Define 'circular economy'
When you start a circular procurement project, you must first determine what ‘circular economy’ means to your organisation. Remember to stay in tune with both national policies and local priorities: for instance, objectives regarding the biobased economy or the creation of local employment. You need to distinguish between the definition of the concept (‘A circular economy is ...’) and a definition for a specific product group (‘A circular clothing item is ...’).
The circular economy is all about extending the life cycles of products, components and materials, and closing the (raw) material cycles. In this context, we distinguish a biological cycle (green) and a technical cycle (blue). The biological cycle consists of materials that are biodegradable and serve as raw material for other natural processes, for example food or wood. The technical cycle relates to products that are not biodegradable and should therefore remain 'in circulation' as long as possible.
The circular economy, comprising a biological and a technical cycle. Source: Ellen MacArthur Foundation, 2012
Circular economy and circularity are often used interchangeably, but refer to a different level. Circular economy is focussed on the economic system as a whole: it involves high-value reuse of products, components and materials, it ensures that new products are non-toxic and makes use of renewable energy. In this way, products, components and materials retain their value in closed cycles. Depending on the definition, circular economy may also include social aspects, such as employment. Circularity primarily concerns the high-value technical use and reuse of products, components and (raw) materials.
To achieve a circular economy, we cannot limit ourselves to the development of products that are circular in the technical sense. From a technical point of view much can be achieved already, however, in practice the results have been limited. To boost circular procurement, there are three aspects that require change:
- The technical aspects (I): the extent to which the procured product has circular qualities.
- The process and organisational aspects (P): the extent to which the main value chain partners are involved in the procurement and the degree to which the process is equipped to enable both circularity and circular usage.
- The financial and economic aspects (F): the way in which suppliers and partners are provided with an economic incentive to pursue circularity.
The circular economy requires interaction of technical, process and financial aspects. Source: Copper8 (2013)
There are many definitions of the ‘circular economy’ going around. This is no surprise, considering that the ‘circular economy’ is currently in a phase of transition. Take, for example, the procurement of a table: when is that circular? If the table is made of reused materials, if it has had a previous life, or if it can be reused in the future? And is one table more circular than the other, or less?
A frequently used definition of the circular economy is:
“A circular economy is an economic system that is based on minimising the use of raw materials through reuse of products, components and high-quality raw materials. It is a system of closed-loop recycling in which products lose as little value as possible, renewable sources of energy are used and systems thinking is seen as a priority.”
Source: Ellen MacArthur Foundation (2012), Towards the Circular Economy
It is important to use the preparation stage of a procurement project to give clarity to market players by providing a definition that is appropriate to the context of your request. In this way, there can be no dispute about what is understood by ‘circular’.
Therefore, it is important to formulate a clear definition and clear ambitions for your procurement project. Some examples:
- The procurement of office furniture can be made ‘circular’ by focussing on extending the service life of the existing furniture if it is still in good condition. If the old furniture does need to be replaced, circular procurement can for instance be achieved by procuring furniture that is made of healthy and recyclable materials (in line with Cradle-to-Cradle) or that offers maximum future reusability.
- Building projects also offer various opportunities. For new buildings, for instance, ‘circular’ has a different meaning than it has for renovation or transformation. For a new building you can define ‘circular’ as ‘maximum application of reclaimed materials’ or ‘all components can be disassembled and reused in the future'. Renovation or transformation projects often focus on retaining the value of materials and existing elements.
- Make sure you have a clear definition of the circular economy, that serves as the starting point for your organisation.
- Link the definition for your organisation to the local context and internal priorities.
- For each procurement project, determine a definition that matches the context of the project.
This infographic explains the concept of the circular economy: a technical and biological cycle that focusses on high-value reuse of products and (raw) materials.
This academic paper shows the large variation in definitions of circular economy. Most definitions identify economic growth as the main underlying objective.
This Roadmap enables you to explore, among other things, the background of circular procurement and formulating an ambition.