Australian miners face funding risks as ESG laws fall short of global standards with Indigenous consent and biodiversity the biggest hurdles

When global lenders assess mining projects, it is no longer enough to meet Australian legislation – financiers are demanding alignment with international ESG standards, and the gaps are costing companies time and money.

Diane Dowdell, executive consultant at SLR Consulting, has spent more than two decades advising constructors, operators, investors, and lenders on the environmental and social risks that can make or break a project. Her work spans Australia, Europe, and the Americas, and her current role focuses on ESG due diligence for projects seeking debt financing, equity investment, or acquisition.

Speaking at the AusIMM Critical Minerals Conference in Perth, Diane emphasised that Australian companies cannot assume domestic compliance is sufficient when it comes to attracting international capital.

“I work with European lenders and original equipment manufacturers,” Diane explained. “When I’m engaged to audit mining and refining companies, the benchmark isn’t just local law. It’s global standards like the Equator Principles, IFC Performance Standards, and independent frameworks such as IRMA.”

The tension between these frameworks and Australia’s regulatory settings is now a defining factor in project finance.

Volatility in ESG

Diane opened her talk by noting the volatility in ESG discourse, particularly over the last 12 months.

“In the United States we’ve seen pushback – debates about whether ESG is necessary at all, with claims it adds cost without value. But that hasn’t been mirrored in Europe,” she said.

“European markets are moving in the opposite direction. They are reinforcing commitments to ESG, updating legislation, and demanding greater transparency in sustainability reporting and due diligence. For Australian projects supplying into Europe, those standards matter.”

This divergence means Australian companies face growing lobbying pressure at home while simultaneously being judged against far stricter overseas frameworks. The result is uncertainty – a key factor influencing investment decisions.

“When approval processes take longer, when costs rise because baseline work wasn’t done early, or when lenders perceive Australia as slipping down the ranks of safe jurisdictions, it has real consequences for project viability,” Diane said.

Equator Principles and global lenders

For companies seeking finance, understanding the different types of lenders and their obligations is crucial.

Commercial banks that have adopted the Equator Principles must ensure their lending practices align with ten sustainability standards. These include robust safeguards for human rights and environmental protection. Countries are classified into designations – “safe” jurisdictions face lighter scrutiny, while higher-risk countries trigger more stringent requirements such as the application of all eight IFC Performance Standards.

“Australia is generally considered safe,” Diane noted. “But we’re seeing more European lenders insisting on full IFC reviews for projects here. That’s a sign of changing expectations.”

Government lenders, she added, can accept higher risk but are bound by public benefit obligations – taxpayers expect clear social and environmental outcomes in return for financing. OEMs, meanwhile, often prefer independent standards such as IRMA because of their diverse stakeholder governance.

Disconnect one: Indigenous rights

The first major disconnect Diane highlighted is around Indigenous peoples’ rights, covered by IFC Performance Standard 7.

“One of the core principles is free, prior and informed consent, or FPIC,” she said. “It gives Indigenous communities the right to give or withhold consent over activities affecting their land, resources, or livelihoods.”

Australia’s Native Title system, however, does not enshrine FPIC. It provides a mechanism for compensation and consultation, but not a veto right.

“In my research on the junior mining sector, I saw companies telling investors that because they held pre-Native Title tenure, they had no obligation to engage with traditional owners,” Diane recalled. “From a lender’s perspective, that isn’t good enough.”

If a due diligence review reveals that a company has not developed genuine relationships with Indigenous communities, the project can be delayed while additional engagement is undertaken – often at the worst possible time in the funding cycle.

“You can’t turn up three months before a financing decision and start building trust,” Diane cautioned. “That work takes years. If it isn’t planned early, it can stop you accessing capital.”

Disconnect two: Biodiversity standards

The second area where Australia diverges from international benchmarks is biodiversity.

Under IFC Performance Standard 6, projects that impact critical habitat must deliver a net gain in biodiversity outcomes, while impacts on natural habitat must at least achieve no net loss.

“In Western Australia, offsets policy doesn’t require net gain,” Diane said. “A company might think it is compliant because it has met state legislation, but when we review against IFC standards, it falls short.”

She added that biodiversity studies also face issues of shelf life.

“Too often, companies do baseline work, shelve the project when market conditions shift, then dust off studies seven years later. By then the data is out of date. Lenders won’t accept it, and the work has to be repeated. That creates cost and delay.”

Timing is everything

A recurring theme in Diane’s presentation was the need to integrate ESG considerations early in project design.

“There are very few environmental issues that are true showstoppers,” she observed. “What stops projects is poor planning and late engagement.”

Identifying no-go areas, building relationships with Indigenous communities, and designing offsets that meet international requirements all take time. Waiting until after a feasibility study is completed or finance is sought can leave companies scrambling.

“These are inputs into project viability, not hurdles to clear after the fact,” Diane stressed.

Financing implications

For investors and lenders, ESG alignment is no longer optional. Diane pointed to the upcoming Corporate Sustainability Due Diligence Directive in Europe, which from 2026 will require large companies to map and manage supply chain risks.

“That means European customers will expect Australian producers to meet international standards,” she said. “If you can’t demonstrate that, you may not be able to sell into those markets.”

She also underlined that loan agreements increasingly tie disbursements to ESG compliance.

“Failure to close out biodiversity or Indigenous engagement obligations can mean you don’t get access to funds, even after the loan is approved,” Diane explained. “It’s that serious.”

Research insights

Diane’s perspective is informed not only by her consulting work but also by academic research. She recently completed a PhD at the University of Queensland examining the junior mining sector and critical minerals.

Her findings confirm that smaller companies often underestimate the importance of social responsibility in financing.

“Juniors tend to think in terms of getting tenure and moving quickly to exploration,” she said. “But financiers are looking at the broader picture – how will this company manage community relationships and environmental obligations over the life of the project?”

This disconnect between corporate mindset and lender expectations, Diane argued, is one of the biggest barriers to accelerating project delivery.

Lessons for proponents

For mining companies, Diane’s message was practical.

• Know your lenders. Understand whether you are dealing with a commercial bank, a government agency, or an OEM, and what standards they apply.
• Plan early. Build Indigenous engagement and biodiversity work into project design, not as late-stage compliance exercises.
• Maintain currency. Update baseline studies regularly so they remain credible when market conditions shift.
• Think globally. Meeting Australian law may not be enough if your product is destined for Europe.

“Ultimately, it’s about integrating ESG into the core of your project strategy,” Diane concluded. “If you treat it as an add-on, you risk delays, higher costs, or failure to secure funding. If you plan for it early, you strengthen your project and your market position.”

A changing investment landscape

As ESG expectations diverge globally, the pressure on Australian projects is only set to increase. Europe’s regulatory push is shaping supply chains, while US debates highlight how politicised ESG has become. In this environment, companies that aim only for domestic compliance may find themselves left behind.

Diane’s advice was clear: ESG is not going away. For projects seeking international finance, aligning with global standards is no longer just good practice – it is essential for survival.