Some of Canada’s largest financial institutions and leading circular economy experts have collaborated to launch Financing the Circular Economy: A Guidance Document for Canadian Financial Institutions. The publication was developed by Circular Economy Leadership Canada (CELC), in collaboration with United Nations Environment Programme Finance Initiative (UNEP FI) and Delphi, along with leading Canadian financial institutions (Coast Capital, Desjardins, National Bank of Canada, Scotiabank, and TD Bank), and with additional technical support from the Ivey School of Business (University of Western Ontario).
“Over the last year and half, we’ve been on a journey with our Canadian financial institutional partners to better understand the circular economy and its linkages to climate, nature regeneration, and social impact. This new Guidance Document provides a useful tool to help identify opportunities for lending and investing in the circular economy,” said Paul Shorthouse, Managing Director at CELC.
Canada’s financial sector engages with many stakeholders on environmental, social, and governance (ESG) issues and has worked to set and meet sustainable finance targets. Opportunities exist to augment current “green investment” criteria with additional strategies aligned with the circular economy that deliver economic and social benefits while addressing environmental challenges, including climate change, pollution, and biodiversity loss.
“As a federal financial cooperative and a social purpose organization, Coast Capital is committed to creating economic opportunities for people and businesses in Canada while supporting the transition to a low carbon economy,” said Roanne Weyermars, Vice President Public Affairs and Communications, Coast Capital. “Circular finance is a key lever towards a more inclusive and regenerative economy and this partnership demonstrates the coordinated effort required to build a better, cleaner future.”
Until now, Canada’s finance sector has not had a common definitional framework or clear guidance to help direct financing into circular economy solutions. Serving as a sector- and technology-agnostic tool, the Guidance Document provides harmonized definitions and criteria for evaluating circular economy projects and activities in order to support lending and investment decisions that can further contribute to sustainable finance targets and ESG goals. The Guidance Document is the first of its kind in Canada, and helps Canada contribute to the global circular finance dialogue, while harmonizing with similar international efforts on this topic.
“This guidance document is an important step forward for circular economy financing in Canada. By bringing together international best practice and local realities, this tailored circular activities categorisation system aims to support Canadian financial institutions in identifying circular opportunities, and inspire policymakers in incorporating circular solutions into the national sustainable finance framework,” said Peggy Lefort, Pollution and Circular Economy Lead, UNEP FI.
“Circular economy is an essential strategy in building a sustainable economic model. National Bank is proud to have helped develop this guidance document, which is accessible to everyone. It represents a key step in identifying contributors to the circular economy and will help stakeholders improve their understanding so they can provide better support to business,” said Barbara Kahle, Senior Advisor of Sustainable Development, National Bank.
This initiative contributes to the development of sustainable finance and investment taxonomies by offering clear definitions for the circular economy. Taxonomies are critical tools for creating clarity and confidence in sustainable investments and for attracting capital into low-carbon transition projects and priorities. The Financing the Circular Economy Guidance Document lays a foundation for future work in this important and emerging area of finance and investment.
“This report is an important tool for financial institutions to better understand how we can support our clients in building a circular economy. Having a common framework with clear definitions will help to ensure Canada is well-positioned to support the global dialogue in developing a more sustainable economy,” says Meigan Terry, Senior Vice President & Chief Sustainability, Social Impact and Communications Officer at Scotiabank.
The Financing the Circular Economy Guidance Document is the first output of CELC’s Circular Finance in Canada workstream, an initiative focused on accelerating investment into Canada’s circular economy. Learn more about this initiative and access the full publication at: circulareconomyleadership.ca
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Background:
The circular economy is a system where materials never become waste and nature is regenerated. In a circular economy, inorganic products and materials are kept in circulation through processes and strategies such as maintenance, reuse, refurbishment, remanufacture, and recycling, while organic materials are returned to the biosphere through processes such as composting. The circular economy tackles climate change and other global challenges, such as biodiversity loss, waste, and pollution, by decoupling economic activity from the consumption of finite resources.
The circular economy is based on three principles, driven by design: (1) eliminate waste and pollution; (2) circulate products and materials (at their highest value and for as long as possible); and (3) regenerate nature. Underpinned by a transition to renewable energy and materials, the circular economy is a resilient system that supports sustainable development.
The circular economy presents a multi-trillion dollar opportunity globally by maximizing the value of our materials and resources, while recapturing value from waste. One Canadian study, for example, found that a shift to circular economy practices in six sectors could reduce 4.9 million tonnes of waste, reduce 5 million tonnes of GHG emissions, generate 20,000 jobs, and improve profitability ($41 billion in additional revenue and/or cost savings).
Investments in circular business models, technologies, and infrastructure (e.g., product redesign, product-as-a-service systems, repair centres, reuse and recycling infrastructure, and much more) could unlock massive opportunities for achieving positive climate change, pollution, and nature regeneration outcomes.
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