Latin America&Caribbean Energy Transition 2025

Energy transition goal: Industrial competitiveness. Problem description: LAC holds some of the world’s largest reserves of transition minerals, indispensable for renewable energy technologies, EV batteries and grid infrastructure. Yet extraction has historically caused severe socio-environmental impacts: water scarcity, deforestation, biodiversity loss and pollution. As of 2020, the region accounted for 310 mineral-related socio- environmental conflicts – 35% of all recorded worldwide. Solution description: The Organization for Economic Co-operation and Development (OECD), Adelphi and regional partners developed a responsible business conduct (RBC) framework for the LAC extractives sector. The approach emphasizes risk-based due diligence, stronger alignment with international human rights and environmental standards, as well as transparency mechanisms that integrate climate and conflict sensitivity into business models. RBC aims to: –Prevent adverse environmental and social impacts. –Improve trust and dialogue with local communities. –Support governments in strengthening regulatory oversight and social benefit-sharing. –Enable companies to maintain a “social licence to operate” in a context of rising global demand and climate urgency. Enablers used: Regulation and political commitment: OECD guidelines on RBC, integration into national mining policies and free, prior and informed consent standards under International Labour Organization (ILO) 169. Education and human capital: Knowledge-sharing platforms between communities, companies and governments; capacity-building for risk assessment. Innovation: Use of conflict-sensitive environmental management systems and water governance frameworks to reduce pressure on scarce resources. Financial Investments: Royalty earmarks for R&D (e.g. Chile’s Fondo de Innovación para la Competitividad (FIC), Colombia’s 10% R&D rule, Peru’s 20% “canon” for universities) to channel mining rents into sustainable development. Stakeholders involved: –OECD and Adelphi (framework development and research). –National governments of Chile, Peru, Colombia, Bolivia and Brazil. –Local communities, Indigenous and Afro-descendant groups. –Extractive companies (lithium, copper and nickel producers). –Civil society organizations and environmental defenders. –International buyers and investors in clean energy value chains. Outcomes achieved: –Growing adoption of risk-based due diligence processes in mining firms operating in LAC. –Policy debates in several countries linking extractives governance to climate and social stability. –Increased attention to free, prior and informed consent (FPIC) requirements for Indigenous peoples. –Recognition of RBC as a tool to de-risk supply chains and secure long-term investment in critical minerals. Exportable lessons: –Embed conflict-sensitivity: Critical mineral projects must integrate climate and water stress risks into early-stage planning. –Prioritize community rights: FPIC and genuine benefit-sharing are essential to avoid resistance and violence. –Use mining rents for diversification: Royalties and taxes should be reinvested into innovation, education and higher-value industries. –Corporate accountability builds trust: Transparency, due diligence and alignment with human rights frameworks are key to maintaining access to global markets.CASE STUDY 10 Responsible business conduct (RBC) framework for LAC (2023-ongoing)59 Energy Transition Readiness: Latin America and the Caribbean 31