Circular procurement is an approach to government procurement that enables private and public authorities to play a role in supporting a transition to a circular economy by purchasing works, goods or services designed to create closed energy and material loops within supply chains while minimising (or avoiding) the generation of waste and other negative impacts on the environment. The circular procurement approach builds on the sustainable procurement approach by adding elements such as the closed-loop use of materials.^[1]

Policy context

The EU Action Plan for the Circular Economy has established an ambitious programme of action which will help to ‘close the loop’ of product lifecycles. This plan recognises public procurement as a key driver in the transition towards the circular economy, and it sets out several actions that the European Commission will take to facilitate the integration of circular economy principles in GPP. These include highlighting circular aspects in new or updated sets of EU GPP Criteria.

Circular public procurement also has a role in achieving the Sustainable Development Goals, defined by the United Nations 2030 Agenda for Sustainable Development. Especially, SDG 12 - Responsible Consumption and Production – includes a specific target on promoting sustainable public procurement practices, in accordance with national policies and priorities.^[1] Furthermore, many countries, regions, and cities have been developing their circular strategies in which public procurement is often emphasized as a key mechanism for scaling up the transition to a circular economy.^[1]

Three Levels of Circular Procurement

There are three types or ‘levels’ of models for implementing circular procurement:^[2]

• ‘System level’: concerns the contractual methods the purchasing organisation can use to ensure circularity. For example, supplier take-back agreements or product service systems
• ‘Supplier level’: how suppliers can build circularity into their systems and processes to ensure the products and services they offer meet circular procurement criteria.
• ‘Product level’: focused solely on the products that suppliers to public authorities may themselves procure further down the supply chain.

Benefits

Besides sustainable procurement, circularity can help buyers take a more comprehensive approach - from the first stages of procurement to the end of product life – while achieving financial benefits. A circular economy will retain materials at their highest value, push for innovation and support local employment markets. By 2025, at a global scale, it has an estimated potential to add $1 trillion to the global economy and create 100,000 new jobs within the next five years.^[3]