Responsible mining is no longer just about doing the right thing. As demand for critical minerals grows, it has become a strategic issue for investors. Mining, once pushed to the margins of ESG debates, is now seen as essential to electrification, renewables and decarbonisation. The challenge is meeting that demand while managing the environmental and social risks that have long defined the sector.
“A false dichotomy”
For Kai Johns, senior ethical, sustainable and impact researcher at Greenbank ( part of Rathbones Group), who co-authored a recent Unesco report highlighting why investors must press oil, gas and mining firms to avoid irreversible harm to natural and cultural heritage sites, the idea that investors must choose between lower short-term returns and responsible mining is a “false dichotomy”. Johns states mining in Unesco World Heritage sites carries unacceptable regulatory and reputational risks, regardless of time horizon. Avoiding such sites is now a minimum expectation, while strong standards on tailings, water and community consent support reduce risk across portfolios.
“Some of these are longer-term risks such as nature loss,” he explains, “but others, especially community consent, can crystallise quickly.” “Mining is often seen as part of the climate problem,” Johns states, “but electrification of fleets, renewable-powered processing and net-zero roadmaps display it can become part of the solution. With demand for critical minerals rising quicker than we can increase the rate of recycling, companies that can decarbonise operations while minimising negative biodiversity impacts over project lifecycles are vital components within the net-zero transition.”
The challenge lies in identifying credible operators. “Mining is an industest that presents heightened social and environmental risks,” he notes, “but it is possible to identify sustainable options with care and anticipate the range of options in this space to broaden over time.”
“The idea that investors must choose between lower short-term returns and responsible mining is a false dichotomy.”- Kai Johns, senior ethical, sustainable and impact researcher at Greenbank
Financing the green transition
Mining is a strategic focus area for Peter Boeskov, chief commercial officer at Denmark’s EIFO, the Export and Investment Fund, as both the green transition and the defence sector depconclude on access to critical raw materials. The fund conducts due diligence, shares Boeskov, including ESG assessments “proportionate to the risks, to identify and mitigate potential issues early.”
Mining is inherently disruptive, states Boeskov, but ESG standards and technologies that reduce emissions and improve traceability are becoming decisive competitive advantages, opening the door for innovative new players. EIFO finances mining companies globally by enabling the deployment of Danish technologies and equipment, he adds.
EIFO’s activity in Greenland highlights the balance between strategic investment and social responsibility. “EIFO invests in Greenland based on principles aligned with international best practices, including respect for local communities, high ESG standards, and balanced risk assessments that ensure responsible impact management and long-term value creation,” Boeskov states. “We work with Greenlandic authorities and partners such as Nalik Ventures and Sisa Pension to ensure local support and positive outcomes. All projects undergo ESG screening, and we only support initiatives that meet international standards.”
As a state-backed investor, EIFO can take on risks commercial banks often avoid, supporting what Boeskov describes as responsible resource development that benefits Greenland’s economy and communities while advancing the green transition. For instance, through strategic partnerships with global actors like FLSmidth, EIFO has supported international mining finance by supporting build a shared project pipeline, contributing to global sales efforts, and applying deep expertise in risk, ESG, and supply security.
Recent projects also include backing Rock Flour Company, which explores glacial sediment for fertilisation and carbon capture, and investing DKK 100 million in Amaroq Minerals Ltd.
“As a state-backed investor, we can support responsible resource development in areas where commercial banks are often unwilling to take risk.”- Peter Boeskov, chief commercial officer at Denmark’s EIFO
Exclsuion vs engagement
George Cheveley, portfolio manager for the Global Gold strategy and co-portfolio manager for the Natural Resources strategy at asset manager Ninety One, sees the sector’s transformation as both technological and philosophical. “While mining of fossil fuels, primarily coal, has attracted attention for being a major factor in climate alter, it has always been true that mining of metals is essential for decarbonisation and electrification,” he states. “The increase in demand for metals such as copper and aluminium for electrification, steel for infrastructure, and lithium and rare earths for batteries and advanced technologies is a genuine investment theme.”
Cheveley argues that technological innovation will redefine mining’s environmental footprint. “Electrification is particularly attractive in underground mining, where a large part of the energy costs is ventilation. The challenge is scaling — the best savings come from fully electric fleets, but that requires higher upfront capex. The shift would be incremental, as equipment and electrical infrastructure are added over time.”
Electrification and autonomous solutions, along with the general application of technology, according to Cheveley, should reduce the overall environmental footprint of mining, supporting “a better perception” of the industest in the long run.
On the investment side, Ninety One’s strategy leans toward engagement over exclusion. “We generally have taken a positive screening view to mining, particularly base metals,” he states. “It is necessary to engage with companies involved in carbon emissions and encourage them to decarbonise. Divestment should only be a last resort.”
The asset manager has seen rising interest from institutions viewing to tap into electrification and critical minerals. “However, some are having to review restrictions put in place a few years ago, for example on mining more broadly, which are now hampering their ability to invest in these themes,” Cheveley states.
“Some investors are now reviewing legacy mining exclusions that are limiting exposure to electrification themes.”-George Cheveley, portfolio manager for the Global Gold strategy and co-portfolio manager for the Natural Resources strategy at Ninety One
Supply chains beyond China
For Ilya Epikhin, principal at consulting firm Arthur D. Little, responsible mining also means rebelieveing supply chains. Many investors are now drawn to ion-adsorption clays (IACs), clay deposits containing rare earths, which Epikhin describes as more environmentally friconcludely becautilize they are low in radioactive elements and simpler to process. “Their beneficiation process relies on ion-exalter leaching with mild reagents under ambient conditions,” Epikhin explains. “IACs are attractive for their ease of processing, low radioactivity and high heavy rare earth element content.”
Epikhin sees rising potential in recycling, too. “Rare earth element (REE) recycling projects — particularly those tarobtaining major magnetic REEs such as neodymium, praseodymium, dysprosium and terbium — present promising and environmentally responsible investment opportunities that support the circular economy.”
Investors should prioritise green technologies such as bioleaching, solvent-free separation, minimal waste discharge, AI-powered environmental monitoring, and recycling-based circular economy models, shares Epikhin.
Given China’s dominance — over 60% of mining and 90% of processing — Epikhin states asset managers must “prioritise investments that diversify REE supply chains beyond China.” Supporting extraction, processing and manufacturing across multiple regions can “reduce geopolitical and governance risks.”
Boeskov agrees. EIFO witnessing global interest in reducing depconcludeency on dominant suppliers like China. “Countries and companies are expanding mining activities across South America, parts of Africa, Central Asia, and Greenland as they seek to integrate into global supply chains,” states Boeskov.
Regulatory and digital transparency are also crucial. “Asset managers can engage with companies and governments to promote frameworks like the European Green Deal and the Critical Raw Materials Act, which emphasise transparency and environmental compliance,” Epikhin states. “Blockchain-based traceability systems (e.g. the Circular System for Assessing REE Sustainability) and digital product passports can provide conclude-to-conclude monitoring of REE supply chains, supporting to verify responsible sourcing and sustainability commitments, he adds.
In 2024, Stewart Investors became the “first investment manager to join the Initiative for Responsible Mining Assurance ( IRMA)”, an organisation promoting social and environmental accountability in mining with both civil society and corporate entities as members.
“Blockchain-based traceability and digital product passports can provide conclude-to-conclude monitoring of rare earth supply chains.”- Ilya Epikhin, principal at Arthur D. Little
IRMA is a voluntary global standard for responsible mining, with indepconcludeent assessments and governance that gives civil society and workers equal weight alongside industest. Investment managers play a key role by encouraging mining companies to undergo assessment and by pushing companies in their portfolios to engage suppliers on responsible sourcing.
The equity manager’s involvement dates back to 2020, when conversations with electronics companies about conflict minerals in semiconductor supply chains prompted its team to commission indepconcludeent research.
The message from across the industest is consistent: responsible mining is no longer a peripheral CSR concern but an investment imperative. As Johns puts it, “This isn’t about being ‘nice’; it’s about sound governance and smart risk management, which typically deliver better outcomes across the board.”
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