A more sustainable future

From the April 2024 print edition

Once viewed as a merely transactional process, procurement is currently undergoing a profound transformation driven by circularity.

The core principle of a circular economy (CE) is preserving the value of products, materials, and resources through material loop closure and waste minimization. This transition towards circular procurement is evident across various industries and within governments, where public procurement is increasingly recognized as a pivotal lever for maximizing efficiencies and reducing costs for taxpayers. Cities and municipalities, particularly in their role as service providers, are leading this transition, setting examples for other sectors within local economies to explore the possibilities the circular economy offers.

Monica Ospina is the founder and managing director of O Trade – Social Economic Development.

As an expert in local procurement and stakeholder engagement, I acknowledge the critical role of circular procurement in contributing to sustainability and resilience. In this article, we will delve into the public procurement approach using initiatives led by Estonia, Amsterdam, and Toronto, shedding light on the transformative potential of circular procurement across industries in transforming products.

Stakeholder engagement
The foundation of circular procurement lies in robust stakeholder engagement. In this approach, open participation and dialogue shape new approaches leading to procurement strategies. Traditional procurement practices mainly involve one-on-one relationships with contractors and suppliers. In circular procurement, however, the emphasis is on the inclusion and participation of suppliers and contractors. It does this while considering the impact on the environment and society to drive discussions around impacts, efficiencies, productivity, cost, and risk. Supplier engagement and market dialogues are strategic in fostering collaboration and innovation. An example of an effective approach to engagement is developed through the Capacity Mapping model by O Trade. Through a guided supplier-buyer engagement process, this model lets companies understand the socio-economic baseline of local production and local infrastructure capacity, identifying gaps as well as talent, technology, infrastructure, and collaboration opportunities.

Measuring impact
Measuring the impact of circular procurement initiatives is essential for evidence-based decision making. Quantifying the benefits of circular procurement efforts facilitates the incorporation of circular economy principles into contracts, paving the way for sustainable procurement practices. Common examples of KPIs used to measure the circular economy of a product include recyclability, recycled content, lifespan, resource usage, energy efficiency, greenhouse gas emissions, packaging circularity, use of renewable materials, and waste management efficiency.

Circularity in public procurement
The cases of Amsterdam, Toronto and Estonia demonstrate the transformative potential of circular procurement, starting with the public sector. Amsterdam’s market engagement approach fosters collaboration with suppliers, driving innovation and a transition to circularity. Toronto’s Waste and Circular Economy program defines options for maintaining existing structural and interior non-structural elements, promoting circularity in construction practices. Meanwhile, Estonia’s goverment-led initiatives, such as the Circular Economy White Paper and the National Waste Management Plan, emphasize collaboration and knowledge sharing to accelerate the transition to a circular economy.

Circularity in businesses and industries
Industrial production across diverse sectors worldwide is making significant strides toward circularity, reshaping their approaches to procurement. Substantial progress in circular procurement can be observed in various areas, including the following.

Water management: Integrated and sustainable water management is crucial for addressing water scarcity and resource shortages. Circular economy principles significantly improve water and energy efficiency while promoting innovation in water recycling technologies. The approach to water use is also linked to KPIs such
as the percentage of circular water consumption, evaluating the percentage of recycled water used by businesses in their operations.

Construction and Demolition Waste (CDW): Construction waste presents opportunities for circularity, with initiatives focusing on promoting material reuse and innovation in construction techniques. Toronto’s Waste and Circularity Program defines the reuse of building materials in two options: Option 1) Retain existing structural elements (walls, floors, roofs, and envelope) and Option 2) Retain interior non-structural elements (for example, interior walls, doors, flooring, and ceiling systems).

Electronics: Circular procurement initiatives in the electronics sector aim to extend product lifecycles through repair, refurbishment, and recycling, driving innovation and sustainability. KPIs related to repairability and spare parts availability play a crucial role in enhancing circularity in electronics manufacturing.

Packaging and Plastics: Circular procurement practices in packaging and plastics aim to minimize waste and promote recycling and reuse. Investments in sustainable packaging solutions and consumer awareness campaigns contribute to the circularity of packaging materials, reducing environmental impact.
Textiles: The fashion industry embraces circularity through initiatives promoting textile recycling and sustainable fashion practices. Circular business models focus on retaining the value of existing materials through perpetual cycles, driven by consumer demand for circular textile products, for example transforming used textiles for carpets or area rugs.

In conclusion, circular procurement reshapes industries, from water management to fashion, by prioritizing stakeholder engagement, market dialogues, and impact measurement. Estonia’s, Amsterdam’s, and Toronto’s experiences underscore the transformative potential of circular procurement in advancing sustainability goals. As cities and industries worldwide embrace circularity, collaboration and knowledge sharing will be key to realizing the full potential of circular procurement in building a more sustainable future.