Green financing is usually not top-of-mind for mining companies considering their financing options, but it should be. Two trends, the “greening” efforts of the mining industry and the growing availability of green and environmental, social and governance (ESG)-linked loan products and sources, have resulted in green and ESG-linked financing becoming an increasingly relevant source of funding for the mining sector. A growing array of innovative debt products is available to finance a wide variety of green projects which can help mining companies meet their sustainability targets and comply with industry initiatives and regulatory requirements.
Further, they can provide mining companies access to capital sources not otherwise available (i.e. dedicated green and ESG capital pools), lower funding costs, more certain paths through investor credit approval processes, and improved reputations for green and socially-responsible business practices.
Partner Cynthia Urda Kassis, counsel Jason Pratt and Mehran Massih and associate Augusto Ruiloba authored two articles on this topic, one published by the Mining Journal, titled “ESG Loans a New Source of Mining Finance,” which is addressed to the mining sector specifically, and another published by Project Finance International, titled “Green and ESG Loans – Emerging Trends,” which is a more in-depth article that addresses green/ESG-linked financing generally.
As the world emerges from the current pandemic, we expect that there will be a return to continued robust growth of the green finance market.