Last October, the Canadian Federal Government announced its plans to deliver ‘made-in-Canada’ sustainable investment guidelines, as well as mandatory climate-related financial disclosures for large, federally-incorporated private companies. These disclosures are designed to help investors better understand how large businesses are thinking about and managing risks related to climate change, ensuring that capital allocation aligns with the realities of a net-zero economy.
This is a huge step toward developing a sustainable finance taxonomy in Canada to identify “green” and “transition” investments, building on the foundational work of the Sustainable Finance Action Council (SFAC) – work that involved many of Canada’s leading financial institutions over the last couple of years, and is aligned with the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD).
However, as we take this important step forward, we are missing a critical opportunity: circular finance. Unlike other countries that have integrated guidelines for circular investments into their sustainable finance taxonomies and efforts, Canada’s plans include no such provisions. As a result, we could end up leaving money on the table that could be powerfully leveraged to advance not only net-zero targets, but socio-economic, biodiversity, and pollution reduction goals as well.
Embracing the circular economy presents an opportunity for financial institutions to lead the charge in driving down GHG emissions while simultaneously delivering on other environmental and socio-economic imperatives. International players are already moving in this direction.
By adding a circularity lens to their lending and investment activities, financial sector stakeholders in Canada can tackle climate change while creating long-term value—not only within their portfolios but for society as a whole. As Canada’s sustainable finance agenda moves from theory to action, this is the moment to open the door for a circular economy.
Read more in our latest blog here.
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