As the 2030 deadline for the United Nations’ Sustainable Development Goals (SDGs) looms, the global push for clean energy is driving unprecedented demand for transition minerals, such as lithium, copper, cobalt, and nickel. However, this demand comes with significant risks—if not properly managed, the extraction of these critical minerals could harm ecosystems, displace communities, and exacerbate existing global inequalities. At this crucial juncture, public development finance institutions (DFIs) and export credit agencies are positioned to play a pivotal role in determining whether the green energy transition fosters sustainability and inclusivity or deepens existing environmental and social issues.
A new report by the Boston University Global Development Policy Center and the Center for China and Asia-Pacific Studies (CECHAP) at Peru’s Universidad del Pacífico highlights the role these financial institutions play in shaping the future of transition mineral supply chains. The research underscores the importance of ensuring that environmental, social, and governance (ESG) criteria are integrated into financing decisions, advocating for a just transition that benefits all stakeholders.
The Role of Public DFIs and Export Credit Agencies in Transition Minerals
Public DFIs and export credit agencies—entities like the International Financial Corporation (IFC) and China’s Export-Import Bank—are critical in financing the extraction of transition minerals. Beyond providing loans, guarantees, and insurance, these institutions also offer technical support, helping businesses embed ESG principles into their operations. However, the report finds substantial gaps between the potential of these institutions to promote ESG standards and their actual performance thus far.
Several key policy decisions in 2025 will determine whether these financial institutions support a sustainable, fair transition for the global supply chains of transition minerals. Below are five critical processes that could define the future of sustainable mining.
1. China’s Green Finance Guidelines and Key Performance Indicators
China is the largest global importer of transition minerals, making its financial institutions a key player in shaping the future of the sector. In 2023, China accounted for 71.2% of transition mineral imports, with nearly half of these imports originating from Latin America and the Caribbean. Despite this influence, China’s environmental and social risk management frameworks are less advanced compared to other development banks.
In 2025, China’s financial sector will introduce new Green Finance Guidelines, including key performance indicators (KPIs) aimed at improving transparency and accountability in overseas investments. These guidelines are expected to set expectations for Chinese firms engaged in transition mineral extraction, aligning their practices with international sustainability standards.
2. Reauthorisation of the US Development Finance Corporation (DFC)
The United States International Development Finance Corporation (DFC) has become an increasingly significant player in financing transition minerals. The DFC, established by Congress, operates under a fixed mandate and requires reauthorisation every few years. Its upcoming reauthorisation in 2025 presents an opportunity to strengthen environmental and social risk management in its financing practices.
The DFC currently adheres to the IFC Performance Standards on Environmental and Social Sustainability, which establish minimum requirements for managing environmental and social risks. As transition minerals become a priority sector for the DFC, stakeholders must ensure that the corporation’s commitments to sustainability remain strong, with independent monitoring and accountability mechanisms in place.
3. The Review of the IFC Performance Standards
The IFC Performance Standards serve as the benchmark for many public DFIs, including the DFC, in managing environmental and social risks. However, these standards are under review in 2025, despite concerns that they may be diluted due to external pressures.
For these standards to maintain their credibility, any changes must be based on robust evidence of their effectiveness in improving ESG outcomes. A comprehensive, independent evaluation of their impact is essential to ensure that the IFC’s standards continue to lead global efforts in sustainable mineral governance.
4. World Bank’s Evolution Roadmap and Policy Lending
Multilateral development banks (MDBs), particularly the World Bank, have been active in supporting mineral governance policies in developing countries. However, few of the countries receiving such support are those with emerging transition mineral sectors. Between 2014 and 2023, while Brazil, Chile, and Peru were the top exporters of transition minerals, the countries most benefiting from MDB policy support—like Burkina Faso, Niger, and Mozambique—were not major exporters of these minerals.
The World Bank’s ongoing Evolution Roadmap, initiated in 2022, is a crucial opportunity to expand financial support for middle-income countries with growing transition mineral sectors. By integrating sustainability measures into national policies, this support can help these countries navigate the environmental and social challenges posed by their mineral wealth. The World Bank must ensure that its Country Climate and Development Reports (CCDRs) and partnerships like the G20 Just Energy Transition Partnerships (JETPs) address the risks associated with transition minerals.
5. Advancing Traceability in Mineral Supply Chains
Establishing effective traceability mechanisms is crucial for ensuring transparency, reducing environmental harm, and safeguarding labor rights in transition mineral supply chains. Without these mechanisms, it becomes difficult to enforce ESG standards throughout the supply chain.
One promising development is Colombia’s pioneering minerals traceability initiative, introduced at the 2024 UN COP16 biodiversity summit. This initiative will be put to a vote at COP30 in Brazil in November 2025. If successful, it could set a global precedent for traceability in mineral supply chains, demanding multilateral backing to ensure its effectiveness.
A Defining Year for Sustainable Finance in Transition Minerals
The coming year will be crucial for public DFIs and export credit agencies as they make key decisions about their involvement in the transition mineral supply chain. From China’s Green Finance Guidelines to the review of IFC Performance Standards, the outcomes of these processes will set the tone for the future of sustainable mining.
Policymakers must seize these opportunities to reinforce a commitment to sustainability and inclusion throughout the green energy transition. Strengthening policy frameworks and integrating robust ESG measures into the financing of transition minerals will ensure that the global move towards clean energy does not come at the expense of environmental and social justice.
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