Mineral shortages have immense “Catch-22” ESG implications

– Heavy mining can have grave social and environmental impacts.
– But insufficient mining could derail transition to cleaner energy.

Here’s a note from Nawar Alsaadi:

Today’s report by the IEA around minerals supply and the energy transition is probably the most important ESG related report to be released in 2021. The IEA is warning of critical shortage in key minerals if we are to be successful in transitioning to a clean energy system.

The problem highlighted by the IEA has immense ESG implications both from an investment and sustainability perspective. Heavy mining to ensure sufficient minerals supply can have grave social and environmental impacts, but lack of sufficient mining could derail the energy transition. The investment implications are even bigger both due to potential mineral shortages (hitting multiple sectors of the economy) and due to the potential derailment of the energy transition (resulting in a severe climate change impact).

This is exactly the type of sustainability challenge that requires a systematic approach, where all moving pieces need to be managed in tandem, by both the private and public sector. I strongly recommend reading the report – with a special emphasis on the IEA recommendations.