Why circular procurement boosts resilience and margins

La sostenibilità è un business case: circular procurement reduces emissions and creates cost savings while building resilience

How circular procurement is reshaping corporate sustainability
Sustainability is a business case: companies that embed circular procurement into sourcing strategies can lower costs, reduce scope 3 emissions and unlock new revenue models. From an ESG perspective, circular procurement is not a marketing exercise but a pragmatic lever to improve margins and resilience.

Leading companies have understood that aligning purchasing decisions with product life‑extension and material circularity drives both risk reduction and competitive advantage.

1. Emerging sustainability trend: why circular procurement now

Who is driving the shift? Procurement teams at multinationals, sustainability officers and investors are converging on circular purchasing criteria.

What is changing? Buyers now account for end‑of‑life impacts, repairability and return flows in contracts. Where is this taking place? Adoption is visible across electronics, apparel and industrial equipment supply chains. Why now? Regulatory pressure, rising material prices and investor scrutiny are making linear procurement models less tenable.

From a practical standpoint, circular procurement targets three levers: specify durable and repairable designs, require take‑back or leasing models, and prioritise verified secondary materials. These actions affect scope 1-2-3 accounting and lifecycle assessment (LCA) outcomes. The business case is tangible: lower total cost of ownership, new service revenues and improved supply resilience.

How to begin implementation in practice? Start with spend analysis to identify high‑impact categories. Integrate circular criteria into tender documents and KPIs. Pilot contracting with a few suppliers and scale based on outcome metrics such as reuse rates and material recovery. From an ESG perspective, rigorous supplier data and third‑party standards shorten the path from policy to measurable results.

Examples of guidance and standards that companies use include GRI, SASB and the Ellen MacArthur Foundation frameworks for circular design. Companies that pilot leasing or take‑back schemes report reduced raw material exposure and prolonged customer value capture. A clear roadmap—category prioritisation, contractual terms, performance metrics, verification—enables procurement to shift from compliance to value creation.

2. business case and economic opportunities

Over the past three years interest in circular models has accelerated. Stricter regulation, volatile commodity prices and investor scrutiny of supply-chain scope 1-2-3 footprints have driven that shift. Sustainability is a business case: circular procurement lowers exposure to raw-material shocks and improves cost predictability.

From an ESG perspective, circular design reduces operational risk and enhances disclosure quality. Life cycle assessment (LCA) tools now enable clearer quantification of environmental benefits and stronger evidence for stakeholders. Leading companies have understood that moving beyond linear purchasing toward circular design creates measurable value across procurement, operations and brand reputation.

Economic opportunities span multiple levers. Recovering materials and components lowers material spend and stabilises margins. Product-as-a-service and remanufacturing open new recurring-revenue streams. Design for disassembly and modularity shortens repair cycles and reduces total cost of ownership. These changes also strengthen negotiating power with suppliers by shifting the conversation from price per unit to total lifecycle cost.

How to capture the opportunity in practice requires clear priorities. Start with category-level analysis to identify high-impact spend areas and suppliers with reuse potential. Embed circular requirements into contracts and supplier scorecards. Use pilot projects to validate cost assumptions and operational readiness before scaling. From an implementation perspective, data governance and LCA-aligned KPIs are essential for tracking progress and avoiding greenwashing.

Examples from the market show the approach in action. A multinational electronics firm reduced component procurement by reusing modules across product lines. A global furniture brand cut material costs by designing for repair and resale. These cases demonstrate that circular strategies can be implemented within existing supply chains without radical disruption.

Roadmap items for procurement teams include:

• conducting an LCA-informed category prioritisation
• defining contractual terms that enable returns, repair and remanufacture
• setting performance metrics aligned with scope 1-2-3 reporting
• running time-bound pilots with clear success criteria
• investing in supplier capability building for circular operations

Dal punto di vista ESG, integrating these steps supports both resilience and investor-grade reporting. The next section examines practical implementation at scale, with examples from companies that have moved procurement from compliance to value creation.

…e next section examines practical implementation at scale, with examples from companies that have moved procurement from compliance to value creation.

From a finance perspective, circular procurement produces measurable results. It lowers total cost of ownership through extended asset life. It reduces disposal fees and creates new revenue via product-as-a-service and remanufacturing. Leading companies have understood that integrating circular clauses into contracts turns suppliers into innovation partners. Carbon neutral claims backed by procurement-led interventions also strengthen brand value and improve access to green financing.

Key economic levers include:

• Reduced procurement spend through refurbished and remanufactured components.
• Lower scope 3 emissions via material reuse and deeper supplier collaboration.
• New revenue streams from take-back, refurbishment and resale programs.

3. How to implement in practice

From an ESG perspective, implementation requires shifting priorities, not just policies. Sustainability is a business case when procurement teams are empowered to measure lifecycle value.

governance and targets

Assign clear responsibilities across procurement, sustainability and finance. Set targets tied to total cost of ownership and scope 1-2-3 metrics. Embed circularity clauses in supplier contracts and KPIs.

procurement processes and contracting

Revise tender criteria to value durability, reparability and service models. Score bids on lifecycle cost and end-of-life obligations, not only purchase price. Use performance-based contracts and take-back clauses.

supplier engagement and capabilities

Map supplier capabilities and material flows. Co-invest in remanufacturing, refurbishment or reverse-logistics where scale justifies it. Treat strategic suppliers as partners for innovation.

data, measurement and reporting

Implement life cycle assessment (LCA) and supplier-level emissions reporting. Track circular indicators alongside procurement savings. Use recognised frameworks such as GRI and SASB for disclosure alignment.

pilots and scaling

Start with focused pilots on high-impact categories. Test business models—product-as-a-service, leasing, or buy-back—before scaling. Document costs, savings and carbon reductions to build internal buy-in.

Case examples illustrate feasibility. Several multinational firms have converted office equipment and industrial components to service models, cutting procurement spend while lowering scope 3 footprints. These pilots demonstrate concrete pathways from compliance to value creation.

From a finance perspective, circular procurement produces measurable results. It lowers total cost of ownership through extended asset life. It reduces disposal fees and creates new revenue via product-as-a-service and remanufacturing. Leading companies have understood that integrating circular clauses into contracts turns suppliers into innovation partners. Carbon neutral claims backed by procurement-led interventions also strengthen brand value and improve access to green financing.0

• Assess high-impact categories and material hotspots.
• Set integrated financial and ESG targets.
• Design pilots with clear success metrics.
• Negotiate contract clauses that enable circular supply chains.
• Scale proven models and report outcomes to investors and stakeholders.

From a finance perspective, circular procurement produces measurable results. It lowers total cost of ownership through extended asset life. It reduces disposal fees and creates new revenue via product-as-a-service and remanufacturing. Leading companies have understood that integrating circular clauses into contracts turns suppliers into innovation partners. Carbon neutral claims backed by procurement-led interventions also strengthen brand value and improve access to green financing.1

phased, data-driven implementation for procurement-led circularity

Carbon neutral claims backed by procurement-led interventions also strengthen brand value and improve access to green financing. From an ESG perspective, that makes a phased, data-driven approach essential. Sustainability is a business case that must start with evidence. Use life cycle assessment and supplier emissions data to map highest-impact categories first.

practical implementation steps

1. Prioritize categories by spend, emissions intensity and circularity potential. Focus on categories with high LCA impact and scalable supplier partnerships.
2. Set measurable KPIs such as percent of reused material, reduction in scope 3 kgCO2e and share of products designed for repair. Make targets time-bound and auditable.
3. Revise contracts to include lifetime clauses, take-back requirements and incentives for remanufacture. Link payments to verified circular outcomes where feasible.
4. Partner with suppliers to pilot circular models and share costs and benefits. Use co-investment to reduce capital barriers and test different business models.
5. Scale with procurement technology for traceability and LCA integration. Embed digital product passports and supplier dashboards to monitor performance in real time.

execution risks and standards

Avoid two common pitfalls: treating circular procurement as a CSR exercise only, and failing to track scope 3 impacts with rigour. From an ESG perspective, weak measurement erodes both environmental outcomes and investor confidence. Align reporting with SASB and GRI standards and apply Ellen MacArthur Foundation guidance for circularity metrics to ensure comparability.

operational roadmap

Begin with a pilot covering one or two prioritized categories. Measure baseline emissions and material flows. Iterate procurement terms and commercial models based on pilot results. Scale successful pilots across categories using procurement tech and supplier scorecards.

business case and expected outcomes

Leading companies have understood that procurement can shift value from cost control to value creation. Expect reductions in scope 3 emissions, improved material circularity and strengthened access to green finance. The next step is integrating these metrics into capital allocation and procurement KPIs to lock in results.

4. Examples of pioneering companies

Several multinationals have moved from pilots to portfolio-level programs. These cases show practical pathways to scale circular models.

• Company A: shifted to remanufactured components across a major product line, reducing procurement cost by 12% and cutting scope 3 emissions by 18%.
• Company B: introduced a product-as-a-service model for electronics, retaining ownership and recovering 60% of material value at end of life.
• Company C: embedded circular KPIs into supplier contracts and achieved early wins in packaging reuse, supported by LCA-based claims.

Leading companies have understood that cross-functional governance — procurement, R&D, legal and sustainability — is essential to scale these examples across business lines. From an ESG perspective, aligning procurement incentives with circular targets turns sustainability into measurable value.

5. Roadmap for the future

Sustainability is a business case that requires concrete milestones and capital alignment. The next step is integrating these metrics into capital allocation and procurement KPIs to lock in results.

Trend: companies are moving from isolated pilots to systems-level change. This shift demands clear ownership, data standards and finance integration.

Business case and opportunities: circular strategies reduce material cost volatility, improve recovery rates and strengthen access to green financing. Leading companies have understood that early investments in reverse-logistics and design-for-disassembly accelerate payback.

How to implement in practice:

• Define a limited set of procurement KPIs tied to material recovery and unit cost improvements.
• Require supplier data formatted for LCA comparability and integrate it into sourcing decisions.
• Allocate a share of capital expenditure to reverse logistics, refurbishment capacity and digital tracking systems.
• Set time-bound pilots that explicitly convert performance gains into procurement price adjustments.

Examples of practical steps already taken by pioneers include supplier contract clauses that reward return rates and internal chargeback mechanisms for end-of-life handling. From an ESG perspective, these moves both reduce scope 3 exposure and generate measurable savings.

Roadmap for scale: prioritize high-volume product lines, cascade targets into regional procurement teams and publish aggregated metrics to build market confidence. Measurement and transparency will be decisive for investor and regulator scrutiny.

Expected development: corporate procurement will increasingly link circular KPIs to capital decisions and supplier performance. This alignment will determine which circular models move from pilot to portfolio-wide adoption.

roadmap to scale circular procurement

This alignment will determine which circular models move from pilot to portfolio-wide adoption. From an ESG perspective, three implementation horizons guide procurement teams and finance partners.

short-term (0–12 months)

Run pilots on the highest-spend categories to test circular inputs and supplier capabilities. Set targets for circular input rates and align procurement KPIs with sustainability objectives. Standardize simple reporting templates to capture baseline data. Measure early and iterate. These steps de-risk scale-up and generate the first performance narratives for investors.

medium-term (1–3 years)

Integrate lifecycle assessment into category sourcing choices. Renegotiate master agreements to include circular clauses on take-back, repair and recycled content. Standardize supplier reporting using GRI and SASB-aligned metrics and verify data quality. Leading companies have understood that embedding LCA and contractual levers unlocks measurable scope 3 reductions.

long-term (3–5 years+)

Shift toward product-as-a-service models where the business case supports it. Demonstrate continuous reductions in scope 3 emissions and publish verified progress toward carbon neutral claims. Invest in circular design and reverse-logistics infrastructure to secure supply and reduce costs over time.

business case and practical steps

Sustainability is a business case: reducing material spend and exposure to raw-material volatility improves margins. Start with categories that combine high environmental impact and clear cost levers, such as packaging, textiles or electronics.

From procurement to legal and finance, assign clear ownership of metrics and budgets. Use pilot results to build the internal financial model that justifies wider rollout.

implementation checklist

• Map top-emitting categories and suppliers by spend and impact.

• Select 1–2 pilot categories and define quantitative targets.

• Require supplier reporting aligned to GRI/SASB and perform third-party spot checks.

• Embed circular clauses in renewals and master agreements.

Run pilots on the highest-spend categories to test circular inputs and supplier capabilities. Set targets for circular input rates and align procurement KPIs with sustainability objectives. Standardize simple reporting templates to capture baseline data. Measure early and iterate. These steps de-risk scale-up and generate the first performance narratives for investors.0

examples and expected developments

Run pilots on the highest-spend categories to test circular inputs and supplier capabilities. Set targets for circular input rates and align procurement KPIs with sustainability objectives. Standardize simple reporting templates to capture baseline data. Measure early and iterate. These steps de-risk scale-up and generate the first performance narratives for investors.1

Run pilots on the highest-spend categories to test circular inputs and supplier capabilities. Set targets for circular input rates and align procurement KPIs with sustainability objectives. Standardize simple reporting templates to capture baseline data. Measure early and iterate. These steps de-risk scale-up and generate the first performance narratives for investors.2

scaling and measuring impact for portfolio-wide adoption

These steps de-risk scale-up and generate the first performance narratives for investors. Effective scale requires three linked actions: robust measurement, dedicated funding, and clear governance. Each action reduces uncertainty for procurement teams and capital allocators.

measure what matters: metrics and data systems

From an ESG perspective, align metrics with recognized standards such as SASB and GRI. Prioritise indicators that trace emissions through scope 3 and capture circular outcomes via product lifespan and material recovery rates. Embed lifecycle thinking using LCA data to compare circular models on total environmental impact rather than unit cost alone.

finance the transition: funding and commercial incentives

Sustainability is a business case when financiers see predictable returns and reduced risk. Establish ring-fenced budgets for circular pilots and performance-based contracts that reward suppliers for demonstrating greater material circularity. Use blended finance to bridge early-stage cost gaps and scale proven models.

build capability: procurement skills and supplier ecosystems

Invest in supplier development and procurement training that emphasises contract design for reuse, repair and take-back. Leading companies have understood that building supplier capability multiplies impact across categories. Create supplier scorecards that integrate circular criteria into sourcing decisions.

communicate results: investor narratives and market signals

Demonstrate outcomes with transparent reporting and verified data to attract investor interest. Use pilot results to renegotiate terms and to expand circular clauses across frameworks agreements. Clear, verifiable metrics send powerful market signals that lower cost of capital for circular suppliers.

roadmap for the next portfolio cycle

Operationalise the most promising pilots with phased rollouts tied to specific KPIs. Prioritise categories with high scope 3 impact and where circular interventions offer clear value for money. Apply product-level LCA to guide procurement choices and to avoid burden-shifting across value chains.

Practical steps for teams: set measurable targets, secure dedicated funding, upgrade procurement contracts, and publish verified performance data. These actions create repeatable processes that scale circular procurement from experiment to standard practice.