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 financing models that can measure and report on the exact level of sustainability in investments and strategy plans that also include systems accounting, ROI + Equity reporting and system-risk analysis based on conventional, sustainable, and circular values.
Some examples include:
- District Development Projects
- Corporate Investment Strategies
- National or Regional Circular Economy Strategies
- A Product line or Supply Chain
- Material Reclamation Programs and remanufacturing
- A Micro Economy or an entire Economic System
- Circular Economy Bonds / Green Bonds / Social Bonds
The valuation produces a model and a roadmap that includes the key foundations and actions required for successful sustainability and circular economy financing programs. The model highlights the risks and opportunities in 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.