Contracts must include enforceable non-compliance protocols and divestment thresholds. Climate conditions should mandate 1.5°C-aligned transition plans and credible absolute emissions targets. Finally, lenders should link capital access to tailings safety audits, zero-deforestation commitments, FPIC adherence and funded closure obligations.

The Metalnomist Commentary

Capital is the most powerful lever for safer, lower-carbon mining. Expect leading lenders to tighten eligibility screens first for tailings and deforestation, then for climate plans with hard milestones. Developers that meet verifiable ESG thresholds will gain a structural cost-of-capital advantage.