Canopy Commits $78 Billion Over Seven Years to Decarbonize Global Supply Chains

Canopy presented this week in Davos a new financing scheme aimed at accelerating the decarbonization of the global paper, packaging and textile supply chains. The total amount of investment over seven years would amount to $78 billion, but what the organization presented at the forum was the first phase of the project. The mobilization of the first $2 billion together with the NO.17 Foundation and Tsao Pao Chee Group (Tpc).

The model is based on blended finance structures, with the aim of reducing the risk of initial investments and attracting institutional capital to alternative materials with a lower environmental impact. According to the organization, these solutions are based on fibers from agricultural waste and recycled textiles, replacing carbon-intensive raw materials.

India will host the first deployment of the program, which is subsequently designed to be replicated in other markets. The initial investment would enable up to 1.5 million tons of new production capacity for paper, packaging and new generation textile fibers in the country, as part of a broader initiative that aims to mobilize $78 billion globally by 2033.

Canopy stresses that the change in supply chains is one of the main vectors for making progress on climate and biodiversity objectives before 2030. The organization recalls that current flows of financing for nature-based solutions are around US$200 billion, “barely a third of what is needed to meet international commitments”.

Canopy proposes to replace high carbon footprint forest fibers and create a replicable financial architecture in other key markets

“Now is the time to rethink how capital flows to climate solutions at scale,“ said Nicole Rycroft, founder and CEO of Canopy. As she explained, the model seeks to “lay the groundwork to replace high-carbon footprint forest fibers and create a replicable financial architecture in other key markets.“

The organization points out that more than 950 brands (including Inditex, Hugo Boss and Etam), with a combined turnover in excess of US$2.1 trillion, already collaborate with Canopy, which reinforces expectations of future demand. In the words of Zoë Caron, strategic head of global investments, “with these structures, capital can be directed towards more circular supply chains, transforming agricultural and textile waste into higher value-added raw materials”.

In the case of India, the project is also linked to collateral impacts such as reducing the burning of agricultural residues, a relevant factor in air pollution episodes. Canopy argues that diverting this waste to industrial uses could improve air quality and bolster rural incomes, while reducing the volatility associated with wood-dependent supply chains.