What is circular procurement?

circular procurement
October 6th, 2020
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Circular procurement relates to any purchase required for an organisation to operate, as part of their transition towards a circular economy.

In this article, you will find the answers to all your questions about circular procurement:

What is circular procurement?

Circular procurement is a term relating to purchases that support the principles of the circular economy, a system that seeks to limit the waste of resources and reduce environmental impact within the context of sustainability.

As you can see, circular procurement tends to break away from the linear "take, make, use, dispose" model. Instead, it follows the logic of a circular economy, defined by the French Ministry of the Ecological Transition as "an economic model that seeks to produce goods and services sustainably, by limiting the consumption of resources (raw materials, water, energy) and the production of waste, and ensuring that resources are used efficiently".  

What are the two models of circular procurement?

To support the circular economy, buyers have two models to choose from. They can:

  • Acquire circular goods or services
    Buyers can choose products that are modular, recycled or recyclable, eco-innovative, eco-designed, bio-based, repairable, with available spare parts or with a warranty covering a certain period of time etc. 
  • Opt for a circular contract
    Buyers can sign contracts for using goods or services, rather than owning them. Inspired by the functional economy, buyers pay for use or performance. Circular contracts may be used in other ways as well, such as for suppliers buying back their products at the end of their service life etc.

In addition to meeting the global challenges of our century, circular procurement offers companies numerous advantages, such as reducing costs and securing supplies. Examples highlighting the advantages of circular procurement are growing, such as GSK which reduced its annual costs by €280,000 by sourcing recycled alcohol, rather than virgin-grade methanol.

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