How can cities use Public Procurement as a strategic tool to support Circular Economy strategies?

In this interview with the European Commission’s Green Public Procurement Helpdesk, Oriana Romano explains the strategic role that public procurement can play on circular economy strategies in cities and outlines several recommendations. 

Public procurement is often said to be "a powerful tool that can enable the transition towards a circular economy". Can you explain this further?

Public procurement is indeed a powerful tool that can enable the transition towards a circular economy. The OECD (2020) Circular Economy in Cities and Regions report highlights several key reasons why public procurement plays a crucial role in supporting circular practices and reducing environmental impacts: 

• Supporting Eco-Efficiency and Eco-Design: Public procurement can drive demand for more sustainable and eco-friendly products and services. By setting specific criteria in procurement processes, cities can encourage suppliers to adopt eco-design principles, leading to products that are more resource-efficient and easier to recycle or reuse. Circular procurement can take various forms, such as adopting a product-as-a-service model. For instance, instead of purchasing light bulbs and appliances, cities can pay for a lighting service that meets their needs, promoting product longevity and efficient resource use. 
• Generating economic benefits: The economic impact of inserting circular economy criteria into public procurement can be substantial. According to the European Commission, public procurement in the EU is estimated to be worth around EUR 2 trillion, which accounts for approximately 14% of the EU's GDP. By embedding criteria in tenders for circular products and services, public procurers can support new industries and companies with circular business models. 
• Empowering Subnational Governments: Cities and regions can take the lead in adopting circular procurement practices. The OECD survey on the Circular Economy in Cities and Regions found that nearly half of the 51 cities and regions surveyed (47%) already include circular economy criteria in their purchasing decisions, with many more planning to follow suit in the future.
• Fostering Innovation: Public procurement can stimulate innovation by providing a market for circular products and services. By requesting circular solutions in tenders, cities can drive private-sector innovation to meet circular economy objectives.

We understand that the OECD has conducted an analysis on how cities are using public procurement to support their circular economy activities. Could you outline your key findings? 

Overall, public procurement is a robust tool for cities to lead by example and pave the way towards more circularity, embedding reuse, durability, reparability, and purchase of second-hand or remanufactured products. 

For instance, the City of Paris’ 1st Circular Economy Roadmap set the objective of promoting sustainable, organic and responsible product supplies in public entity canteens such as schools. The objective is linked to the city’s ambition to create a socially and environmentally responsible public procurement scheme and encourage agriculture practices in the city. The City of Asker (Norway) developed a Sustainable Public Procurement Strategy around 26 financial, environmental and social sustainability themes with the purpose of reusing furniture from the municipal merger. The city of Bollnäs (Sweden), has applied what the local government calls “functional public procurement” (funktionsupphandlingen) to rent light as a service in municipal pre-schools and schools. The service is provided by a start-up that received support from Umeå’s BIC Factory business incubator. In Groningen (Netherlands), green public procurement is applied to the purchase of a 10-year service of refurbished furniture for the municipality. Since 2018, all public plastic bins must be made of recycled plastics, as established by public procurement requisites. 

Green public procurement is still not totally exploited. First, while environmental criteria have been added to the selection process, in practice, the price is still the prevailing selection method. Authorities awarding the contracts tend to only consider upfront capital costs rather than the lifecycle costs (e.g. operation, maintenance and end-of-life); second,  requirements for green public procurement may not be mandatory, calling for strengthening national-level legislation in enhancing the circular economy transition in public procurement; third, there is rarely a dialogue between procurement officials and potential contractors, in order to incorporate circular requirements for suppliers and design tenders to promote circularity. 

What recommendations do you have for public procurers that want to better support their cities’ circular economy strategy?

Based on key findings, we have set a number of recommendations to support cities in building robust and coherent circular strategies through public procurement: 

• Establishing clear requirements in tenders to foster efficient material use and reuse, quality and maintenance. In Ljubljana, for example, the hygiene materials purchased have to be made from cardboard packaging collected in the city. In Paris, in 2018, 14% of the city's purchases included circular criteria, such as reuse/recycling processes for used equipment, demountable nurseries, retreated tyres and eco-responsible office supplies (recyclable and/or rechargeable).
• Applying the life cycle analysis to look beyond short-term needs and consider the longer-term impacts of each purchase. In Ireland, GPP criteria for the built environment address the key phases of the construction life cycle: preliminary conditions for the design and performance of buildings (in terms of energy and water consumption for example); construction and maintenance; operation and demolition.
• Stimulating a dialogue between the main actors, procurement officials and potential contractors, in order to incorporate circular requirements for suppliers and design tenders to promote circularity. For example, The Brussels-Capital Region (Belgium) organises "Buyer meet suppliers" events providing public authorities with the opportunity to meet suppliers, stimulate innovation and forge public-private synergies. This could really help build stronger connections among suppliers, the people in charge of preparing the tenders and those who manage the contracts once in place. The region of Flanders, Belgium, implemented the Green Deal Circular Procurement (GDCP) between 2017 and 2019. In total, more than 100 purchasing organisations, local authorities, companies, financial institutions and 54 facilitators were involved.
• Considering dividing public tenders into lots that enable SMEs and local self-employed workers to participate can be a way to upscale innovative circular projects. The Brussels Region divides the tenders into product design, product use and the phase of closing loops. Some of the requirements include that suppliers reuse assets at the end of the use phase of products. To only mention IT equipment, it requires that these types of equipment get reused or donated to an association for reuse.
• Creating a monitoring and evaluation framework for GPP to analyse procurement policy results, enabling the city to incorporate the lessons learned in the design of new procurement policies and regulations. The city of Toronto, Canada has developed a Circular Economy Procurement Implementation Plan and Framework to use its purchasing power as a driver for waste reduction, economic growth and social prosperity.

Ander Eizaguirre and Mariam Fofana, Policy Analysts, Water Governance and Circular Economy Unit, OECD Cities, Urban Policies, and Sustainable Development Division, OECD, contributed to this interview.