Just transition in mining: fair or fail?

The energy transition will not succeed if the communities asked to deliver it are left behind. For investors, that is not just a social concern. It is a financial one.

The global shift to a low-carbon economy is an urgent necessity to prevent the worst impacts of climate change. According to the London School of Economics (LSE), the damages to the UK economy could cause disruption worth up to 4.1% of GDP [1]. While achieving net zero requires investment, for every £1 spent in the UK it is estimated that there will be £2 to £4 in benefits [2].

However, this monumental economic transformation must be both fast and fair. A just transition ensures that climate action supports an inclusive economy, protecting workers, communities, and human rights while avoiding the exacerbation of existing inequalities.

A just transition is a matter of financial materiality. When the social impacts and economic shifts of decarbonisation are overlooked, the resulting impacts can destroy shareholder value. For example, an indigenous community whose consent determines whether a mine can operate, meaning that without local approval, projects can be delayed or shut down entirely. Or a coal dependent town facing shrinking tax revenues and job losses, putting pressure on local economies and public services.

The energy transition will create enormous opportunities, but it will not feel fair by default. Some regions will lose jobs faster than new industries arrive. Some communities will bear environmental and social costs without seeing enough of the upside.

At Royal London Asset Management, we have a strong history of championing the just transition through active investor stewardship. We believe that integrating social risks and place-based impacts into decarbonisation strategies is critical for addressing systemic threats that impact long-term stability and value for our clients. Building on our learnings, we are now turning our focus to a sector at the foundation of the global energy shift: mining and minerals.

Transitioning out: the phasing out of coal

A critical component of achieving global climate targets involves "transitioning out" of highly polluting fossil fuels. In 2025, the share of coal power was overtaken by renewables for the first time [3]. However, this phase-out poses socio-economic risks for regions heavily dependent on employment in the coal industry.

Take the Mpumalanga province in South Africa, which accounts for 80% of the country's coal production and within which 68% of employment relates to the coal value chain [4]. Entire municipalities in this region rely on the coal sector not just for direct and indirect jobs, but for vital infrastructure such as roads and trainlines, municipal services such as the sale of water, and funding for local projects through corporate social responsibility programmes.

Decommissioning coal mines and power plants without comprehensive strategies for worker re-training or regional economic diversification – such as developing local renewable energy sites, agriculture, or eco-tourism – can lead to devastating economic instability. Many coal industry workers possess valuable, semi-skilled technical capabilities. Preserving these skills through targeted re-training and matching them to alternative sectors is vital to alleviate local social and economic disruption from the transition. For investors, poorly managed coal mine closures can create financial and reputational risk. Smart closure planning, such as through early and inclusive engagement and social safety nets such as worker retraining and community development and enterprise support can reduce both.

For investors, poorly managed coal mine closures can create financial and reputational risk

Transitioning in: the critical mineral boom

The world is rapidly "transitioning in" to a clean energy future. This transition is undoubtedly dependant on an increase in the supply of critical minerals such as copper, lithium and zinc. Without this, there won’t be the resources to manufacture wind turbines, solar panels, electric vehicles, and the data centres to support them.

For example, global graphite demand is expected to nearly double between 2024 and 2030 due to the need for batteries [5], while in the UK the Government’s Critical Mineral Strategy anticipates demand for lithium will increase by 1,100% by 2035 [6].

However, this rapid demand expansion brings profound social and environmental challenges. Crucially, half of the world’s transition mineral reserves are located on or near the lands of indigenous peoples [7].

Half of the world’s transition mineral reserves are located on or near the lands of indigenous peoples

The financial risks of failing to secure Free, Prior, and Informed Consent (FPIC) and establish meaningful community relations are increasingly evident. Real-life examples highlight the materiality of these issues:

These cases underscore that community consent, and human rights are foundational to operational stability.

Mining companies that proactively embrace just transition principles – such as establishing robust community development funds, supporting local enterprise, or exploring co-ownership and equity models with Indigenous communities – can successfully mitigate these risks and transform potential conflicts into shared prosperity.

What we expect from mining companies

Inclusive planning, fair negotiations, and respect for human rights are financially material to the success of the energy transition. We are committed to ensuring that the mining sector plays a responsible and proactive role in this industrial shift.

Since 2022 we have engaged with companies in the sector through our Net Zero Stewardship Programme. We have also been active participants in the Global Investor Commission for Mining 2030, helping to shape the future direction of the industry. And we are supporting the development of robust and transparent mine site sustainability audits through IRMA – the Initiative for Responsible Mining Assurance. 

Building on our history of stewardship and past engagement programmes we are developing a set of just transition expectations for the mining sector. Working with partners, these investor expectations will set clear, actionable guidance for our investee companies.

By insisting that mining firms embed social risk management, equitable negotiations, and community partnerships directly into their climate strategies, we can help drive an energy transition that is fast, fair, and financially sustainable for all.

1. What will climate change cost the UK? Risks, impacts and mitigation for the net-zero transition - Grantham Research Institute on climate change and the environment
2. Supplementary analysis of the Seventh Carbon Budget

3. Global Electricity Review 2026 | Ember

4. Just-Transition-and-the-Labout-Market-in-South-Africa.pdf

5. Global Critical Minerals Outlook 2025

6. Vision 2035: Critical Minerals Strategy - GOV.UK

7. Energy transition minerals and their intersection with land-connected peoples | Nature Sustainability

8. 2024 Transition Minerals Tracker

9. International court rules against Guatemala in a landmark Indigenous and environmental rights case | AP News

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