Sustainable Finance Insights: Special Episode on Sustainable Finance in the Metals, Mining and Commodities Sector

ESG in Conversation

Episode Summary Hosts

• Aditi Bhatia, Regional Sales Manager, Corporate Solutions
• Nicholas Gandolfo, Director, Corporate Solutions
• Nishant Bhagchandani, Sales Manager, Corporate Solutions
• Vanessa Tang, Sales Associate, Corporate Solutions

In this special episode, we focus our lens on sustainable and transition finance opportunities within the metals, mining and commodities sector, amid growing interest from companies and investors. The sector is incredibly important because of its crucial role in the global transition to a low-carbon economy. The demand for minerals used in clean energy technologies is expected to increase four-fold by 2040 to meet climate goals.1 However, mining is also resource intensive, contributing to between four and seven percent of global greenhouse gas emissions,2 and affecting water resources. The various social challenges the sector faces greatly impact local communities, even after mines are closed. As with other harder-to-abate sectors, maintaining access to capital amid a long list of environmental, social and governance risks can be a challenge. Listen to our panelists discuss key considerations for banks, issuers and investors interested in using sustainable finance instruments to help fund improvements across the metals and mining sector and mitigate potential environmental, social and regulatory risks. They share insights on the trends they’re seeing in the market, the conversations they’re having with issuers and banks, and what’s next in sustainable finance for the metals and mining sector.

Key Moments 0:00:57

Introductions

0:02:44

Overview of Sustainalytics’ approach to sustainable finance

0:04:29

Exploring the growing interest in sustainable finance for the mining sector

0:08:42

Use of proceeds or linked finance? Considerations for mining companies and banks

0:12:48

Applying the Climate Transition Finance Handbook

0:15:24

External reviewer landscape – how does Sustainalytics compare?

0:19:38

The benefits of labeling transactions from the mining sector

0:26:13

How Sustainalytics supports banks’ sustainable finance activities

0:29:45

Sustainable finance questions from banks

0:37:08

A look at transaction trends and market developments

0:45:03

Green Bond Impact Reporting – The next frontier in sustainable finance

0:53:17

Outlook for sustainable finance in the metals and mining sector

Links to Select Resources

• International Energy Agency (IEA) – The Role of Critical Minerals in Clean Energy Transitions
• International Capital Market Association (ICMA) – Climate Transition Finance Handbook
• World Bank – Minerals for Climate Action: The Mineral Intensity of the Clean Energy Transition
• ICMA – Registry of key performance indicators for sustainability-linked bonds
• ICMA – Principles, Guidelines and Handbooks
• Loan Syndications and Trading Association (LSTA) – Sustainability-Linked Loan Principles
• Task Force for Climate-Related Financial Disclosures (TCFD)
• Taskforce for Nature-Related Financial Disclosures (TNFD)
• Global Reporting Initiative (GRI) – Sector standard project for mining
• Sustainalytics Bond Impact Reporting
• Sustainalytics Corporate Impact Reporting
• Sustainalytics Supply Chain Solutions – ESG Assessment Platform

Sources

1 IEA. 2021. “The Role of Critical Minerals in Clean Energy Transitions.” May 2021. https://www.iea.org/reports/the-role-of-critical-minerals-in-clean-energy-transitions.

2 Delevingne, L., Glazener, W., Gregoir, L., and Henderson, K. 2020. “Climate Risk and Decarbonization: What Every Mining CEO Needs to Know.” McKinsey Sustainability. January 28, 2020. https://www.mckinsey.com/capabilities/sustainability/our-insights/climate-risk-and-decarbonization-what-every-mining-ceo-needs-to-know.

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