As the 2030 deadline for the United Nations’ Sustainable Development Goals (SDGs) approaches, the race for clean energy and climate action is accelerating demand for transition minerals. Yet the pressure on supply chains for lithium, copper, cobalt and nickel, among others, brings both opportunity and risk. Without robust environmental and social protections in place, extraction of these transition minerals threatens to scar landscapes, displace communities and deepen global inequalities.
At this pivotal moment, public development finance institutions and export credit agencies are emerging as forces in shaping how these resources are sourced. Their financing decisions will impact whether the green transition upholds principles of sustainability and inclusion or exacerbates long-standing injustices.
A new report from the Boston University Global Development Policy Center and the Center for China and Asia-Pacific Studies (CECHAP) at Peru’s Universidad del Pacífico examines how these institutions are engaging with the transition minerals sector – and the role they must play in strengthening environmental and social governance (ESG) to support a just transition for all.
Public development finance institutions (DFIs) and export credit agencies are financial institutions that aim to support development and trade through loans, guarantees and insurance. Our research demonstrates that these public financiers – ranging from multilateral development banks (MDBs) like the International Financial Corporation (IFC) to export credit agencies like the China Export-Import Bank – are involved in directly financing the extraction of the transition minerals.
In addition to their financial investments, public DFIs also frequently offer technical and advisory support, helping companies incorporate ESG principles into their business practices. However, we find that major gaps exist between these banks’ potential to improve ESG performance on transition minerals and the extent to which they have done so thus far.
The insights generated from this stock-taking have direct relevance for several important public DFI policy processes over the coming year. The following five processes taking place in 2025 will determine how public DFIs and export credit agencies support the development of a more sustainable and inclusive transition mineral supply chain in the long run.
1. China’s Green Finance Guidelines: Key performance indicators
China is the most active player in financing transition minerals, due especially to its dominance in global trade flows. Our analysis of global trade flows showed that China accounted for 71.2% of all transition mineral imports in 2023 – approximately half of which came from Latin America and the Caribbean. China’s institutions have a long history of being highly active in supporting Chinese firms’ overseas investments.
However, the environmental and social risk management frameworks of Chinese public DFIs are relatively less developed as compared to their peer development banks. The ongoing green finance reforms in China’s financial sector will be fundamental to setting verifiable expectations for the performance of Chinese firms’ overseas activity. In particular, a major step forward will be the introduction of key performance indicators for China’s Green Finance Guidelines, which are set to be released this year. These indicators should be focused on providing transparency and accountability, ensuring that investments by public DFIs and export credit agencies align with global sustainability standards.
2. The US Development Finance Corporation’s reauthorisation
More recently, other national public DFIs, such as the United States International Development Finance Corporation (DFC), have also become active players in transition mineral sectors. As a US government agency established by Congress with a fixed mandate, the DFC requires periodic reauthorisation. Its reauthorisation in 2025 presents an opportunity to reinforce environmental and social risk management commitments.
Since its inception under the first Trump administration, the DFC has adhered to the IFC Performance Standards on Environmental and Social Sustainability, which require borrowers to carry out a minimal level of environmental and social risk management. Maintaining these commitments will be critical, in addition to ensuring that they are underwritten by robust independent monitoring as well as grievance and accountability mechanisms. Especially given that transition minerals are identified as a key priority sector for the DFC, policymakers and stakeholders must advocate for a continued adherence to these sustainability standards during the reauthorisation process.
3. The IFC Performance Standards: Ensuring an evidence-based approach
It is imperative for public DFIs with strong on-paper environmental and social risk management policies to resist pressure to weaken them in order to expedite future projects. The IFC Performance Standards serve as the foundation of environmental and social risk management for many public DFIs, including the DFC. However, they are up for review this year, despite the lack of an evaluation of their effectiveness by the IFC’s own Independent Evaluation Office. This raises concerns about potential dilution under external pressure. To maintain credibility, any revisions must be grounded in robust evidence as to their efficacy in improving environmental and social performance. A rigorous and independent review process is essential to uphold these global benchmarks.
4. Strengthening policy lending through the World Bank Evolution Roadmap
MDBs, and particularly the World Bank, have been active in policy and institutional support for mineral governance in direct cooperation with host country governments. Although this support can be transformative for lower-income countries, few of the countries targeted by this type of support are those with burgeoning transition mineral sectors. Our research finds that, between 2014 and 2023, Brazil, Chile, and Peru were the countries with the highest share of transition mineral exports, while Burkina Faso, Niger, and Mozambique received the highest share of MDB policy support. However, there were no countries that had both a high share of transition mineral exports and of MDB policy support.
Discussions around the World Bank’s Evolution Roadmap – a broad process initiated in 2022 to review and update the bank’s mission, operations and resources – present an opportunity to expand concessional policy finance to middle-income countries. This financial support could empower environment ministries in mineral-exporting nations, integrating sustainability and inclusion measures into national policy frameworks. Aligning these efforts with country platforms like the World Bank’s own Country Climate and Development Reports (CCDRs) and the G20 Just Energy Transition Partnerships (JETPs) will help contribute towards a more just and equitable transition.
However, our analysis shows that few of the current CCDRs discuss responding to the environmental and social risks involved in transition mineral sectors: of the World Bank’s 54 CCDRs, 22 mention these minerals as an opportunity, among which 18 of these reports highlight environmental and social risks associated with them, and only nine mention a specific strategy to mitigate these risks.
5. Advancing traceability in transition mineral supply chains
Establishing enforceable traceability mechanisms is indispensable for improving transparency, reducing environmental harm and ensuring fair labour practices in transition mineral supply chains. Without traceability, it is impossible to fully apply environmental and social standards to project clients’ suppliers. Developing traceability mechanisms is a pressing issue, especially due to a pioneering minerals traceability initiative introduced by Colombia at the 2024 United Nations COP16 biodiversity summit that is to be presented for a vote at this year’s UN climate conference, COP30, set to be held in Brazil in November. Such an initiative will require strong multilateral backing to move forward.
A defining year for sustainable finance in transition minerals
The coming year presents several pivotal decision points for public DFIs and export credit agencies in terms of their engagement with transition mineral supply chains. From China’s Green Finance Guidelines to the IFC Performance Standards review, the choices made in the next several months will shape sustainability efforts for years to come. Strengthening policy commitments to sustainability both up and downstream in green energy technologies must remain at the forefront of global development finance discussions. Policymakers at DFIs should take these opportunities to drive forward a more sustainable approach to transition mineral finance.
