The transition of our linear, single use economy to a circular one is an increasingly necessary step on the road to averting (no, too late—better say mitigating) the climate crisis. Not only that, it’s an intelligent business strategy, and it begins with procurement.
Achieving net zero is not simply a matter of restructuring and regulating our energy industry. (Believe me, it would be a long overdue start and current levels of action to curtail fossil fuel usage. Or to mitigate the impact of lithium and cobalt mining for EV batteries are laughably, woefully inadequate. That’s not what we’re here to talk about today, however).
In addition to fossil fuel consumption, the way in which our global supply chain extracts, consumes, and then (most importantly) disgards our planet’s resources is in desperate need of reform.
A 2019 report from the Ellen MacArthur Foundation found that, while a transition to renewable energy sources could alleviate 55% of our global greenhouse gas emissions, the remaining 45% stem from the linearity of global economic structures.
The authors highlighted the need to shift to close-loop value chains. They also emphasise steps like diet shift at a population level, and methods like carbon capture. Nevertheless, if a circular economic structure could be adopted across key industries—sources of “overlooked emissions”—like steel, plastic, aluminium, cement and food manufacturing, it could reduce emissions in each sector significantly. On average, each sector could realise a 40% emissions reduction by going circular.
Take, make, and dispose
A further report by Edie Insight in partnership with Reconomy notes that current systems have a long way to go. “Corporates are, by and large, still operating on a linear basis of ‘take, make, dispose’. This mindset is usually baked into their own plans and budgets,” the report observes. As a result, a more “holistic shift is required to move to closed-loop practices.”
The report also notes that, when attempting to take a more sustainable approach in procurement, there is often a “contract gap” or disconnect between the sustainable messaging of a tender and the fact cost is still the number one indicator of success. They note this “could be because the rhetoric around sustainability has not been defined by both parties.” Another explanation could be because “sustainability and social currency has a poor exchange rate compared to costs.”
One major issue is that a lot of the terminology surrounding sustainability measures isn’t legally protected. If it is, the truth can often be obscured. Methods like carbon credits, or the selling of “recycled” waste to countries in the global south to be burned or buried in a landfill are common tactics. Organisations looking to promote a more circular economy should take pains to define terms and interrogate the veracity of sustainability claims within their supplier ecosystem.
Implementing a circular economy
There is no single solution to the question of how to implement a circular economy.
However, there are ways that organisations can use procurement to drive circular economic practices. One step involves pushing for more sustainable practice throughout their own supplier ecosystems. Next, not considering all matters other than cost to be secondary in the tender process can be hugely impactful. Modernising existing processes to be more efficient in their consumption of raw materials, and exploring the use of materials with higher upfront manufacturing costs but longer lifespans and potential to be reused multiple times (like glass over single use plastic in the food and beverage sector) are all vital steps.
Internal synergy is also vital. A great deal of linearity occurs because of materials being transferred from one department to another throughout the manufacturing process.
The Edie report notes that “in retail, for example, goods and packaging is commonly purchased by commodity buyers.” The problem, however, is that another department will be tasked with procuring the services to deal with the resource once it is considered ‘waste’. Then, another department might handle compliance and another will oversee recycling. This not only creates logistical siloes, but also means the process falls into a separate budget aside from procurement.
The report stresses that all these moving parts should be in the same resource cycle. The ongoing problem that needs to be solved, however, is that they commonly conflict with one another internally.
