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Circular Economy in Procurement – White Paper

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Circular Economy in Procurement – White Paper

The integration of circular economy principles into procurement processes holds significant importance for local governments, offering opportunities to enhance sustainability, drive innovation, and achieve long-term economic and environmental benefits.

Recently, LGP conducted a comprehensive study on the status of circular economy practices within in New South Wales. This research has enabled us to identify key challenges of implementing circular economy practices and offer practical solutions for procurement departments within NSW Local Governments. The white paper detailing our findings and recommendations can be accessed via this link.

In the following sections we provided an overview of the findings.

Definition of circular economy

While definitions of ‘circular economy’ (CE) may vary in their nuances, they converge on a central principle: the transformation of linear economic model, based on a ‘take-make-consume-throw away’ pattern, into closed-loop systems where materials and products are kept in circulation as long as possible to maximise their value and minimise waste.

Key benefits of circular economy

CE practices offer numerous advantages to organisations seeking to enhance their sustainability and resilience while protecting the environment. By adopting CE principles, organisations can achieve significant cost savings through more efficient resource utilisation and waste reduction.

Embracing circularity also fosters innovation, providing opportunities to develop new products, services, and business models that prioritise sustainability. Beyond financial benefits, CE initiatives enhance an organisation’s reputation by demonstrating commitment to environmental and social responsibility.

The role of procurement in circular economy

The CE extends beyond merely managing waste through recycling, recovering, treating, and disposing. It begins by addressing the root of waste generation, emphasising the need to change behaviours to prevent waste from occurring. This shift underscores the pivotal role of procurement in determining how products/materials initially enter an organisation, highlighting its significant influence. Procurement departments play a critical role in deciding which products or materials are purchased and brought into organisations, directly impacting how these products will be managed at the end of their life cycle.

A true CE should not be led by waste teams, it needs to be led by finance and procurement teams who are delegated with procurement authority. It is critical for procurement officers to understand and implement the CE frameworks as they control what resources enter their organisations.

Why NSW Local Governments need to focus on circular economy in procurement

As highlighted in the National Waste Action Plan (2019) and its Annexure in 2022, local governments play a critical role in implementing the National Action Plan for managing waste and achieving sustainability goals. By investing in and supporting local-level initiatives, local governments not only contribute to broader national objectives but also adapt and respond to the unique environmental, social, and economic contexts of their communities.

In addition, within the framework of the NSW Circular Economy Policy Statement: Too Good to Waste (2019), NSW councils are entrusted with a pivotal role in embedding the seven principles of CE that guide the NSW Government’s decision-making and planning processes. One of the key principles, “Foster behaviour change through education and engagement,” underscores the importance of councils engaging with communities and businesses. By effectively communicating the benefits of CE and demonstrating how circular activities can be implemented locally, councils play an essential role in fostering a broader understanding and adoption of these practices.

Importantly, managing waste effectively plays a crucial role in reducing emissions, as highlighted in the Net Zero Community Emissions Guide for NSW councils. According to the guide, emissions from waste represent one of the top five sources of emissions in NSW, accounting for 3% of the state’s total emissions in 2020. Adopting the waste management practices not only promotes a CE where waste is minimised and materials are continually repurposed, but also helps mitigate climate change, supporting environmental sustainability goals at the community level.

What are the challenges and recommendations for NSW Local Governments in implementing circular economy practices in procurement?

Within the white paper, we have provided an overview of the CE landscape globally, contextualising it within the Australian context, particularly within the state of NSW. Data from a survey of NSW local governments provided insights into the current status of CE initiatives in procurement practices, highlighting examples of initiatives undertaken by local councils.

We also identified challenges faced by NSW local governments embedding CE principles into their operations, including insufficient staff knowledge, cost barriers, insufficient leadership support and case studies, and supply chain issues.

To address these challenges, we offered recommendations such as training programs, supplier engagement, and industry collaboration that procurement departments in local governments can apply to overcome those challenges. By addressing these challenges and implementing these recommendations, local governments in NSW can further advance their efforts towards integrating CE principles into procurement processes, contributing to the transition towards a more sustainable and CE.

All the references for statistics, studies and documents mentioned here are outlined in the White paper which can be accessible via this link.

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