Nordic mining: ESG drivers reshape sector operations

The Nordic mining sector plays a strategic role for the EU’s green transition, providing essential inputs for many supply chains. As demand increases for minerals, the industry faces mounting pressure to balance operations and expansions with environmental, social and governance (ESG) factors. 

Nordic mining companies are responding proactively, leading in technological innovation and setting high standards on climate, nature, human rights and working conditions while securing EU supplies of vital minerals and materials. 

A rapidly evolving regulatory landscape 

While the EU Critical Raw Materials Act (CRMA) presents clear business opportunities for the EU mining sector, other regulations also pose challenges:

• EU Emissions Trading System (ETS) and Land Use, Land-Use Change and Forestry (LULUCF) regulation is putting constraints on operations, assets, costs and available mining areas.
   
• Corporate Sustainability Reporting Directive (CSRD) and EU Nature Restoration Regulation introduce new compliance requirements, potentially increase reclamation reserve funds and may limit operational flexibility.
   
• Corporate Sustainability Due Diligence Directive (CSDDD) and EU Battery Regulation drive the need for enhanced transparency and coordination across end-to-end supply chains and a focus on EU domestic strategic raw material capacities. 

These regulations require companies to develop robust ESG strategies. On average, Nordic mining companies are well-positioned to adapt to regulatory changes. They are generally: 

• Familiar with environmental reporting and KPIs due to already extensive environmental compliance reporting
   
• Used to lifecycle planning as permits typically require mining site reclamation plans
   
• Enabled to decarbonise and electrify operations due to low-carbon and stable electricity grids in the Nordics

Technological development opportunities 

Technological innovation is paving the way for the sector’s adaptation, profitability and growth:

• Substantial reductions in operational carbon footprints are expected through the electrification and automation of mining vehicles and processes. 
   
• Advanced technologies such as machine learning, sensors and drones can enhance decision-making, precision in ore targeting and environmental oversight.
   
• Optimising the recovery processes for complex tailings – the residual material left after extraction – can improve both operational efficiency and environmental performance.

Managing physical climate risks in operations and supply chains 

Physical climate risks present direct operational challenges to Nordic mining operations and transportation. Flooding threatens infrastructure, particularly tailings facilities. Such events can compromise containment systems, potentially leading to widespread environmental hazards. Droughts can hinder proper processing of ores and lead to higher concentrations of metal discharges. These physical climate impacts emphasise the need for comprehensive risk management strategies that span both operations and supply chains.

Proactive measures: the Nordic mining sector’s sustainability work 

Nordic mining companies are advised to prioritise several key areas addressing sustainability topics:

1. Environmental stewardship: Mitigate climate and environmental risks by reducing emissions and capturing carbon, optimising water usage, minimising waste and protecting biodiversity. Predicting, tracking and analysing disruptive events, such as heavy precipitation and floods, enhances operational continuity and decreases risks of environmental spills.
    
2. Social responsibility: Manage financial and reputational risks by respecting human and indigenous rights. Engage with communities, for example by seeking free, prior and informed consent, and implementing benefit-sharing mechanisms.
    
3. Supply chain resilience: Address supply and revenue risks by evaluating cross-border trade flows to maintain supply chain stability amid changing regulatory, geopolitical and climate conditions.

These initiatives demonstrate the sector’s commitment to responsible practices and long-term sustainability. Already now, 83% of Nordea’s lending exposure to the mining sector is covered by greenhouse gas (GHG) reduction targets, with 61% covered by a Science Based Targets initiative (SBTi) validated GHG reduction target. 

Chart 1: Greenhouse Gas (GHG) reduction targets in Nordea mining exposure

At Nordea, we support the climate transition of the Nordic mining sector by offering a range of solutions and products to our large as well as small- and medium-sized corporate customers.