Novel financing methods and new government incentives could stimulate heightened investment in Canada's sustainability industry, according to speakers at the GLOBExCHANGE conference.

Responding to increasing funding challenges and outright hostility to the sustainability movement from some sectors, panellists at the Toronto event outlined both the problems and some potential solutions. 

Spending on innovation in recycling technology can be encouraged with higher landfill taxes, policies that push plastic producers to increase recycled content, and banning construction waste in dumps, speakers at a circular economy session suggested.

Securing the initial funding via philanthropy and catalytic capital, and more investor education on sustainability can help overcome a reluctance to invest in unfamiliar sectors, panellists discussing innovative funding methods agreed.

Canadians are, generally speaking, risk averse, Keith Ippel, managing director of Vancouver-based Spring Impact Capital, said at the session on innovative funding methods.

But he also observed a breaking of the dam as of late: “We’re starting to see movement into blended finance, into catalytic capital, so different forms of investing, different approaches.” Canadians are becoming more comfortable with investing “for sustainability and for financial returns at the same time.”

Philanthropy and catalytic capital

Though it makes up a small portion of climate funding, well-targeted philanthropy could be “the early dominoes” unlocking a chain of public and private investment, noted Eric Campbell, the executive director of the Clean Economy Fund. The Toronto-based organization advocates for a higher flow of philanthropic funding toward climate solutions.

He gave the example of Accelerate, an industry alliance of the zero-emission vehicle sector which pushed for multibillion-dollar investments into electric vehicle and battery manufacturing in Canada. The Ivey Foundation contributed funding for Accelerate.

Nine Canadian family foundations that pledged $405 million for climate action in November 2024 are another example.

Canadian philanthropists are becoming increasingly excited to de-risk climate investing, according to Joanna Klimczak, the senior director of Canada and the U.S. for New York City-based CREO Syndicate. 

CREO, which has a goal of investing US$100 billion into decarbonization by the end of 2025, is tapping into capital from asset owners, insurance companies, pension funds and ultra-high-net-worth families, and working with families to de-risk investment into green solutions.

Such steps are providing capital “that is willing to lose it all” toward unproven solutions that have potentially large environmental payoffs, such as nuclear fusion. Another is enabling catalytic capital, which eases investments for future investors with moves like taking a first loss tranche or enhancing the creditworthiness of a deal.

A need for better storytelling and education

In addition to the capital, Canada’s investors need more awareness about the sector, speakers said.

“We don’t see as much conversation where advisors are coming in and explaining impact investing . . . That’s probably where we’re seeing people are the most stuck for us, that education gap for retail investors,” James Dick, a senior sustainable investment associate at Genus Capital Management, said. 

Genus, a Vancouver-based investment fund that offers sustainable and fossil-fuel-free funds, opened an office in Toronto in 2024 to address this information gulf.

Ippel praised CREO’s storytelling through publicizing its successful deals with research studies and market surveys, which outline the movement in the sector and examples of technologies being adopted.

“I think it’s very important for us to really put these case studies, these stories out there” to show individuals and family offices “they’re not alone,” he said.

Education clears up any possible misunderstandings about financing mechanisms in the sector, Klimczak said.

Incentivizing a circular economy in Canada

At a separate session on strengthening supply chains through circularity, panellists discussed how companies can be pushed to incorporate more reuse and recycling into their business models.

A ban on construction waste in landfills is one solution pitched by David Messer, director of the Climate Smart Buildings Alliance, an industry organization advocating for low-carbon solutions. Such policies are already in place in British Columbia and Nova Scotia, he said, and the LEED green building certification already considers waste diversion in its grading.

Such a policy will incentivize businesses to adopt on-site collection of materials, which EllisDon is implementing in B.C. through its partnership with Danish company Rockwool.

“A lot of that is driven by regulations those companies have to follow in the countries where they come from in Europe, which then translate over here into more business models,” he said.

A higher landfill tax on par with Europe was suggested by Michael Zabaneh, the Retail Council of Canada’s vice-president of sustainability. Higher fees drive “more innovation, more collaboration” into circular economy solutions, he said. 

Other recommendations he gave included a tax on companies that fail to meet a recycled content minimum for plastic packaging, and relaxing taxes on refurbished goods as Sweden did in 2020.

Call for more producer responsibility laws

Zabaneh highlighted extended producer responsibility policies which make non-recyclable options the most expensive choice. Conversely, low fees for producers using highly recyclable plastics would motivate businesses to use these materials.

U.S. companies making polypropylene, a plastic commonly used to make yogurt containers, invested in development of an optical sorter to assist in recycling because of these limitations, he said.

The U.S. threat of tariffs on all Canadian exports, which includes Canadian garbage and scrap steel, will open an opportunity for uplifting the circular economy at home, Zabaneh answered in response to an audience question.

“I would challenge the government to close the border on exporting our garbage. I challenge them to say, ‘This is an opportunity for us to develop our local economy,’”