The Just Transition Finance Lab, The Grantham Research Institute on Climate Change and the Environment, and the London School of Economics and Climate Change (Antonina Scheer and Nick Robins) published ‘Unjust minerals: investing in the changes needed for a just transition in the mining sector’ (August 2024) which describes the priorities for a just transition in the mining sector and the levers that investors have at their disposal to drive action forward.
Human Level’s Take: What do manufacturers of low-carbon technologies (batteries, solar photovoltaics and wind turbines) all have in common? They rely on mining minerals. Electric vehicles need copper, lithium, nickel, manganese, cobalt and graphite. Wind turbines need copper, nickel, manganese, chromium, zinc and rare earth minerals. Solar panels need copper and silicon. And electricity grid power lines need require copper and aluminium. So demand in minerals as we move to net zero is sure to go up - by a lot. Ensuring that this extraction is done in a way that is aligned with a just transition is therefore a critical priority moving forward. The report makes the case for investors to place the just transition in the minerals sector at the heart of their engagement priorities with mining companies, State-owned enterprises, and Governments. In so doing, it provides a number of recommendations for minerals companies - including developing a just transition plan (or integrating just transition into a broader transition plan) and including workers and affected communities in decision-making.
Key points from the report:
- The importance of extraction for a just transition: The report describes how extraction “is at the heart of the just transition challenge.” Extraction is involved when it comes to a just phaseout of coal mining - which will impact the livelihoods and regional economies that are dependent on coal. Think: significant job losses and regional decline. Extraction is also involved when it comes to a just expansion of mining for minerals that are critical to the low-carbon transition. Think: batteries, solar photovoltaics and wind turbines. In fact, the mining of energy transition minerals (ETMs) “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.” The report describes how mining involves dangerous work as well as local environmental destruction and complex economic development risks and opportunities. However, the report finds that no mining company or country currently demonstrates the level of ambition required to achieve a just transition in the mining sector.
- The outcomes we are looking for: The report delves into the urgent need for a just transition in the minerals sector. Without the trust and consent of affected stakeholders (which becomes mining companies’ social licence to operate), we will not be able to meet the demand for energy transition minerals, which in turn carries significant risk for the low-carbon transition at large. There are three priorities for a just transition in mining: (1) respecting communities including through securing the free, prior and informed consent of Indigenous Peoples for its activities, (2) protecting workers’ labour rights and addressing issues such as safety and informal employment, and (3) developing local economies. Specifically, the report calls for mining companies to proactively align their activities with just transition principles by mitigating the harm caused by mining and promoting social opportunities. This includes developing a just transition plan (or integrating just transition into a broader transition plan) and including workers and affected communities in decision-making. For companies operating downstream, the report calls for both harnessing innovation to reduce their demand for minerals, as well as establishing strict expectations for those minerals they do purchase.
- The role for investors: The report makes the case for investors to act now to ensure that those minerals companies they invest in are pro-actively advancing on a just transition. Investors have many tools at their disposal, including shareholder engagement, resolutions and voting, and decisions about whether to purchase specific corporate shares or bonds. Actions to take include making public commitments on how they will support a just transition and deepening their engagement efforts with mining companies on the just transition. This also includes sharing their expectations for just transition policies with governments and engaging in dialogue and advocacy to achieve their implementation. 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 can also engage directly in dialogue with these impacted stakeholders to jointly hold companies accountable. Investors are asked to play a role to identify opportunities to promote a just transition in mining along value chains (e.g. with processing companies, manufacturers of electric vehicles, banks and insurers). Investors are also asked to 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. Finally, investors should explore opportunities to contribute to regional economic development, including through partnerships.
