Vital resources and critical raw materials are fundamental to the world we live in, yet their significance is sometimes underestimated. Throughout history, resources have been pivotal in shaping global events. As a key component of the energy transition, the materials transition has become an increasingly central topic in the world. Geopolitical challenges, the global economy's dependence on a small group of resource-rich countries and an increasingly loud cry for help to achieve the climate goals are three developments that make one thing clear: the materials transition is a dire necessity.
The importance of critical raw materials (CRMs) for the energy transition took center stage at COP29. With the demand for rare earth elements (REEs) and essential minerals - such as lithium, cobalt, and nickel - expected to skyrocket to support renewable energy and electric vehicle production, participants emphasized the urgency of securing sustainable, ethically sourced supplies. Geopolitical concerns, including supply chain dependencies on single countries like China or the Democratic Republic of Congo, and the environmental impact of mining activities were discussed as significant challenges to scaling up production sustainably.
Reports on unprecedented resource scarcity in critical materials like lithium and cobalt show that the global economy is facing not only rising demand but also significant disruption. Countries are re-evaluating their dependencies on certain materials, and companies are innovating to minimize waste and recycle more effectively. Moreover, the effects of resource extraction on ecosystems and communities have underscored the importance of sustainable practices.
From surging demand for scarce resources to breakthrough advancements in sustainable production, the challenges and opportunities around materials have become more apparent than ever. We stand at a pivotal moment: the choices we make today will shape the path for industries, economies, and ultimately, our planet's future. We recognize the materials transition as a key factor in securing both environmental and financial sustainability. By focusing on sustainable sourcing and adhering to regulatory frameworks like the EU’s Critical Raw Materials Act, we not only fulfill our ESG commitments but also position ourselves to capture long-term opportunities in sectors like renewable energy and green technologies. Supporting this transition is essential for delivering responsible and stable returns.
That’s why this past year, we dedicated our attention to the materials transition. It has been a year filled with collaboration, thorough analyses, and active engagement with partners, industry experts and thought leaders from around the world. Through these activities, we sought to gain a comprehensive understanding of what a sustainable materials transition means for both industries and investors alike.
As we look ahead, we are eager to share the knowledge and insights we have gained. In this report we share our research and learnings, offering a foundation to inspire meaningful action - not only within our organization but also among our peers and stakeholders - on this critical and timely issue.
Making the materials transition work is no walk in the park. Everyone needs to be on board, from governments to manufacturers, and from long-term responsible investors to NGOs. I call on all of us to take up our role.
Ronald Wuijster
CEO APG Asset Management
The paper is intended for research purposes only and should not be interpreted as investment advice.