Seizing a multi-trillion dollar opportunity

The circular economy promises to unlock massive opportunities — and solutions to some of our most pressing challenges. How can Canada’s finance sector open the door?

[This work] brings together international best practice and local realities to support Canadian financial institutions and inspire policymakers.

Peggy Lefort


Paul Shorthouse envisions a future where waste doesn’t exist. Instead, the head of Circular Economy Leadership Canada (CELC) imagines that products and materials are reduced, redesigned, reused, recycled, repurposed, or composted after we’re done with them. This “circular” approach radically reduces pollution and carbon emissions and creates new economic opportunities for businesses and communities.

And it’s not just a pipe dream. According to Accenture, the circular economy could represent a multi-trillion-dollar global opportunity by 2030. But creating and scaling this approach requires investment and access to capital. That’s why Shorthouse is championing circular finance: funds, investment, and lending tools explicitly targeted to circular businesses, projects, infrastructure, and activities.

Investing in circular undertakings isn’t just a smart way to tackle climate change and pollution. European research reveals that they lower investment risks and offer superior returns.

That’s because these enterprises are less affected by supply chain disruptions and less reliant on virgin resources to grow. At the same time, they’re prepared for a new wave of regulations anticipated in many countries, and they’re satisfying consumer demand for greater sustainability.

Coast Capital’s Roanne Weyermars sees this kind of investing as a natural fit for her credit union. “We’re dedicated to supporting our members to get financially ahead, working to ensure the transition to a low-carbon economy is socially just, and empowering the communities and businesses we serve to thrive in a low-carbon and circular economy,” she explains.

But because circular finance is a nascent concept in Canada, Weyermars and her financial sector colleagues had questions.

[This work] brings together international best practice and local realities to support Canadian financial institutions and inspire policymakers.

Peggy Lefort


Circular staircase

Defining circular finance in Canada

“When we started this work a year and a bit ago with the banks and financial institutions, they were just coming to the table to better understand what is the circular economy, what is circular finance, what are the trends, and what’s happening globally in this space,” says Shorthouse.

So in October 2022, CELC teamed up with partners — United Nations Environment Programme Finance Initiative (UNEP FI), Delphi, Ivey School of Business, Coast Capital, Desjardins, National Bank of Canada, Scotiabank, and TD Bank — to understand and define circular finance within the Canadian context.

It was no small undertaking. They interviewed experts and reviewed documents from a host of countries; drafted definitions and criteria for evaluating circular economy projects and activities; and sought input from a wide range of stakeholders and third-party reviewers.

In February 2024, that work culminated in the release of Financing the Circular Economy Guidance Document, a tool to help financial institutions identify opportunities for lending and investing in circular solutions.

According to UNEP FI’s Peggy Lefort, the document represents a big step forward for circular economy financing in Canada. “It brings together international best practice and local realities to support Canadian financial institutions and inspire policymakers,” she says. “At the same time, it harmonizes with international efforts and contributes to a global dialogue on circular finance.”

Now, Shorthouse is keen to build on those foundations. That means collecting better data to track how well companies keep material flowing within the economy — and what benefits that brings, including carbon emission reductions, nature protection, and diverse and inclusive jobs. It means integrating circular finance into the sustainable finance work that’s currently underway in Canada. And it means identifying policies to further de-risk circular investments.

“What gets me excited is the potential for this to really open the door to greater capital flowing into the circular economy and unlock the related opportunities and benefits,” he says.

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