7 measures to include in your procurement department’s circular economy action plan

March 26th, 2024
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At government level, but also within companies of all sectors, a transition towards a new circular economy now appears necessary to address the environmental crisis. This economic model provides an answer to today’s major challenges: Depletion of natural resources due to excessive production and consumption, climate change and biodiversity loss. But also and above all, circular economy reconciles environmental issues and economic growth for the benefit of a sustainable future for all. To ensure we move in the right direction, it is imperative to implement a circular economy action plan within countries and companies alike. 

What is a circular economy action plan? 

Many countries around the world, such as Finland, Chile and France, have implemented their own circular economy action plan. This is a strategic tool to initiate overall change and promote relevant measures for a transition towards a circular economy. Whether a state or an organisation is implementing such an action plan, the goal remains to make rapid progress towards its objectives by involving all stakeholders over the long term. 

The purpose of drafting such a document is to mobilise players within the same ecosystem to conduct in-depth analysis, build an appropriate circular economy approach and define the means to implement it. It is a pragmatic strategy that involves bringing together everyone’s perspectives, as well as determining the different steps required to achieve the set objectives. 

This reference document generally contains several parts: 

  • The overall strategy and vision; 

  • The timeline and methodology used; 

  • The main commitments, in line with the principles of sustainable development; 

  • The circular economy measures to which everyone commits; 

  • The specific actions and objectives for each of these measures. 

What measures for your procurement department? 

Among the departments and functions that play an essential role in this transition to a circular economy, the procurement department is on the front line. Buyers can influence the three areas of the circular economy: Better production, better consumption and better waste management. Here are 7 key measures that can be implemented within procurement departments. 

1. Developing eco-design of products and services 

Many experts agree that 80% of the environmental impact of a good or service is determined at the product design stage. This is why eco-design is considered the cornerstone of the circular economy. It requires a complete analysis of the environmental footprint of a product throughout its life cycle. 

The procurement function plays an important role in this process, in particular to compare different materials and suppliers, as well as delivery methods, etc. This is an essential step in helping to reduce the amount of waste. 

2. Promoting the functionality economy 

The functionality economy involves selling the use of a product rather than its ownership. This business model is based on the benefits customers can derive from the products and services provided. 

This works for equipment such as printers or lighting systems, but also for transport used by employees, for example. It is up to buyers to rethink their contracting practices to enter the era of “equipment as a service”. 

3. Developing the sharing economy 

Just as a company can rent a product or equipment instead of buying it, it can also use a product owned by another company, in cases where it is underutilised or overstocked. To do this, procurement departments must rely on digital platforms that connect the various stakeholders. These can be external, but also internal for large groups. 

In the case of exchanges of energy, raw materials, services or infrastructure flows within the same territory, this is known as industrial symbiosis or territorial industrial ecology. The waste products of some become resources for others within the local ecosystem. 

4. Extending product lifecycles 

Companies can promote the reuse, recycling, repair or remanufacturing of their products and materials. Procurement departments play a key role in this approach, whether they choose to internalise or outsource these processes. 

They then work to develop the skills of their teams or work with suitable service providers. In the latter case, they are responsible for sourcing, supporting and monitoring supplier performance. 

5. Improving end-of-life product management 

It is up to procurement departments to identify the right partners to ensure sorting, collection, processing and recovery of waste. This is especially important given that not all materials have mature recycling channels available. 

Procurement also has an additional role in market monitoring. They need to identify innovation in recycling technologies and processes. 

6. Developing recyclable and/or recycled packaging 

Packaging affects waste management and the overall environmental footprint of products. This is why procurement departments have every interest in reviewing the composition of their packaging. 

They can start by favouring cardboard, glass or PET (polyethylene terephthalate) plastic, which are less harmful to the environment. It is also possible to rethink packaging design to make it more compact and lighter. Aiming to make packaging biodegradable and compostable is also a good way to reduce packaging waste.  

7. Training procurement teams 

Raising awareness and training procurement teams is crucial to successfully transitioning to a global circular economy. Relying on professional instructors and experts, the idea is to organise training sessions on the key concepts of the circular economy, the associated economic and environmental benefits, and sustainable procurement practices. 

Of course, each circular economy action plan is specific to a given company. It reflects its challenges, priorities and perspectives in this area. It is therefore up to procurement departments to identify and prioritise the measures that make sense for their company in order to contribute to the green transition and promote the development of the circular economy. 

It is through these sustainable procurement practices that they will be able to effectively limit their environmental footprint (particularly by reducing indirect greenhouse gas emissions, known as scope 3), as well as generate savings and align with current and future regulations.

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