Without credible human rights and environmental safeguards, the energy transition risks becoming another chapter of missed opportunities, stalled growth, predatory exploitation, ecological harm, and community dispossession.
Raw materials are indispensable for batteries, renewables, and new technologies – many of them come from mining. Yet mining carries material risks: displacement of local communities, including Indigenous peoples, pollution liabilities, security abuses, and corruption. These risks translate directly into business exposure — from stranded assets and financial losses to exclusion from EU supply chains and protracted litigation.
Financial institutions: Conditioning capital on responsibility
Financiers ultimately decide which projects move forward and on what terms, shaping incentives across the sector. Every investment decision carries human rights and environmental consequences, whether acknowledged or not.
Successful finance today depends on ensuring that capital flows only to projects with credible due diligence in place. This includes:
• alignment with OECD standards in conflict-affected and high-risk areas,
• enforceable Free, Prior and Informed Consent (FPIC) processes with Indigenous peoples,
• strict security and anti-corruption safeguards,
• verifiable traceability across supply chains.
In cases where projects overlap with protected ecosystems or Indigenous territories, enhanced safeguards – or, where risk outweighs opportunity and impacts cannot be responsibly mitigated, a decision not to proceed – may be the most strategic business decision.
Ignoring these responsibilities exposes financiers to direct business risk: unlawful displacement claims, liability for abuses linked to project security, corruption and money-laundering exposure, and reputational damage. The opportunity costs of tying up resources in poorly managed projects, combined with the cost of capital, can be significant. Sometimes, the best business decision is not to finance the project at all. Choosing which projects to finance and what to require from mining companies is a delicate task.
In a moment of intense global competition for critical minerals and the need to boost European competitiveness, what financial institutions and mining companies need converges exactly with what rightsholders deserve and stakeholders demand: respect for human rights and the environment.
Mining companies: Embedding due diligence into operations
For mining companies, responsible business practice is now a precondition for access to capital and licence to operate. Companies must integrate human rights and environmental due diligence (HREDD) into every stage of operations – from exploration to closure – because risks and impact arise at each step of the process.
At the exploration stage, inadequate consultation and land acquisition processes can lead to disputes and loss of trust. During construction and operation, risks include labour rights violations, security abuses, and pollution. At closure, unaddressed community expectations and environmental damage can create long-term liabilities. Continuous due diligence helps companies identify and address these risks before they escalate into conflict or financial loss.
This process starts with meaningful stakeholder engagement and FPIC processes that are genuine rather than symbolic, ensuring affected communities have both a voice and a choice. Early participation of local stakeholders helps avoid expenditures on inadequate social compensation and can turn local communities into long-term allies of the operation. By positioning themselves as partner of choice, mining companies can strengthen both stability and viability of operations.
Over the course of my work, I have observed both sides of this dynamic. Through conducting Human Rights Impact Assessments (HRIAs), I have witnessed how responsible relationships between mining companies and local communities can foster mutual benefits, sustainable development and stable production. In such cases, community members often come to trust the mining company, engage as suppliers or employees, and together help build a vibrant local ecosystem. Yet I have also encountered operations marked by tension and mistrust, and where protests disrupt supply routes, cause financial losses and at times even lead to divestment.
These firsthand experiences have made it clear that mutual and sustainable progress involving companies, financiers and local communities are only achievable when companies are committed to conducting HREDD effectively. As I often repeat: the opposite of due diligence is negligence. Being responsible is a win-win strategy.
How we support
At Löning, we help companies and financiers to turn human rights and environmental responsibilities into drivers of stability, trust, and long-term business value. We conduct human rights and environmental risk and impact assessments, design and implement due diligence systems aligned with OECD, IFC and EU standards, and support community engagement processes that build legitimacy and mutual respect.
By combining global expertise with local insight, we ensure that projects meet the requirements of regulators, investors, and the people most directly affected. Our approach enables clients to not only comply with standards but also strengthen their social licence to operate and improve access to sustainable finance.
The energy transition will only succeed if capital flows to projects that can demonstrate credible due diligence and genuine accountability. Markets need a reliable supply of critical minerals – and financiers and companies can deliver it while creating long-term value.
The only smart way forward is to respect human rights and the environment, effectively and strategically.
Leonel Lisboa
Consultant and Head of Löning Academy