Data and research provider Sustainable Fitch has suggested more use of proceeds bonds could be issued by mining firms under recently introduced guidance from the International Capital Markets Association (ICMA). Described by Fitch as a “significant expansion”, the new guidance enables green value chain activities to be financed within green bond frameworks, even if the activity itself is not necessarily environmentally sustainable. Examples of activities include equipment needed for renewable energy, batteries, electricity transmission, as well as the production of inputs such as critical minerals and chemicals. ICMA’s new guidance recognises the contribution of inputs from production processes which cannot currently be made net zero to green activities by considering environmental impact on a life-cycle emissions basis, rather than just at the point of production. Last year, green and sustainability bonds from issuers in ICMA’s indicative list of green enabling sectors – chemicals, industrial machinery and equipment, manufacturing, mining and metals, and technology – accounted for only around 5% of total issuance value. However, Sustainable Fitch pointed to examples of growing investor interest in broader sustainability engagement with the mining sector, such as the Global Investor Commission on Mining 2030, which has been backed by asset owners, asset managers and banks. There has also been action at a national level in some jurisdictions, with Australia potentially becoming the first developed economy to classify mining as sustainable by including copper, lithium, nickel and iron ore mining as eligible green and transition activities in its draft sustainable finance taxonomy.
