The circular economy is based on three principles: designing out waste and pollution, keeping products and materials in use at the highest possible value, and regenerating natural systems.

Businesses sit at the heart of the transition from a linear to a circular economy. Some of the most successful circular companies are those that adopt a diverse set of features that help to enable the transition, such as embedding circular economy principles into the heart of corporate strategy, making circular economy understanding part of internal capacity building programmes, adapting systems and processes across all business functions, committing to circular innovation, and promoting circular initiatives within the supply chain.

The circular procurement framework provides an overview of the intervention points organisations can use to make their purchasing choices more circular and engage their suppliers in circular economy conversations and collaborative circular partnerships.

The top-level guidelines outlined in this resource will have to be adapted in each individual business and may look different depending on the industry, sector, company, geography, and other factors.

The content of this resource has been created with contributions from PA Consulting as well as Essity, H&M Group, Novo Nordisk, Tarkett, and Virginia Tech.

Circular economy intervention points along the procurement journey

Procurement journey explained

Strategy: On identifying a business need, this process supports the decision logic that should be explored before launching the sourcing activity.

Sourcing: Incorporating the circular economy principles across the sourcing activity, this process aims to educate and spark ideas for sourcing products and materials in a way that adopts and incentivises the best circular practices.

Management: On entering into a circular economy partnership with suppliers, this process helps manage continued performance and ensure mutual value generation.

Procurement steps explained

How to use this resource

You can either click on the circular intervention point on the menu on the left, or go through the entire resource by selecting 'Next' below.

Although complete circularity is the target, the maturity and capability of the supply base may not allow this from the start.

Checklist

• Can you agree internally how to manage and assess a potential partial circular model – with a view to supporting suppliers in their transition to a fully circular model?

Circular economy risks and opportunities can vary significantly from one type of goods or service to another and from one supplier base to another.

Checklist

• Can you consider the following aspects in relation to your sourcing need:

  • technical aspects;

  • compliance culture;

  • sourcing locations;

  • supply chain capability / capacity;

  • the need to develop an after-market?

• What are the circular economy related risks and opportunities addressed by the sourcing process in question?

Even without a circular economy strategy in place within your organisation, the procurement department can choose more circular purchasing options.

Process

Checklist

• Can you explore the opportunities to reuse as-is or repurpose internally?

• Can you choose non-ownership based sourcing options?

• Can you embed circular economy criteria in your requirements?

• What is your optimal supply chain structure to address your circular economy needs?

• What due diligence do you need to conduct on circular economy products?

Product as a service*

• Can you choose the payment arrangement that enables circularity?

  • Fixed period (e.g. price/month): Potential circularity, but no incentive to limit consumption/use rates;

  • Pay-per-use (e.g. price/wash cycle) or Pay-per-outcome (e.g. price/ provision of light or price/service of floor covering): Greater chance for circularity, as the supplier is incentivised to provide the service with minimum consumption of resources.

* This section is adapted from Tukker, Arnold. "Eight types of product–service system: eight ways to sustainability? Experiences from SusProNet." Business strategy and the environment 13, no. 4 (2004): 246-260.

The value case for adopting a circular economy approach should be clear for all internal stakeholders – including those parties who will be responsible for the asset or service over the complete life cycle.

Checklist

• Can you consider who needs to be involved in the conversations at the strategic and operational levels?

If you have a good case example you would like to submit for a specific section in this resource, please use this form.

Checklist

• What is the present capability of the supply market to meet or exceed your sourcing needs and the required circular economy criteria?

• How early can you engage your potential suppliers to understand their intent and preparedness to meet your circular requirements?

• Can you consider the following aspects?

  • New technologies, alternative goods or services and new business models.

  • Existing supplier capabilities.

  • Available reverse logistics structures.

  • Circular economy maturity of the market.

  • Existence of local suppliers and/or partners with local economic impact.

  • Certification system like ISCC to certify the whole chain of custody.

  • The impact extraction, production, and transport has on climate.

CASE EXAMPLE (TBC)

By-products

An inevitable result of certain types of material processing and agriculture. In a circular economy all by-products can be feedstock for another production process.

Circular business models

Business models designed in ways that are aligned with one or more of the circular economy principles. For example, product-as-a-service is a business model where the ownership of the product remains with the manufacturer, incentivising, for example, longer product life, easier refurbishment, and better recycling, meaning it is more likely to lend itself to the principles of a circular economy.

Circular economy

Moving past the current take-make-waste extractive linear model, a circular economy is restorative and regenerative by design. It entails gradually decoupling economic activity from the consumption of finite resources. Underpinned by a transition to renewable energy sources, it is based on three principles: design out waste and pollution; keep products and materials in use; and regenerate natural systems. Transitioning to a circular economy not only addresses the negative impacts of the linear economy, but more importantly represents a systemic shift that builds long-term resilience, generates business and economic opportunities, and provides environmental and societal benefits. The concept recognises the importance of the economy working effectively at all scales, and of creating an economy that is distributed, diverse, and inclusive.

Materials sourced from regeneratively managed resources

Materials grown in ways that improve whole ecosystems, including by increasing soil health and carbon content, water quality, and biodiversity. The concept goes beyond retaining the status quo of natural systems (unless those systems are not degraded in any way) and extends to improving their health and capacity to regenerate themselves.

Material sourced from sustainably managed resources

The material was grown in a way that preserves the ecosystem without degrading it further, but falls short of being sourced from regeneratively managed resources. Sustainable sourcing is considered a transition stage towards a regenerative way of managing materials sourcing. Most well-known sustainability certification schemes fall under this category (e.g. FSC 100%).

Products and materials suitable for the biological cycle

Products and materials suitable for the biological cycle are consumed or otherwise degraded during use and do not cause harm to human health or the environment during or after their use. This category mainly pertains to food and feed, but also includes ornamental plants, medicines from living sources, biomass used in energy production, and inorganic matter that is cycled through natural systems (e.g. salts).

Products and materials suitable for the technical cycle

Products and materials suitable for the technical cycle can be used, reused/redistributed, maintained/prolonged, refurbished/remanufactured, or recycled. They include all inorganic materials such as metals, plastics, and synthetic chemicals, as well as materials from a biological origin, such as wood, cotton, and bioplastics found in products designed to be part of the technical cycle. Note that this category also includes materials of biological origin that are used as reactants in chemical processes (e.g. vegetable oil for plastics) and those that form the basis of other materials or products that behave as technical materials (e.g. pulp for paper).

Recycling

The process of reducing a product all the way back to its basic materials, reprocessing those materials, and using them to make new products, components or materials. Recycling refers to materials that are processed in practice (as opposed to materials for which recycling is technically feasible). It is okay to use publicly available recycling rates where you can demonstrate that they are for materials that you produce and in regions where you are active.

Refurbish/remanufacture

When a product is refurbished, its condition is improved – potentially to as-new. The process can include disassembly and rebuild, replacing components where necessary, updating specifications, and improving cosmetic appearance. When a component is remanufactured it is re-engineered to as-new condition with the same warranty as a new component.

Reuse/redistribute

Products in the technical cycle can be reused multiple times and redistributed to new users in their original form with little enhancement or change.

Service

A service is something a company provides, and the customer pays for, but there is no transfer of material ownership. A service cannot be transported or stored and only exists while the provider is supplying it and the customer is using it. For example, refurbishing is a service. There are three types, dependent on whether there are material flows, and who owns them:

• Services with material flows, where your business owns the materials (e.g. a company that owns and leases furniture)

• Services with material flows, where your business doesn’t own the materials (e.g. a company that services IT hardware owned by others)

• Services without material flows (e.g. consultancy)

Suppliers

Any organisation or individual you procure from (can be more than one step upstream).

Waste

Unwanted materials or substances. In a circular economy, waste is designed out.

When including circular economy criteria in the tender process, think about your strategic circular economy objectives and create a general framework about criteria you want to meet and the data you need to collect to get there.

CASE EXAMPLE (TBC)

Checklist

• Can you define your circular economy criteria with the following aspects in mind:

  • It helps to have criteria that are measurable, objective, transparent and verifiable.

  • When you communicate them to your suppliers, consider how to allow for fair competition.

  • You may need to pay special attention to SMEs and the development of their capacity to respond to such criteria.

  • Pay attention to how far up the supply chain it is necessary to go for adequate fulfilment

  • Allow suppliers to challenge the criteria if they can see opportunities to improve circularity.

If US higher education expenditure was a country, it would be the 21st largest economy in the world.

There is no doubt that higher education plays a vital role in the global transition to a circular economy. From teaching and learning, through research and into student action, across the globe there is growing momentum from the sector to move into the circular economy space. But, it isn’t only in the classroom or laboratory where real change is possible - how higher education institutions choose to use their immense purchasing power can have significant effects on making campus activities and supply chains more circular. More circular procurement decisions can significantly help to shift the economy and support universities in their net zero carbon ambitions.

In this 8 minute video, Brian Goldberg, an Assistant Director at the MIT Office of Sustainability, describes the approach to ensure MIT’s new waste contract supports a circular economy on campus.

Checklist

• Can you source/purchase ingredients that are grown regeneratively?

• Can you source/purchase ingredients that are made from by-products of other processes?

• Can you utilise the entire value of the ingredients you purchase? Do you have a strategy/plan in place to valorise by-products of the ingredients you purchase?

• Can you source/purchase ingredients that are grown locally where appropriate?

• Can you source/purchase diverse and/or seasonal ingredients?

CASE EXAMPLE (TBC)

Checklist

• What are the required capabilities your supplier must have to fulfil your purchasing needs with the circular economy criteria?

  • If they are not demonstrable at the point of tender, how do they plan on building these in-line with your requirements?

• What parts of the supply chain can the supplier cover and what parts of potential upstream activities do they have influence over in terms of circular economy requirements?

• How can you help suppliers develop new circular economy capabilities?

• Does the supplier have a good understanding of circular economy principles? Can they articulate them and demonstrate their understanding properly through their activities and offerings? Does the supplier have a sustainability officer and a circular economy strategy? (It’s likely that the circular economy approach will be embedded in their sustainability strategy.)

• Does the supplier have a Circulytics score? If not, would they be willing to complete it?

• Is there a relevant ISO (e.g. 20400) they are certified in?

CASE EXAMPLE (TBC)

Checklist

• Can you conduct the supplier briefings, setting out the requirements and communicating circular economy opportunities?

• Can you communicate and confirm the selection criteria and objectives during these briefings?

• Can you ensure the suppliers fully understand the commercial and circular economy expectations?

• Can you seek opportunities to gather more circular economy information and potential opportunities to collaborate with your supplier?

• Can you encourage joint proposals and collaboration among your suppliers with complementary offerings to address the capabilities you need?

CASE EXAMPLE (TBC)

Flex-N-Gate, a leading manufacturer of high-quality parts for the automotive industry — and a long-term customer of DS Smith, an international packaging company — wanted to optimise the space in the trucks that were used to transport the car bumpers from their manufacturing facilities to the car assemblers. They made a request to DS Smith for a new type of packaging that would allow them to optimise the space in the trucks, and if possible, adhere to sustainability criteria. The cost was the key tender criteria with CO2 emissions reduction playing a part too.

Due to their long-term partnership, DS Smith was able to work closely with key people at Flex-N-Gate to innovate and validate the new packaging solution. They created a new type of box with the optimal amount of material that made best use of the space in the truck. The total cost of ownership of this innovative solution was more attractive than the previous one and reduced CO2 emissions, thanks to a maximised number of products in the truck and the perfect protection of the goods (painted car bumpers that are sensitive to abrasion), avoiding the necessity to produce and deliver replacement products. The packaging is made out of a mix of recycled and virgin cardboard and is 100% recyclable.

The special shape associated with centering devices and a customized pallet also secure the load on each pallet by a perfect stability, delivering great safety conditions to all employees.

“Working with people directly responsible for the project on the Flex-N-Gate side made it easier to innovate and validate the optimal solution.” (Jean-Michel Audivert, Sales Manager, Industrial Markets Business Unit, DS Smith)

Key insights:

• Write your tender based on the performance needs instead of items or materials. This provides the opportunity to innovate without resorting to the usual and previously used solutions. The capabilities of the supplier (ability to innovate, machinery available, quality control) will be key.

• Make sure that your supplier can work closely with the key people and teams in your organisation to test and validate their new solution. That might be more possible in long-term partnerships with established relationships and trust.

• As a supplier, make sure you have proper internal processes to allow the information sharing to come up with the best solution. In the case of DS Smith, they had the industrial design team set up to share relevant knowledge and experience

Checklist

• Can you conduct supplier clarification workshops to ensure they can deliver and meet your circular economy criteria?

• Can you conduct supplier site visits or other verification activities if necessary to see the circular economy elements of a supply chain if possible?

• Can you create and circulate evaluation templates for all key stakeholders to score suppliers?

• Can you run debriefs for suppliers upon disqualification to help them improve their circular economy offerings?

CASE EXAMPLE (TBC)

Checklist

• Can you combine the total cost of ownership and circular economy related value in one analysis to maximise value?

• How can you create a negotiation environment which fosters innovation and problem solving – two essential ingredients for a circular economy?

• How can you ensure that all parties in the negotiation have the best possible understanding of the circular economy and available solutions being sought so that the outcome is mutually beneficial?

• Can you conduct trade-off and sensitivity simulations in order to understand different scenarios and the circular economy value vs. the up-front monetary cost?

CASE EXAMPLES (TBC)

Your purchasing needs have to be approached strategically to begin with. Think about how your needs, and ability to fulfil them, align with your company's circular economy vision and strategy.

Your circular economy strategy on a company level may lead you to decisions such as switching from virgin material suppliers to take-back schemes where you collect materials from your own sales operations. This would influence your business model, require a much longer time frame to implement, and would need the involvement of various stakeholders.

CASE EXAMPLE (TBC)

Having a circular economy strategy in place may make it easier for your procurement team to consider circular purchasing options.

CASE EXAMPLE (TBC)

Process

Checklist

• Can you leverage the company’s circular economy strategy (if you have one) to make procurement decisions more circular? (Can you define what full circularity looks like for your company? How does it influence your key sourcing needs?)

• Can you reframe the need and find circular economy opportunities?

• Can you think of alternative sourcing opportunities by finding ways to substitute the virgin inputs?

• At what point do you need to engage other internal and external stakeholders to help make these decisions?

Checklist

• Can you purchase items that are USED MORE


?

  • Can you purchase through business models that increase utilisation (e.g. supplier can provide repair, reuse, rental, recommence, and remanufacturing options at scale)?

  • Can you choose items that are designed, created and manufactured to be durable, repaired or refurbished so it aligns with a business model that keeps it at its highest value?

  • Can you make sure that all items that are made and purchased will be used?

• Can you purchase items that are MADE TO BE MADE AGAIN


?

  • Is there a system in place to collect and return these items for reuse, repurpose, refurbishment, remanufacturing or recycling, thus making sure they don’t end up as waste?

  • Can you purchase items that use packaging made from reusable, recyclable or compostable materials?

• Can you purchase items that are MADE FROM SAFE AND RENEWABLE INPUTS


?

  • Can you purchase items that are free from hazardous chemicals, and thus respect the health of ecosystems?

  • Can you purchase items the production of which (including chemicals used during manufacturing and finishing processes) is fully decoupled from the consumption of finite, non-renewable resources?

  • Can you purchase items made from post-consumer recycled content (where technically possible) both to decouple from finite feedstocks and to stimulate demand for collection and recycling?

  • Can you purchase items which, if (partially) made from virgin inputs, use inputs from renewable feedstocks, where proven to be environmentally beneficial, and, where relevant, are sourced from regenerative sources?

  • Can you purchase items that are manufactured, distributed, sorted and recycled using renewable energy?

  • Can you purchase items that, through their production, maximise resource efficiency (water, energy, material use etc.)?

Checklist

• Can you eliminate problematic or unnecessary packaging through redesign and innovation, getting rid of materials, components or formats that:

  • are not reusable, recyclable or compostable;

  • can be avoided altogether;

  • hinder or disrupt recycling;

  • have a high likelihood of being littered;

  • or contain hazardous chemicals?

• Can you replace single-use packaging with reusable formats, i.e. refillable or returnable, or choose to implement alternative delivery models?

• Can you purchase packaging or plastics that are 100% recyclable or compostable, meaning they are effectively recycled or composted in practice and at scale?

• Can you purchase packaging or plastics with recycled content or sourced from renewable (or bio-based) feedstocks?

Checklist

• How can you create an open communication stream with your supplier to periodically evaluate how well they fulfil your circular economy needs?

CASE EXAMPLES (TBC)

This resource has been produced by the Ellen MacArthur Foundation (the "Foundation"). The Foundation has exercised care and diligence in the preparation of this resource, and it has made use of information it believes to be reliable. However, the Foundation makes no representations and provides no warranties to any party in relation to any of the content of the resource. Any case examples included in the resource have been provided by third parties and have not been independently verified by the Foundation. The Foundation (and its related people and entities and its and their employees and representatives) shall not be liable to any party for any claims or losses of any kind arising in connection with or as a result of use of or reliance on information contained in this resource, including but not limited to lost profits and punitive or consequential losses.