The climate transition is entering a critical phase. As we approach 2030, the window to achieve the interim greenhouse gas (GHG) emissions reduction targets for that year is rapidly narrowing. While many companies have made ambitious carbon-neutrality pledges, keeping global temperature rise to 2°C—or ideally 1.5°C—remains a highly challenging scenario. A significant financing gap persists in meeting climate goals, particularly when it comes to investments in the climate transition.
Reaching these targets will not be possible if resources are directed only toward low-carbon sectors. Focus on energy and resource intensive sectors, which play a key role in the economy, is essential to achieving climate objectives.
In Latin America and the Caribbean (LAC), some of the highest GHG-emitting sectors include manufacturing, mining, energy production, and agriculture—all of which are also key drivers of economic growth [1]. These sectors play a key role in achieving the countries’ Nationally Determined Contributions (NDCs). Consequently, governments are likely to develop climate regulations targeted at these industries, making them more susceptible to transition risk.
The transition of these sectors is generally more complex in emerging markets such as LAC, given a volatile financial context, lack of local technologies, and regulatory frameworks that are still under development. While the region has made progress in raising its climate ambition, a significant gap in capital mobilization remains toward the sectors facing the greatest decarbonization challenges.
What Can You Expect From This Series?
This series analyzes the sectors that account for the largest share of GHG emissions in LAC, with a focus on their dual role as engines of economic development and focal points for decarbonization. Each publication will analyze emission sources, transition strategies, and the financial, regulatory, and technological challenges that define these sectors, while highlighting emerging opportunities for sustainable growth.
Drawing on insights from regional leaders, the series will feature up-to-date data, and international best practices.
We begin with the mining sector—a cornerstone of the global energy transition—in which LAC plays a pivotal role as a leading supplier of critical minerals such as lithium, copper, and nickel. Yet, despite its strategic importance, the sector remains highly exposed to both climate and social risks.
Mining Sector Overview
Mining accounts for between 13% and 19% of foreign direct investment in the region [2]. The region also produces around 40% of the world’s copper and 35% of global lithium output. These industries are critical to the economies of countries such as Chile, Peru, Mexico, Argentina, and Brazil, where they represent on average around 3–4% of GDP. Chile and Peru, in particular, stand out, with mining representing approximately 6–7% of their national GDP [3].
Beyond its current economic importance, LAC is estimated to have a development opportunity of around USD 50 billion per year through 2050, driven by rising demand for minerals required for decarbonization—particularly copper. These opportunities include the investments needed to meet NDCs, with a focus on the development of electric vehicles, renewable energy, power systems, and carbon capture and storage technologies [4]. This aligns with market expectations for materials, which highlights a structural shift in demand driven by the energy transition [5].
The mining sector accounts for approximately 5.9% of global greenhouse gas (GHG) emissions, being one of the top ten end-users of the energy sector [6]. While most of these are indirect emissions (Scope 3), direct emissions (Scopes 1 and 2) can vary considerably depending on the type of material extracted and the energy sources powering operations.[7]
Figure 1. GHG Emissions Breakdown from the Mining Sector
Mining companies have already begun their transition. Globally, one third of the industry—represented by members of the International Council for Metals and Mining (ICMM)—has committed to decarbonizing their operations by 2050. At the regional level, regulatory expectations around responsible mining are increasing, given the sector’s role in supplying critical minerals. For example, Chile [8] and Brazil [9] have incorporated mining into their sustainable taxonomies.
At the same time, investors are increasingly demanding verified information on companies’ carbon footprints and their transition strategies. In this context, initiatives such as the Transition Pathway Initiative (TPI) evaluated 31 mining companies worldwide and found that 19% already have a defined transition plan integrated into their corporate strategy, while 65% are in the process of developing one [10].
According to Pablo Contreras, Head of Climate Action at CODELCO, “For the mining industry, the energy transition is core. One of our key workstreams is climate action, which includes various commitments and management mechanisms such as carbon footprint reduction and adaptation. In line with this, Codelco has also advanced in decarbonizing its energy matrix by securing 100% renewable energy supply contracts by 2030.”
Latin American mining companies are set to play a pivotal role in the decarbonization pathway, as the region accounts for a significant share of global copper and lithium production—40% and 35%, respectively [2].
How To Decarbonize the Mining Sector?
Opportunities
There are multiple opportunities to decarbonize mining operations that are both financially and technologically viable. Current efforts mainly focus on decarbonization of the operations through investments in renewable energy, circular economy practices, and nature-based solutions.
Marcela Boccheto, Climate Change and Sustainability Integration Senior Executive at Anglo American Chile, explained: “As part of our Sustainable Mining Plan, launched in 2018 and led by our Board across the entire group, Anglo American established climate goals to achieve Scope 1 and 2 emissions reductions by 2030, and to reach carbon neutrality across our operations by 2040. The company is actively seeking commercially viable technologies to advance the replacement of fossil fuels, with a particular focus on addressing Scope 1 emissions. Since 2021, our operations in Chile have been powered by 100% renewable energy, and we have also secured renewable energy supply agreements in Peru and Brazil.”
In Latin America, this type of strategy is particularly feasible given the high share of renewable energy in the region’s energy mix and the openness to investment in clean energy.
Additional opportunities lie in the circular economy. Metals such as copper and steel are fully recyclable, and promoting a circular system creates opportunities to reduce mining waste, mitigate the environmental impact of raw materials, and develop secondary markets, while optimizing resources and extending the lifespan of materials. For instance, up to 19% of copper demand in Latin America could be met through recycling scrap copper from end-of-life products [11].
Barriers
Implementing these initiatives entails additional costs, as they require substantial capital investment to modernize or replace existing machinery. Yet, market willingness to absorb these costs remains limited: more than half of customers are unwilling to pay a premium, and only 11% would consider paying extra for materials certified as low-carbon [5].
Adding to this challenge, many of the required technologies are still in early stages of development, lacking maturity and scalability for widespread adoption. Nonetheless, the sector is actively working on solutions—such as green hydrogen and electric machinery or transport—that could eventually achieve scalability and financial viability. For now, their integration into decarbonization strategies should be considered part of a longer-term transition plan.
As Nicolás Arriagada, decarbonization specialist, from Anglo American Chile noted: “For a decarbonization strategy in mining to move forward, it must be backed by a clear business case. Transitioning to an electric fleet, for example, makes sense due to cost savings. But when we consider the next steps, many options are still not financially viable. The real question is: how much more are we willing to pay for more expensive energy sources, such as biofuels or hydrogen? These are the trade-offs we are evaluating today.”Similarly, Alejandro Sanhueza, Vice President of Finance from CODELCO explained that: “Identifying or classifying green projects in the mining sector is not always straightforward: some machinery may be less polluting, but the environmental benefits are not immediately evident.”
How Can Mining Companies Finance the Transition?
Currently, the main sources of financing for mining projects come from companies’ own capital, project finance, bank loans and plain vanilla bonds. At the global level, the issuance of thematic bonds by mining companies remains relatively low and in LAC are only a few companies issuing thematic bonds. However, there is potential for the sector to enter the thematic bond market as a way to finance the climate transition.
While CFOs in the industry noted that issuing thematic debt does not currently offer a clear cost advantage – investors increasingly recognize and assign value to companies that demonstrate credible and well-defined transition strategies. Within the thematic bond market, certain frameworks align closely with the characteristics and transition needs of high-emitting sectors, enabling mining companies to articulate a coherent narrative around their role in decarbonization.
Two narratives that can be explored are:
1. Green Enabling Projects:
The International Capital Market Association (ICMA) has published new guidance on how to finance activities essential for green value chains, underscoring the need for clearer frameworks to channel capital to transition-enabling activities. ICMA’s 2024 guidance on Green Enabling Projects highlights key sectors critical to the transition, defining these projects as integral parts of a Green Project’s value chain.
For mining, lithium extraction, for example, can qualify as a Green Enabling Project because of its central role in renewable energy generation [13]. To qualify as a Green Enabling Project, an activity must demonstrate that it is essential to the value chain of a Green Project, avoids long-term carbon lock-in, delivers clear, quantifiable, and attributable environmental benefits, and effectively mitigates adverse environmental and social impacts. [14]
2. Climate Transition:
In its Climate Transition Finance Handbook, ICMA defines the key elements of a credible transition framework. These include a climate transition strategy aimed at enabling the issuer’s GHG emissions reduction in line with the Paris Agreement; alignment with the issuer’s environmentally material business activities; reliance on science-based targets; and transparency. The Climate Transition label may be applied to green or sustainable projects that contribute directly to an issuer’s decarbonization strategy, or to sustainability-linked bonds (SLBs) where one or more KPIs monitor GHG emissions or related performance indicators.[15]
To build investor confidence and mobilize transition finance effectively, companies must present credible, science-based transition plans supported by independent verification from external reviewers or rating agencies. These plans should include measurable targets, interim milestones, and transparent capital alignment with net-zero pathways. Such rigor helps mitigate greenwashing risks and reinforces market discipline, ultimately enhancing long-term value.
CFOs will be central by aligning financing mechanisms with decarbonization roadmaps, ensuring that sustainability commitments translate into viable strategies. Their role will be key in demonstrating the financial viability of transition projects, communicating value to investors, and embedding decarbonization into long-term corporate planning. Ultimately, the credibility of the transition in sectors such as mining will depend not only on technological innovation, but also on how effectively financial strategies are mobilized to support systemic transformation.
Conclusion
Climate finance needs a new narrative for high emitting sectors. To date, much of thematic financing has been directed toward low carbon emitting industries, leaving behind those where the transition is most complex but also most impactful. For the mining sector, thematic bonds with a transition label or a green enabling narrative can be designed to enable a credible pathway toward decarbonization. By adopting this pragmatic approach, investors and mining companies can help close the existing financing gap.
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Gabriela Sepúlveda is a sustainability professional with over 12 years of experience in the financial sector, focusing on sustainable finance, risk management, and strategic planning. Since April 2024, she has served as a professor of Sustainable Finance at Tecnológico de Monterrey, where she develops and teaches courses on ESG principles, regulations, and methodologies. Previously, she was Associate Director at Sustainable Fitch, where she analyzed ESG-labeled debt, issued Second Party Opinions (SPO), and led research on sustainability trends across Latin America. From 2019 to 2021, Gabriela worked as Investor Relations Manager at Banregio, overseeing financial reporting, investor communications, and strategic initiatives. She holds a Bachelor’s degree in Economics and a Master’s in Corporate Social Responsibility from Universidad Regiomontana, a Securities Analysis certification from IEB (Madrid), and an ESG specialization from the Corporate Finance Institute.
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References
[1] IDB (2024). Green or Growth? Understanding the Relationship between Economic Growth and CO 2 Emissions. Available here.
[2] IEA (2023). Latin America’s opportunity in critical minerals for the clean energy transition. Available here.
[3] IDB (2024). Recursos de la minería: Una oportunidad para aumentar la recaudación y financiar la transición verde. Available here.
[4] IDB (2022). Apalancando el Crecimiento de la Demanda en Minerales y Metales por la Transición a una Economía Baja en Carbono. Available here.
[5] McKinsey (2024). Global Materials Perspective 2024. Available here.
[6] WRI (2024). Where Do Emissions Come From? 4 Charts Explain Greenhouse Gas Emissions by Sector. Available here.
[7] ICMM (2025). Decarbonizacion. Available here.
[8] Chilean Ministry of Finance (2024). Taxonomía de Actividades Económicas Medioambientalmente Sostenibles de Chile (T-MAS). Available here.
[9] Brazilian Ministry of Finance (2023) Taxonomia Sustentável Brasileira. Available here.
[10] Transition Pathway Initiative (2025). TPI Global Climate Transition. Available here.
[11] International Copper Association (2023). Cobre: El camino hacia el Net Zero. Available here
[12] CEPAL (2023). “Sustainable bond issuances in international markets, 2014–2022:
characteristics, trends and greenium in Latin America and the Caribbean” Available here.
[13] ICMA (2024). Green Enabling Projects Guidance. Available here.
[14] Sustainable Fitch (2024). Green Enabling Project Guidance Broadens Definition of Sustainability. Available here.
[15] ICMA (2024). Transition Finance in the Debt Capital Market. Available here.