Measure for Circular Economy Financing

In recent years, the world has seen a new breed of investors who care about the impact their investment has on the environment and social wellbeing.  As this trend is increasingly hitting mainstream, a new sub-trend has emerged by an even more focused type of investors whose investments are focused on “systems” and “circular economic” outcomes.

These investment strategies require new innovative metrics that measure the impact of investments across environmental, social and economic performance areas.

The Yorth model recognizes Restorative Development as the cornerstone and a key foundation in a circular economy.  We also recognize that understanding the synergistic relationships between all parts in the system are important for circular economic planning and investment principles.  This is a cornerstone in our metrics and sustainability financing tools.

Profit vs Equity

When measuring return on investment (ROI) in current economic systems, we do not price externalities.  Consequently, many investments made today produce a negative system return on investment (SROI) while generating ‘profit’ for the investor.  We can show how and why that happens and how it makes our economies lose equity over time.

We can further explain how certain investments and strategies can make a seemingly prosperous business landscape become volatile and less resilient.  Sadly, many sustainability investments produce a negative system ROI still today.

The finance team at Yorth set out to create innovative models that qualify investments as sustainable or circular. The outcome is a comprehensive model that can measure and report on the exact level of sustainability of investments as it relates to the investment itself and to the ecosystem of which the investment is a part of.

Some examples include:

  • Infrastructure development projects
  • Evaluation of corporate investment strategies
  • Evaluation of infrastructure plans
  • Evaluation of economic development strategies
  • Evaluation of Master Plans
  • National or regional circular economy strategies
  • Product lines and supply chains
  • Material reclamation and repurposing programs
  • A micro economy or an entire economic system
  • Circular economy bonds / green bonds / social Bonds

The valuation process produces a report that includes a risk assessment, SWOT analysis, and the key actions required for successful circular economic qualification.

The model exposes the risks and opportunities of various financing  pathways and opens the door for impact investors to connect with investments that truly make the world a better place for life and work.