Development finance and critical minerals: Opportunities for supporting sustainability and inclusion through patient capital

“Before critical minerals became critical, they were first minerals.” This was shared by a participant in the workshop on development finance institutions and transition minerals. Learning from the lessons of past mineral “boom and bust” cycles, the “resource curse" literature highlights the role of institutions in mitigating negative socio-economic and political outcomes (Bebbington et al., 2018). Robust environmental and social risk management (ESRM) frameworks are posited as tools that can, if effectively implemented, contribute to more sustainable and inclusive development. ESRM frameworks are institutional processes that development finance institutions have developed to ensure the economic, social and environmental sustainability of the projects they support, including project selection criteria, stakeholder consultation processes, grievance mechanisms, and other institutional processes. Yet beyond the ESRM challenges that have emerged from previous booms, the ongoing critical mineral boom is associated with distinct geographies, rapid speed of expansion and, in some cases, newly-commercialized extraction techniques (Carr-Wilson et al., 2024). While many environmental and social issues remain constant, these evolutions necessitate refocused attention on ESRM governance in different contexts.