Packaging Procurement: How to Drive Sustainability With the Circular Economy Model

As sustainability becomes a core business imperative, the circular economy model offers a groundbreaking shift, especially for procurement. It challenges the traditional linear approach of "take, make and dispose" and proposes a sustainable strategy focused on resource efficiency, waste minimization and recycling. 

With packaging materials, this shift is especially significant, because it allows procurement leaders to play a critical role in sourcing and value creation through sustainable practices. 

Addressing Greenhouse Gas Emissions 

A circular economy approach to plastic packaging can reduce greenhouse gas emissions by 25%, according to the Ellen MacArthur Foundation. 

This model minimizes the reliance on virgin plastics, which are energy-intensive and contribute significantly to emissions. Procurement leaders can strategically source recycled or bio-based materials and help their organizations meet sustainability goals while also reducing costs associated with carbon taxes and regulatory compliance. 

Global Packaging Waste and the Opportunity for Procurement 

The global packaging industry consumes about 78 million tons of plastic each year, of which only 14% is recycled, according to the World Economic Forum. 

Packaging is essential for product protection and transportation, but the predominance of non-renewable materials has led to severe waste accumulation. 

For procurement, the circular economy offers a way to not only reduce environmental impact but also drive innovation in material sourcing. Procurement can significantly reduce waste and support a regenerative supply chain by choosing suppliers that prioritize recyclable and compostable materials. 

Value Creation and Cost Savings in Circular Procurement 

By adopting circular principles, the packaging industry could realize annual savings of $7 billion in material costs. For procurement leaders, these savings translate to value creation and competitive advantage. Circular design and sustainable sourcing reduce dependency on raw materials, lowering both procurement costs and supply chain risks. 

Aligning with circular economy goals also improves brand reputation and can drive consumer loyalty, offering a competitive edge in a market increasingly focused on sustainability. 

Growth in Bio-Based Packaging and Sustainable Sourcing 

The bio-based packaging market is expected to grow at a 7% CAGR between 2021 and 2028, driven by demand for renewable materials such as agricultural waste and plant-based polymers. 

Strategic procurement of bio-based materials, such as bamboo or mushroom mycelium, reduces reliance on fossil-fuel-based plastics and demonstrates a commitment to environmental stewardship. 

This shift also builds resilience by diversifying the supplier base, ensuring that companies are less exposed to fluctuations in oil prices that impact traditional plastic costs. 

Promoting Reuse and Refill Models 

Refillable packaging systems, like glass bottles that can be reused up to 50 times, offer significant reductions in waste and resource consumption. Procurement leaders can champion reusable packaging by sourcing products designed for durability and extended lifecycle. By encouraging suppliers to adopt reuse models, procurement can reduce expenses associated with single-use packaging and disposal. 

Enhancing Recycling Rates Through Strategic Supplier Partnerships 

While recycling rates vary — about 58% for paper and cardboard packaging in the EU compared to 39% for plastic — procurement can drive change by partnering with suppliers who prioritize recycling. 

Advanced recycling technologies, such as chemical recycling, can break down complex polymers for reuse, enabling a high-quality circular supply chain. Strategic supplier collaboration allows procurement teams to prioritize materials with high recycling potential, thus reducing reliance on virgin resources and enhancing overall material circularity. 

Key Focus Areas for Procurement Leaders 

1. Supplier Collaboration: 

Procurement teams should engage suppliers who prioritize sustainable materials, waste reduction, and recycling initiatives. 

2. Circular Design Initiatives: 

Sourcing materials and products that are designed for reuse, recyclability, or biodegradability is essential to fully embrace circular economy principles. 

3. Investment in Innovative Materials: 

From bio-based packaging to recycled content, procurement leaders should focus on sustainable materials that reduce environmental impact and support resilience in the supply chain. 

4. Internal Alignment and Consumer Education: 

It’s essential for procurement to work with other business units to foster an organization-wide commitment to circular principles, educating consumers on the environmental impact of their choices. 

To Sum Up 

The circular economy model is more than just a trend. By fostering supplier relationships grounded in sustainability, reducing reliance on virgin materials, and promoting recycling and reuse, procurement can play a pivotal role in achieving long-term environmental and economic resilience. 

Author: Chris Casey