The Strategic Role of Circular Procurement

From goods as simple as office supplies to services as complex as energy systems – everything has to go through procurement. For the private sector, a company’s commitment to procure in sustainable and circular ways can generate added value at multiple levels: better risk management, more efficiency, long-term cooperation with suppliers, and collaborative development of innovative solutions. On the other hand, the public sector and its high demand could turn procurement into a strategic tool for promoting more sustainability and supporting circular economy systems. This means, for instance, shaping public tendering in ways that ensure the lowest footprint with the highest positive social and environmental impact through circular procurement. Recognising public authorities as major buyers, the European Commission has put Green Public Procurement (GPP) high on the political agenda. Green Public Procurement is not only closely tied to key EU Green Deal targets, but also to the indispensable principle of a just and inclusive transition to the Circular Economy.

Developing circular procurement processes

Put simply, circular procurement is the process by which products and services are purchased in accordance with the principles of the circular economy, and it should function as part of the wider sustainable procurement strategy of a particular organisation. Two main pillars of circular procurement are: boosting circular supply chains by increasing demand for circular products, materials and services and promoting new business models based on innovative and resource-efficient solutions. In designing and implementing successful sustainable and circular procurement strategies, clear guidelines are half of the work. Such guidelines define the scope, identify and link existing processes as well as facilitate the planning and prioritisation of improvement measures. Such measures can take place at any of the implementation levels of circular procurement. For example, on a systems level, it is important that organisations look for collaborations and partnerships as circularity cannot be achieved alone. On a process and supply level, an eye must be on designing for disassembly, improving data exchange systems, or putting into place take-back schemes that work on a consumer level as well. Finally, on a product level, through circular procurement organisations can favour and boost innovative and sustainable materials, as well as circular design.

For public organisations – whether they are government agencies, cities or utilities – it is important to make green public procurement (GPP) more relevant through training, communication and engagement for circularity. With its extensive demand, the public sector can both lead by example and bring about substantial positive changes: improve the social well-being of citizens, create added value and support regenerative circular economy models.

For private companies, identifying relevant questions and addressing those with key stakeholders, internal and external, is the right starting point. The concept of eight steps is useful in that it takes companies through a process of rethinking their procurement models by defining the benefits of circular procurement, identifying relevant internal stakeholders, and finding ways to involve key suppliers in the value chain. Moreover, the process of developing circular procurement strategies should aim to put into place mechanisms for measuring, assessing, and sustaining the circularity of procured goods and services in the long run.

Finding solutions at all levels

Organisations of all types and sizes – private or public, corporations or small and medium-sized enterprises – are faced with various challenges, have to make decisions, and find solutions at all levels of circular procurement: technical, organisational, and financial.

At the technical level, which concerns the reduction, reuse and recycling of materials, organisations have to engage in co-design processes with researchers, start-ups, businesses, and civil society to ensure that products are not only durable, easy to maintain and fit to be repurposed but are also made of renewable and non-toxic recourses.

At the organisational level, an involvement of all partners in the supply chain, from production to end of life product, is key in ensuring circularity. Important questions to be asked include: What opportunities are there available in becoming more circular? Which products and suppliers should be prioritised to achieve a more circular supply? What structure should the contract have in order to establish a long-term relationship with the suppliers and ensure joint product responsibility?

Finally, on the financial level, organisations should make circular solutions financially viable and support measures like put in place financial incentives that ensure circularity both on the supplier side as well as on the customer/consumer side.

Tapping into the strategic power of circular procurement

Integrating circularity criteria and principles into procurement turns the latter into a powerful mechanism not only to optimise investments, but also reach multiple other goals: reduce dependencies and become more resilient, meet regulatory demands and increase the positive social and environmental impact. The CSCP supports private and public organisations in leading more circular and sustainable procurement processes and supply chains at all levels: facilitating collaborations (system level), developing and implementing strategies and new circular business models (process level), and assessing products and product portfolios (product level).

Together with you, we are also keen on going beyond and leveraging other assets, such as blockchain, artificial intelligence or the internet of things, to ensure transparency, increase resource efficiency, and improve the interaction between different productions units – all in favour of smooth and efficient circular procurement processes.

Do you share this vision? Contact us and let’s turn procurement into a strategic tool for circularity – together!

For further information, please contact Cristina Fedato.