Public procurement encourages collaboration between government and private enterprises, in turn allowing public authorities to achieve sustainable and circular practices. Procurement promotes the use of digital tools, resources and applications to drive sustainable innovation across multiple sectors and determine the systems needed to achieve a more environmentally conscious transition.
Effective procurement practices allow the establishment of a closed-loop circular supply chain that helps deliver more efficiency, from end-to-end and supports the formalisation of different services, including e-waste management, recycling, resource sharing, and supplier regulatory development.
The following blog will provide a more detailed exploration of creating sustainable procurement strategy, their benefits and challenges during implementation. This blog looks to address the role and importance of driving long-term sustainability and supporting the development of a circular economy.
What Are Sustainable and Circular Procurement Practices?
Sustainable procurement practices take on various forms and encompass a mirage of sectors. In the public ecosystem, sustainable practices may include the following:
Environmental Considerations
Encouraging the use of recycled materials, implementing processes to reduce waste and looking to protect valuable natural resources. This includes the development of circular economy principles, and guidance to reduce greenhouse gas emissions within the procurement process.
Social Considerations
Procurement can be a driver of change, promoting diversity, and inclusivity, and supporting progressive corporate governmental policies.
Economic Considerations
Creating supply chains that help to reduce costs, minimise over spending, and help to improve product quality. In addition to this, procurement sustainability ensures effective delivery of services within desired timeframes.
On the other hand, circular procurement looks to achieve the following:
Waste Reduction
Remove processes that are resource intensive, and actively implement systems that will reduce waste and minimise the need for natural resources throughout the supply chain.
Reusing Resources
Putting resources back into the production cycle, and finding methods that will encourage manufacturers and public entities to not only reduce the use of natural resources but reuse as much as possible. Creating more resource efficiency can assist with things such as lowering energy consumption, among other things.
Creating Closed-Loop Systems
Circular procurement promotes the development of a closed-loop system that holds circular resources, and circular design and delivers recovery of resources from end-to-end of the supply chain. These attributes can be linked to creating key performance indicators that leverages sustainability factors and contract management.
The Importance of Sustainable and Circular Procurement
Public procurement plays a valuable role in helping drive sustainable developments while promoting circular economic activities across various sectors and different supply chains. These actions are achievable and require support from public entities to ensure:
Assess the need for procurement: Government organisations should determine whether there is an actual need to procure various services and consider the requirements to achieve procurement more sustainably.
Acquisition requirement: Develop an acquisition strategy that allows for the procurement of products, services and goods that are in line with circular economic principles.
Map environmental impact: Look at the ecological impact that procurement activities will have. Consider the physical monetary costs associated with current procurement methods, and how various risks could impact short-term success.
Implement applicable laws: Ensure that the necessary laws, policies and regulations have been implemented to further drive sustainable procurement, promote diverse and equitable working environments, and meet the demands of labour laws.
Market engagement: Gather insight from suppliers to better understand the supply chain. This will allow buyers to have clear information on their approach, and how to overcome current risks and promote sustainable changes.
Regulations and Frameworks Driving Adoption
One of the first steps to achieving long-term sustainability and circular procurement goals lies within the development of a regulatory framework that seeks to align with domestic and international initiatives.
In the UK, procurement sustainability is supported by:
The Procurement Act of 2023
Provides an emphasis on environmental, social and economic sustainability. The Act requires that all public entities consider the social value and impact of procurement decisions, and comply with the Government Buying Standards. In most instances, buyers and sellers are required to report project sustainability during procurement.
PPN06/21
This is a procurement policy that requires all suppliers bidding from public government contracts worth more than £5 million per year to commit to a Net Zero policy by 2050. Furthermore, all bidders are required to provide a Carbon Reduction Plan.
Sustainable Procurement Policy
Another policy aimed at promoting more sustainable procurement practices, including reusing and recycling various materials and natural resources. This policy encourages the provision of reports to the House of Parliament for review and auditing.
In the European Union (EU), there are several key policies related to sustainable and circular procurement development:
Green Public Procurement (GPP)
GPP is a voluntary instrument that forms part of the EU’s broader plan to create a more resource-efficient economy and includes the use of verifiable and scientific evidence-based criteria that support environmental projections for products, services and other goods.
Circular Economy Action Plan (CEAP)
In 2020, the EU introduced the CEAP, which is a key instrument in the European Green Deal. This plan aims to assist in the reduction of carbon emissions and mitigate the use of natural resources. The long-term projections include the creation of sustainable growth, and the achievement of the EU’s 2050 climate-neutral target.
Challenges and Solutions
Implementation of sustainable and circular procurement activities is not without a series of challenges, including:
- Supplier engagement: Connecting with suppliers to understand preferences and needs is often a major obstacle within public procurement and can lead to short and long-term challenges.
- Ineffective supply chain transparency: Some buyers may have vast and complex global supply chains, leading to a lack of transparency and understanding of supply chains.
- Cost and margin: Not all suppliers will be on board with implementing new sustainable procurement goals at the expense of their company.
- Lack of support: While implementation of regulations is a start, support from public entities and government is often minimal and reduces engagement along the supply chain.
There are some ways to overcome these clear challenges:
- Assess and implement criteria: Seek to implement criteria based on an initial assessment of the needs of suppliers and their impact on the environment.
- Promote supplier engagement: Look at ways to engage more effectively with suppliers throughout the supply chain.
- Encourage transparent reporting: Look at methods to encourage more transparency and direct communication between all links within the supply chain.
- Stakeholder engagement: Consider the important role of all stakeholders, and how effective engagement on their behalf could help promote more sustainable and circular economic activities.
- Digital integration: The use of new technologies plays an important role throughout the transition and should be a central component of effective procurement practices.
Future Trends in Sustainable and Circular Procurement
Future trends will enable suppliers and public entities to overcome present-day challenges. More than this, forward-looking trends will help to mitigate risks and new emerging threats to the long-term success of creating a sustainable and circular procurement regime.
Artificial Intelligence (AI)
AI will become a central player in the development of new sustainability strategies, equipping suppliers with the knowledge to overcome certain challenges, and better navigate current problems more effectively without increasing their reliance on natural resources.
Blockchain technology
With the blockchain, supply chains will become more transparent, and allow buyers to have more oversight. Not only this, but the blockchain also allows for products, goods, and services to become more traceable throughout the supply chain.
Social value
The growing importance of social value in procurement decisions will help drive more progressive change while looking to develop procurement solutions that encourage equitable practices and support diverse labour laws.
Final Thoughts
Developing sustainable and circular procurement practices requires input from all stakeholders. To achieve forward-looking goals, all stakeholders should be informed and equipped with the knowledge and resources to make more sustainable decisions and become drivers of positive impact. Only through effective collaboration and engagement will suppliers, and bidders look to achieve a more sustainable procurement regime that drives innovation, and encourages a more closed-loop circulatory system.
