4 Economic Development Tools for a Just and Circular Transition

The transition to a clean Canadian economy is a huge opportunity for many businesses – however, the shift risks leaving unprepared industries exposed and vulnerable. To ensure success, our businesses need to be able to recognize, capitalize on, and otherwise respond effectively to the challenges presented by this shift. It is also imperative to equip workers with the tools and knowledge they will need to navigate through the transitional period and beyond.

By adopting circular economy practices, diversifying workplaces, and leveraging other workforce transformation efforts, businesses and workers can excel while combatting climate-related economic risks. In this article, we pinpoint certain actions that businesses, workers, policymakers, and others such as economic development agencies could take to prepare for the transition. We lay out precedents and examples – including from the Vancouver Economic Commission – to show how economic development tools can facilitate the transition to a sustainable economy at scale. 

Before we delve into any tools and ideas about economic development, we invite you to consider economic development as a discipline: economic development generally refers to working with the business community to increase wealth, incomes, and jobs, as elegantly explained by Economic Development Winnipeg. Moreover, the Government of Canada’s definition of economic development states its purpose is to improve livelihoods and create prosperity for all. 

All economic development efforts should therefore reflect on and integrate our country’s collective responsibility to examine ecological, material, financial and social systems as we transition to our future economy. This includes implementing the United Nations Declaration on the Rights of Indigenous Peoples as a legal, moral, and political imperative in all activities. 

Build Resilience by Adopting Circular Economy Practices 

According to The World Economic Forum, transitioning to a circular economy has the potential to generate $4.5 trillion in additional global economic output by 2030. Adopting circular economy practices enables a business to better retain the value of their investments – for instance, their inventory and staff. It also allows a business to optimize for the fullest possible returns while securing sustainable inputs and revenues and also solidifying customer loyalty. 

“Transitioning to a circular economy has the potential to generate $4.5 trillion in additional global economic output by 2030.”

Additionally, shifting from the dominant linear economy to more regenerative practices will catalyze new employment opportunities for workers, including those from historically underrepresented and equity-deserving communities. These demographic segments include but are not limited to Indigenous, Black and people of colour (IBPOC or BIPOC), newcomers, and people with disabilities, many of which can offer specific contributions and wisdom related to circularity.

In “Returning to Circular Economies Rooted in Indigenous Values”, Galina Angarova writes, “Indigenous Peoples have sustained diverse and complex societies with circular economies over millennia without defaulting to the sort of replacement extractivism that some of today’s renewable energy options entail.” Cultures around the world practiced zero-waste living until the industrial revolution began to influence norms and material practices. 

“Widescale attempts to reshore select manufacturing and repair activities will create a demand for innovation from our business community and increase the need for data transparency between firms.”

In today’s globalized economy, making the most of what is already in use contributes to the relocalization of supply chains – a clear need, given how recent years exposed the extreme fragility of global supply chains on the Canadian economy. Widescale attempts to reshore select manufacturing and repair activities will create a demand for innovation from our business community and increase the need for data transparency between firms. If attained, these efforts could reward us with massive gains in local economic resilience – and provide for workers displaced from sectors with declining prospects in a net-zero economy. 

Account for Workforce Transitions while Diversifying Workplaces

In 2022, the Canadian Chamber of Commerce identified three main obstacles facing the business community: recruiting skilled employees (37%), shortage of labour force (36%), and retaining skilled employees (27%). It has been proven in other regions that the transition to a circular and decarbonized economy will create new jobs, which will put additional pressure on the already limited supply of skilled workers in Canada. 

“Increasing the diversity of leadership teams can lead to more and better innovation and improved financial performance while eliminating homogenous worldviews.”

Boston Consulting Group and Diversity in Sustainability suggest that increasing the diversity of leadership teams can lead to more and better innovation and improved financial performance while eliminating homogenous worldviews. A widely accepted tactic to help the labour shortage is to create more diverse and culturally inclusive workplaces: workers from equity-seeking groups represent an untapped workforce that faces numerous additional barriers to the economic opportunities offered to their mainstream counterparts. 

To do this, companies need to recognize that hiring individuals from either group may require consultation with employment support organizations and additional considerations throughout and beyond the hiring process. Workplace initiatives, such as targeted recruitment, unconscious bias training, mentorship programs, or partnerships with employment support organizations help companies to implement culturally safe and diverse practices in their workplace to ensure ongoing success for participation by the workers of the global majority. 

Indigenous knowledge can also prove valuable in today’s workplaces, such as taking a two-eyed seeing approach to business practices, by which we learn to incorporate the strengths from both Indigenous and settler ways of knowing in the pursuit of an equitable and prosperous transition to the future economy. 

4 Economic Development Tools to Increase Economic Resilience During the Transition

Over the last 25 years, the Vancouver Economic Commission (VEC) has utilized and refined a range of economic development tools to support the transformation to greater resilience and prosperity in Vancouver’s local economy. 

These tools can help to increase resilience during the economic transition by helping industries adapt and innovate new technologies, promoting inclusive and diverse workforce development and social adaptation, and championing new business models, research and development, and IP creation and retention in Canada. 

1. Business Retention, Expansion, Attraction (BREA)

Business retention, expansion, and attraction are considered the basic tenets and primary objectives of economic development. Applying the lenses of inclusive employment and circularity to conventional BREA activities provides a strategic framework for building economic resilience. 

Strategic business attraction is key to building economic resilience in any economy. For example, in Trail, BC, the economic development team branded the area “Metal Tech Alley” to represent the city’s burgeoning circular economy, which combines mining, metallurgy, industrial recycling, and IoT in a nearly closed material loop. The team conducted a material flow analysis to identify remaining gaps; the findings were used to create a strategic business attraction plan that recruits enterprises able to help close remaining material loops, create local jobs, and further enhance the prosperity of the community. 

Business expansion can be facilitated in part by helping operators draw from the full breadth of the available workforce, including workers with transferrable skills from declining industries and individuals who have faced barriers to employment in other industries or roles. 

2. Invest in Change 

Economic development includes activities that attract investment from within and outside a region to increase local prosperity. Initiatives that fall within this definition include direct and indirect venture support, investments into Indigenous-led economic development, and investments into workforce development and retention. By supporting training, up-skilling, equipment acquisition or access, and programs to facilitate B2B collaboration, governments can provide valuable scaffolding that supports the private sector in the transition to a zero-carbon and inclusive economy. 

“It’s equally crucial that workers from historically underrepresented groups (such as Indigenous workers, communities of colour, low-income populations, new immigrants, people with disabilities, youth, LGBTQ2S+) are considered for available jobs.”

The Government of Canada has invested millions of dollars into advancing a sustainable economy, such as through the training and up-skilling of Canada’s workforce, as outlined in the Sustainable Jobs Plan (2023). However, investing solely in workers currently in the workforce is not enough to bridge the labour and talent gap; it’s equally crucial that workers from historically underrepresented groups (such as Indigenous workers, communities of colour, low-income populations, new immigrants, people with disabilities, youth, LGBTQ2S+) are considered for available jobs. To ensure worker retention and longevity, these and, in fact, all workers should be provided access to tools such as mental health support, childcare options, and culturally safe workplace practices. 

Furthermore, it is vital that we invest in retaining Canadian-made IP to keep corporate wealth and individual wealth in the local economy. One exemplary initiative is the Government of Canada’s Net Zero Accelerator (NZA), which helps to stimulate wealth retention while ensuring Canada remains competitive in a net-zero economy. Parallel to government action, economic developers should also work to direct private capital to invest in solutions toward an inclusive, zero-carbon economy. 

 

For example, VEC, with support from several partners, created Angels for Climate Solutions, a program designed to catalyze the growth of climate technologies by empowering angel investors to increase the flow of early-stage capital to climate-focused startups. The program provides the winning venture with a sizeable investment. However, the greater impact is that many more investors are now trained to evaluate climate ventures for their potential to create a significant impact on climate mitigation and adaptation.

3. (Re)build and (Re)design Infrastructure 

For governments at all scales, investing in infrastructure is a common practice to bolster economic activity, particularly in response to economic downturns. It follows that applying the same lenses of circularity and supporting workforce transitions to leveraging infrastructure can create opportunities to increase economic resilience. 

“Funding infrastructure via public-private partnerships that include both expense and revenue-sharing with Canadian firms will help to generate and retain wealth in the local economy.”

In Canada, a pre-requisite of infrastructure projects is the recognition and respect for Indigenous rights, sovereignty, and self-determination, as well as implementing Free, Prior, and Informed Consent (FPIC) as the baseline when engaging Indigenous communities. Creating systems for stable revenue generation by Indigenous firms while investing in climate-aware infrastructure goes beyond the baseline. 

Funding infrastructure via public-private partnerships that include both expense and revenue-sharing with Canadian firms will help to generate and retain wealth in the local economy and, depending on the nature of the project, aid Canada in retaining the intellectual property of its own firms. Infrastructure builds also represent a significant opportunity to harness the power of procurement to favour circular materials and processes. 

Investment into physical infrastructure creates employment opportunities for workers, some of who will be transitioning from declining industries or be from diverse communities. Existing government assets may also be used to accelerate the transition, such as Zero Waste Demonstration Site, an incubator operating on city-owned property in partnership with VEC, that provides innovative ventures with access to municipal waste streams in order to trial their solutions.  

4. Community Engagement and Network Activation

Economic developers must engage with sensitivity and convene with purpose to grow trust among members of relevant communities. B2B asset sharing, pre-competitive collaboration, safe and inclusive workplaces, and ethical supply chain management all rely on establishing trust between parties.

Highlighting diverse perspectives can generate new solutions and create a shared sense of ownership and power. It is therefore important to ensure that cultural practices are (re)surfaced, viewpoints from across the community and the organization are actively invited, and that decision-makers invest sufficient time in building reciprocal relationships. 

Hosting roundtables can help unearth multiple perspectives and catalyze action. VEC recently facilitated a roundtable on the current state of training for young workers and workers in the transition to a green economy. Moreover, engagement can be of additional value to its participants. Working with the BIPOC Sustainability Collective founded in Vancouver, VEC planned an event to better understand the barriers and challenges Indigenous, Black and people of colour face when accessing jobs and working in the sustainability field. By structuring it as a community networking event, the organizers were also able to create a welcoming space for these professionals in sustainability. 

Creating a coalition can build consensus amongst diverse partners and catalyze action while minimizing the duplication of efforts, increasing funding opportunities, and holding political sway in actioning programming and initiatives. Of course, a coalition must include representatives from every facet of the economy, including but not limited to workers, businesses, not-for-profits, governments, and Indigenous organizations.

The Right Economic Development Tools Will Drive Us to a Bright Future Economy

The clean transition will touch every sector, every business, and every worker in Canada. However, the Canadian Climate Institute has warned that over 70% of exported goods and over 60% of foreign direct investment are in sectors that are vulnerable to market disruption during the transition.  

There are promising economic development tools that can be harnessed by a variety of policymakers, education institutions, workers, trade and labour organizations, and facilitators to ease the transition and ensure the Canadian economy is poised to benefit. We present a diverse set of actions geared to support individual workplaces and systems-wide material and economic planning:

• Implement culturally safe and diverse practices in workplaces.
• Engage with sensitivity and convene with purpose to enable trust to grow among members of relevant communities.
• Support workforce transformation groups that include intersectionally diverse representation from across the economy.
• Direct private capital to invest in values-aligned solutions.
• Build public-private partnerships.
• Facilitate government expense and revenue-sharing with Indigenous and Canadian firms.
• Harness the power of procurement to favour circular materials and processes.
• Conduct material flow analyses to identify remaining gaps and close remaining material loops.

While the range of needs may seem daunting, third parties and intermediaries like economic development groups have a significant role to play in facilitating solutions. Economic development agencies across the country are well-positioned to facilitate dialogue and action between businesses, between workers and employers, and governments and businesses. And economic development can be undertaken by anyone – look to the range and effectiveness of the tools we’ve covered to date and consider how you can apply them to empower your own course of work through this transition.