As a responsible consumer, government has a role to play in driving Australia's transition to a circular economy. Practicing sustainable procurement and increased purchasing of recycled materials is essential in leading the way.
In December 2020 the Department of Agriculture, Water and the Environment hosted a masterclass on the circular economy and sustainable procurement intended for Australian government officials.
At this masterclass, circular economy specialist, Dr Scott Valentine and sustainable procurement expert, Jean-Louis Haie joined DAWE’s Acting Director of Sustainable Procurement, Catherine Caldwell to discuss the intersection of circularity and sustainable procurement, and provide practical examples of how government can drive circularity through procurement of recycled content.
An introduction to circular economy
Presentation by Dr Scott Valentine, Director and Senior Circular Economy Specialist, KPMG Australia. Video length: 30 minutes.
Our first speaker today is Dr Scott Valentine. Dr Valentine is a former professor and Associate Dean of Sustainability and Urban Planning at RMIT Melbourne. Scott has led major research projects in Denmark and Holland around the circular economy, with a particular emphasis on corporate strategy and public policy design and implementation. In Australia, Scott is a member of the Standards Australia Committee and Joint Standards Australia, Standards New Zealand Committees for development of an international standard on the circular economy. Scott has also recently been appointed Chair of the Planet Ark Circular Economy Hub Circular Economy Working Group. Welcome Scott.
Scott will provide an introduction to the circular economy and let us know how government can lead the way. Scott, over to you.
[Slide with text saying ‘Constructing a Circular Economy’, ‘An introduction to the circular economy, and how Government can lead the way’, ‘Presented by Dr Scott Valentine’]
Dr Scott Valentine:
Great. Okay. Thanks folks. Sorry. We’ve got a little bit of a reverberation here. Thank you so much for inviting me and for giving me the opportunity to join you and speak about the circular economy.
Before we begin today, I’m unfortunately going to have to beg your indulgence here as I take a quick step backwards to the foundations of the circular economy. And there’s a very good reason for that. In most nations when the circular economy is at a growth stage, an immature stage, there is a tendency to begin to conceptualise the circular economy from a recycling standpoint, and this poses a potential challenge when we are approaching policy design and development. So I just wanted to help to reconceptualise what we’re trying to achieve with the circular economy before we embark on a discussion of policy itself.
Now this waste hierarchy diagram should be a diagram that is familiar to a great many of you. What’s interesting about this diagram is that it also has implications for economic development. If you look at the diagram, and in particular hone in at the higher levels of the hierarchy, the refuse and reduce areas, one of the elements that is important to recognise when planning the circular economy as an economic development lens is that these higher order activities are actually higher in resource productivity as well, therefore they’re more desirable.
Let me give you an example. And I’d like to give you an example of a pickle jar, mainly because if you have an opportunity to give an example on anything, shouldn’t it be a pickle jar? Well if you talk about reusing something like a pickle jar, the whole idea behind it is you take a jar, you’ve used the contents, and then you rinse it out and you re-task it for something else. Now when you think about that economically, reusing that same jar for something else requires very little resource inputs. Indeed in most of the times it’s just a matter of rinsing it out and reusing it.
If we move down a little bit on the hierarchy to repair and remanufacture, we see a fairly similar profile. For example, if you’ve got a computer and you sell it – say you’re a computer manufacturer – you sell it to a consumer, and somehow you can get that computer back again after a certain period of time. You can open it up, you can replace the components that are no longer working, buff it back a coat, and then sell it back into the market place. Really what you’ve incurred there are just the costs of repairing the computer itself, so very minor cost. For incurring these very minor costs, you’ve essentially sold the computer twice. So that’s what I mean by higher productivity along the waste hierarchy.
Now if you turn down to the bottom of this, you see recycling, and here’s where the interest really lies, because there’s a lot of talk about recycling as a foundation to the circular economy. Well let’s think about recycling in terms of our infamous now pickle jar. So you’ve got a pickle jar, but now you want to use it for pickles again. So what do you do? You take your pickle jar, you send it back out to a recycler who transports it, so uses transport and labour, they then crush it back down into its constituent parts, it then gets reground up and reprocessed into another pickle jar. So what’s happened in the recycling process is that you’ve taken a product that required energy, labour, the cost of materials, equipment, investment, transportation, and you’ve crushed it up, and then you’ve infused the same amount of labour, energy, investment to create a new product. And this is why folks recycling is at the lower end of the hierarchy, because the whole recycling process takes so much more effort and cost, that it is a lower level contribution to economic development.
Now I’ve bored you with this for a long time, because it’s really important to understand that waste hierarchy when it comes to conceptualising the circular economy. So as you can see with my model of the circular economy here on the right, what you see is the emergence of our waste hierarchies again. So to define the circular economy, what’s really happening here is we’ve got a macro economic strategy. It’s designed specifically to optimise waste or to optimise the use of resources throughout the entire economic system. And if you do that, you infuse higher levels of productivity into the economy, you make businesses more productive, therefore more competitive, and you strengthen local businesses, enabling them to compete successfully in international markets. That is the allure of the circular economy.
So when you look at it in terms of my butterfly diagram, what you see here is commitments at the beginning to both the refusal or avoidance and reduction of waste, both at the virgin resource use stage, and also in terms of inputs into production and to consumption. So you’re trying first and foremost – if you want a circular economy to work, you want people to use as few resources as possible. So that’s point number one.
Point number two is you’ve got producers and consumers. They are all doing stuff. They’re buying things and they’re using things. What you want them doing is you want them re-tasking the materials that they can re-task at higher orders of the hierarchy. Because if you do that, you’ve still got the embedded productivity in the products. So each of these little small circles, the small loops that you see in this butterfly diagram, are actually corporate strategies that can be put in place to allow companies to operate at higher levels of that waste hierarchy, and therefore become more profitable. That folks is what the circular economy is all about, and that’s what we’re trying to do when we are sitting down with governments to try to give them advice on how to structure the circular economy.
So how do you do it? That’s really the next question isn’t it? Well this is a small diagram of a normal pathway to developing a circular economy from the bottom up. It starts with something that isn’t even related to the circular economy, which is an environmental and stakeholder analysis of a region, a council area, or even a nation, to begin to understand what the aspirations of people are. Because at the end of the day, we’re not practicing the circular economy in order to make circles. What we’re doing is we’re practicing the circular economy in order to enhance economic inputs into an economic system that is desirable for the nation.
So the first stage is really an outreach program that’s designed to interact with stakeholders in order to help to understand what they want to achieve economically. The second stage then, once you understand what people aspire their nation to be, is to then begin to construct a circular economy vision. This cannot be done top down. I emphasise that. When you are constructing a circular economy vision, you have to do it from the bottom up. What that means is you need to get out to all stakeholders that could possibly be economically involved in the circular economy, and you need to understand their willingness and capacity to get involved. At KPMG we have a program called Circular Champions, which does just that.
At stage three, what you’re doing there is you’re now starting to flesh out the map that you’ve constructed in the circular economy vision. And so what you’re trying to do here is you’re trying to identify anchor tenants or anchor companies that can help to drive the circular economy. Now this is all getting a little bit potentially confusing, so let me just step back for a minute and talk about this as if we were trying to build a shopping centre. If you’re trying to build a shopping centre, you want to find out at stage one what the environment is like and where you’re going to site your shopping centre. Stage two, you want to sit down with the developers and understand what your shopping centre should look like. Stage three is the search for anchor tenants, whether it’s a David Jones or a Kmart or Big W, to drive volume in your shopping centre. Well that’s very similar to what we’re trying to do in the circular economy. You want to have a grounded stakeholder engaged participative discussion over who can do what in the circular economy.
Once you’ve got the major companies on board – and these are companies that typically are very resource intensive, they are recyclers, they are advanced materials reprocessing companies – once you have them on board, then you can move to the fourth stage, and the fourth stage is really then starting to look for the connections in the ecosystem. So if you’ve got for example a number of organisations that have material – so you’ve begun in stage three with a number of recyclers – well in stage four what you’re doing is you’re looking for companies that connect with those recyclers to create new products. And so here, once again, it needs to be grounded bottom up planning. You need to get out into the community. You need to be discussing prospects with entrepreneurs and innovators to see whether or not there is a level of interest in participation. Because if you judge the level of interest properly, it does not cost you as much to create subsidies to drive the market. So stage four is really about filling the gaps and fleshing out your circular economy. And again, at KPMG, we’ve got a program specifically for that called the Circular SME Program.
And then finally the last stage in the process is the fortification of the ecosystem, and this is where you start to bring in university connections, public programs, local schools, retailers and retail spaces, social ventures, and these companies are then starting to drive the circular economy back toward the stakeholder aspirations that have been identified for a given planning area. This folks to me is what a circular economy progressive journey looks like.
And if you do this right, you begin to develop an understanding of the types of activities that take place within the circular economy. So here’s an example of an engagement that we had with the Council of Hume, which is a city on the outskirts of Melbourne central. Now Hume has a lot of industrial activity. So on the bottom left, when we were engaging with Hume, we began to talk about the need for a materials marketplace. We need to trade the materials. We also began to conceptualise around who the recyclers are in the given council area, and what kind of advanced materials repurposing capabilities does Hume have.
Now once we did that, these started to take shape on one of our maps, and as we began to map this out, we realised okay, we’ve got control over our resources. Now we need to figure out where they should be going. And so if you turn to the bottom right side of this chart, you can see that there’s a number of programs focused around the development and enhancement of activities to support entrepreneurs and innovators. So creation of maker spaces, creation of events hubs, Circular Advantage, which is one of our capacity building programs for SMEs. These are all the types of initiatives that need to be developed in order to support entrepreneurs who then can tap into this resource base and create products.
Create products. Where? How? When? Well to do that, we move down to the bottom left here. And as you can see here in the case of Hume, we began to talk about the need for physical innovation space. So we began to talk about the idea of the design of CE innovation hubs. And if we had innovation hubs, the innovations need to somehow be supported. So we began to talk about a coalition of universities, which we called multiversities, for supporting the circular economy. So now we’ve got innovation hubs supported by university R&D, but wait a minute. There’s a vision in Hume. One of the visions, the aspirations, is to have improved social impact. And so therefore we need to look at ways in which we can design social impact businesses that can fit into this model. So all of these things begin to develop as you have the stakeholder engagements.
And finally down at the bottom right hand corner, you see a number of activities that are essentially based on the assumption that we have created something here on the left, businesses now have goods that are circular in nature, they need to sell them. So we need to have community circular economy spaces. We need to have retail spaces. We need to have virtual one stop hubs. So this is the vision of the circular precinct in Hume that we’ve been working on, and it’s not dissimilar from the types of visions that one would see, whether it’s with an RDA or an LGA or a number of other regional bodies that have come together to create the circular economy. It all begins with a bottom up consultation with the stakeholders.
Okay. So if you don’t mind, I’ll just have a quick pitch to make the point that at KPMG we recognise that these discussions need to take place at various different levels, so we have various different programs. And I’m not going to get into these programs, but I would like to highlight an important point, which is that at each stage you need to have custom made programs to achieve specific outcomes if you’re trying to build capacity. So for us, on the left, here is our Circular Champions Program. This is the program that is designed to create the conceptual circular economy maps that we then start to flesh out with actual businesses. The middle program, Circular Pioneers, is an engagement program with major industry where we begin to take them through the throes of designing circular economy strategy to fit into our vision. And then finally on the right is the Circular Advantage Program, and that’s a program that’s designed for SMEs that helps them to identify the gaps in the emerging circular economy network so they can begin to pitch for funding in order to create new jobs and new ideas that feed into the circular economy.
Okay. So we talked about building the circular economy, and I wanted to sort of end off – I’m assuming that we started a little bit late, so maybe I can take a couple of minutes. I’m hoping for people to – anyway, we’ll be finished by 3:37. Okay. I’d like to take you through some policy channels of case studies, and I think it’s useful, because it highlights the point that the circular economy is by no means easy, and it’s by no means something that can be undertaken without real careful, deliberative study of the needs of industry.
So here’s the first one. This is a great company. This company is called Interface, and I believe they’ve got a Sydney head office here in Australia. Now Interface has a really great idea. They connect with communities in the Philippines, and they actually pay these communities for their recovered old fishing nets. What this does is it takes all of these fishing nets out of the marine habitat where they cause lots of damage to the species, and it re-tasks this into carpets. So they break down these nets, they re-pelletise the material, they turn them into carpeting, and sell them back into the market.
Let’s think about this if you’re trying to make this work in Australia and you’re Interface. You need to be sure that you are getting a guaranteed flow of this supply of netting. Because if you’re not, you’ve got no business. You’ve got no way to produce your carpets. So companies that are going into the circular economy are always concerned about how are we going to get material that is of a certain quality and of a certain quantity? Something to think about.
Second thing that is I think a second food for thought in terms of policy challenges relates to a discussion I had with the pioneer of Melbourne’s Repair Cafés. I sat next to her at a conference, and I leaned over and I said ‘You are fantastic. Just the fact that you’ve been able to do something like this all across Melbourne, terrific. What is the biggest challenge that you faced when you opened this up?’ Now interestingly, she surprised me with what she said. I never imagined that this would have been her biggest hurdle. But her biggest hurdle was getting insurance to run these repair cafés. And if you think about it, it makes sense doesn’t it? Because here’s a business that relies on volunteer workers to come in to help other people to repair their goods. Now imagine if somebody who is unqualified comes in and repairs a toaster, the person who had the toaster repaired goes home, plugs it into the wall and it sets fire to their house. The Repair Café is indirectly to blame for this isn’t it? So I guess what the case study of the Melbourne Repair Café tells us is that many of these entrepreneurs face extreme regulatory hurdles when they are trying to start up their businesses. And when we’re setting policy, we have to anticipate this if we expect to get entrepreneurs to adopt these types of models.
Okay. Here’s another interesting model of a circular economy initiative. This falls into the sharing of resources category, and it’s a French company called Blabla Car. Now Blabla Car is really interesting, because it’s just got such a simple model. The idea is that say you’re in, I don’t know, Rotterdam, and you want to somehow get to Brussels. So you just go on to the Blabla app and you type in ‘I’m in Rotterdam. I want to go to Brussels. I don’t have a car,’ and you can find somebody who similarly has registered who has a car who wishes to pick up a rider and share the cost. So the driver and the rider share the cost and off they go from Rotterdam down to Brussels.
Now the interesting thing about this – and this is not dissimilar to an Uber model of shared transportation – is when you think about trying to seed these types of opportunities, one of the main policy challenges is keeping people safe. So a young lady gets into a car that is unregistered, goes off to Brussels and never arrives at her destination. What’s happened? So these are issues that companies that are going into this type of business have, but they need to be legislated and regulated because we need to keep people safe. So when we are trying to seed the circular economy, there needs to be a balance between the type of regulations and legislation to keep people and products safe, while at the same time allowing entrepreneurs to move ahead with innovative business ideas.
Another policy challenge that gives rise to some thinking in terms of how difficult it is. So what is the choice when you see a supermarket chain that is running, as you can see on the left here, freezers that don’t have doors on them? Think about how irresponsible that is in general. Now imagine if you have kids. Imagine if one of your children opened your refrigerator door and then went to bed. What would you think? There would probably be a bit of discussion in the house wouldn’t there? And yet in every supermarket around Australia on a regular day we see this type of behaviour. So what’s the balance that we should be finding here if we are trying to reduce greenhouse gas emissions, and we’ve got companies that are not adopting technology that is appropriate for the challenges that we have nationally.
Now what’s really interesting about this challenge is that – and I will not name the company, but I will say that this is a famous supermarket chain in Australia – and interestingly they have just started to adopt, on the lower right here, these types of enclosed refrigerators. Now why did they do so? Well interestingly, the story is this. This company apparently had a CEO, who would be classified as an extreme bone head if you thought through his thought processes regarding this particular initiative. This CEO believed that having an open refrigerator was necessary because people would not open the door to buy things. So if you put a door on a refrigerator, then people would not buy any of their product, and as a result they would go bankrupt. Lo and behold, what happened? The CEO was replaced. A new CEO came in, looked at the research, put doors on to their freezers, and guess what happened? The sales of the company skyrocketed, because people weren’t freezing to death as they wandered through the refrigerated section of the supermarkets.
So here are some real inefficient, ineffective technologies that we see being applied on a regular basis to businesses and industries all across Australia. The question is how do we move these businesses away from ineffective technology? Should it be the carrot or should it be the stick? It’s not an easy or cut and dried question to solve.
Okay. A couple more minutes. So I’ve got one last case study, and then I’ll summarise. So here’s an interesting company. This company is called Nybo Workwear. It’s in Denmark. I worked with them a few years back. They developed a really interesting hospital uniform that was made out of PET bottle fibres. So the great thing about this is that it was perfectly recyclable. Whenever the uniform started to wear out, you could take it back and recycle it back into its pellets and create new uniforms again. But this particular company was unable to sell their hospital uniforms to hospitals. Why? Because hospitals in Denmark do not buy the uniform. Who buys the uniform? Laundries. And laundries are not happy to have mixed fabrics when they’re trying to clean their clothes, because they have to set the machines at different temperatures, and of course they have to use different levels of detergent.
And so here we had a company that had a great idea, a PET fibre uniform, but they couldn’t sell it into the hospitals. And all it took really was a simple green procurement legislation to come around, and as soon as the procurement standards changed at the hospitals, suddenly the laundries began to change. So that’s the type of impact that we can make at the government level through our procurement strategies, and so I’m glad that Jean-Louis is going to be able to talk to you a little bit about procurement strategies going forward.
If I may, just to summarise here. There’s a lot of issues to deal with when we look at moving in to the circular economy. First and foremost is really the role of recycling, because if we have too big a reliance on effective recycling, it takes the market attention away from some of the higher order activities. For example, if you’re recycling a whole bunch of material and that happens to be your new supply chain, that material may not be so easy to procure if you’re trying to re-task it for something else.
But here’s some of the elements that I think you need to look at. You need to have a marketplace. So the question here is do we centralise it? Is it a competitive model? Should it be government run? These are all questions we need to ask. In terms of recyclers and material processing, what’s the council’s role in this? Do we provide recyclers with subsidies to get them to move into select types of materials? Do we set up material processing precincts to allow the circular process to be more efficient? In terms of corporate capacity building, what level of consultant support should be provided? Should the government be providing support to businesses for that? Should education programs be developed in universities for this?
In terms of investment inducements, we need to ask things like what types of procurement programs do we need? What types of investment tax credits should we be giving companies for investing? What types of subsidies should we be giving for companies that invest in recycled material?
I’ll skip this little bit. In terms of seeding innovation, innovation hubs, should the government be providing this? Should this be a PPP relationship? Should this be provided at the state level? With universities or not? Should we have entrepreneurship centres? In terms of quality assurance, what’s the role of the EPA with this? Should this be an independently assured process? Should there be fast tracking, and is that possible to have a fast tracking system? What are the links to insurance programs? Can insurance programs be made affordable so that entrepreneurs can buy cheap recycled products?
In terms of network building, what are the building models? I presented you with some of the KPMG approaches, but there’s many out there. What models should we be adopting? How do we undertake a gap analysis? How do we participate and how do we engage stakeholders in participation?
It’s a really interesting journey that we’re all on, and I’m glad that you’ve joined us in this master class, because this is just the beginning I think of a very complex but very rewarding foray into the circular economy. I’ll tell you this. If we get it right, the circular economy is really exciting. Because it enhances the resilience of businesses, it improves the innovation and entrepreneurship of the nation, and it will significantly reduce our ecological footprints.
So I thank you all for joining me in this first session of our master class, and I will pass you back I believe to Rachel, who will then introduce you to Jean-Louis. Thanks again for joining.
An introduction to best practice sustainable procurement
Presentation by Jean-Louis Haie, former chair to the ISO 20400 Sustainable Procurement Mirror Committee Video length: 30 minutes.
I’d now like to introduce our second speaker, Jean-Louis Haie. Jean-Louis is an internationally recognised sustainable procurement and supply chain management expert, with 12 years of experience across industries in Europe and the Asia-Pacific region. His experience has led him to become the Chairman of ISO 2400 Sustainable Procurement Mirror Committee between 2013 and 2017. Jean-Louis is a regular speaker at sustainable procurement events. Welcome Jean-Louis.
Jean-Louis will provide us with an introduction to sustainable procurement best practice, as well as some examples of how we can reduce waste through procurement.
[Slide with text saying ‘Increasing use of Recycled content through Sustainable Procurement’, ‘An introduction to sustainable procurement best practice, and examples of how we can reduce waste through procurement’, ‘Presented by Jean-Louis Haie’]
Thank you Susanna, and thanks Scott for a very insightful presentation. Can you hear me? So thumbs up for those who I can see. Excellent. So my role today is to give you an introduction to sustainable procurement and how you can use it to drive the circular economy, circular economy objectives, especially through the use of recycled content.
First question for you, all of you who are watching this webinar. If you think about sustainable procurement, what comes to mind? Think about it for 30 seconds. What do we mean by sustainable procurement? What are we trying to achieve through sustainable procurement?
It’s a very important question, because basically if we’re not speaking the same language, then we’re not going to be able to work together on sustainable procurement. So think about it for another ten seconds. When you hear the words sustainable procurement, what does it mean to you?
There are many definitions worldwide, globally around this topic. What you can see on the right of the screen is a bunch of terms you may have heard, and those terms refer to slightly different sustainability issues sometimes in slightly different ways to talk about procurement. But what happened between 2013 and 2017 is the fact that 52 countries globally joined their efforts to develop an ISO standard on sustainable procurement called ISO 20400, and one key outcome of this joint effort was to develop an internationally recognised definition of sustainable procurement, and that’s what you can see on the screen. And what’s really important to remember about that definition is that – well I haven’t put the definition of procurement, and I’ll come back to that, but procurement is a comprehensive and wholistic process to select and manage suppliers. But what’s interesting is to see that we’re really talking about the balance between environmental, social and economic impacts. That’s the first very important aspect. Which means that it’s not green procurement or it’s not social procurement, which is very important for government jurisdictions across Australia. It’s the balance between the people, the planet and prosperity.
And so I really liked when Scott was talking about somehow the [0:39:37] between reducing environmental impacts, but also creating more productivity through circular economy business models. So remember that definition, because it’s very important to understand that we’re talking about a wholistic approach. And the last part of the definition is over the entire life cycle, which is important as well. We’re not only talking about the impacts of what we buy, when we have the product and where we’re using that service, but it’s what happens upstream in the supply chain or value chain, everything that happens before that product comes to office. And it’s everything that happens of course once we get rid of a product or an equipment or an asset. So it’s that whole end of life management or potentially a new life management. So these are very important concepts in terms of the language and how we talk about sustainable procurement.
If you want to look at it in another way, think about the government and think about how the government has the ability through its purchasing power to influence a range of organisations, and especially suppliers I should say – when those suppliers are working on site. So you have service providers coming on your site. If you think about a cleaning service provider, facility maintenance, repairs, waste management that come on your site as well, but you think as well about your local supply chains and your extended supply chains. So that’s the government’s share of influence, and you think about how can the government I guess select, engage and manage suppliers that are doing the right thing in terms of sustainability. That’s really what we are talking about. And when we’re talking about that in terms of sustainability, we talk about a variety of topics. We talk about environmental risks, we talk about human rights, all types of human rights, including the prevention of modern slavery, but also labour standards, health and safety. We’re talking about the impacts of what we buy on the community – if you think about a large construction project having quite a big impact maybe on a community in terms of noise, dust, jobs, and then when it’s done, the actual use of that construction asset. You think about diversity and inclusion. How can we use our purchasing power to promote a more diverse community, provide jobs to the disadvantaged communities, provide jobs to Indigenous businesses, social enterprises, disability enterprises? There is a lot we can do with procurement, and you all know that. Fair practices of course, how we do all of that in a fair, honest and transparent way. And of course environmental opportunities. Carbon, waste, energy, materials, recycling.
All of those issues are relevant to government procurement. They all are. And as mentioned before, it’s about finding the balance when you deal with suppliers about how they should contribute to some of those issues, making sure that nobody’s contributing negatively to those issues. But at the same time, you should think about buying a fleet of cars versus cleaning services or buying paper. The issues will be different. There’s a very important element in the definition of sustainable procurement, which is let’s find the balance between those issues, but let’s also ensure we understand where to prioritise, where are our priorities. So in terms of I guess circular economy objectives, anything can contribute to circular economy objectives, but think about what you buy, think about the RFTs you manage, the contracts you manage. You need to think about where are the contracts and the suppliers and service providers, where there is the most benefits in terms of circular economy. So a question I had for you. Think about it for 30 seconds again. You think about all those sustainable procurement issues. Can you think about any regulations or policies from the Commonwealth Government that would be relevant to those issues? Think about it for 15 seconds.
I saw a question in the Q&A around the new CPRs, the Commonwealth Procurement Rules. So some of you may know, maybe all of you would know, that the Commonwealth Procurement Rules include very clear links to those topics, in terms of labour and ethical standards, environmental issues, or the contribution to the economy. You think about the Commonwealth Modern Slavery Act for example. You think about Indigenous procurement policy. You think about a bunch of environmental regulations you need to comply with. And you have a bunch of policies that are going to be quite important in terms of the environment and circular economy in the future. So if you look at all the policies at the Commonwealth Government level that have a link to procurement, there’s a lot of those that are going to be good hooks for you to work on sustainable procurement. And the idea is that when you look at, or if you’re a contract you’re able to, think about what are those most relevant regulations and policies for that contract based on risks.
Alright. So enough with the basics. But remember, it’s wholistic. It’s looking at the balance, it’s looking at prioritisation, and link it to the existing policies, which are giving you more tractions to work on this. So does the circular economy fit into that? I’m not going to try to be as good as Scott as explaining circular economy and circular procurement, but basically what procurement does is helping to create the demand for those circular economy solutions. So it’s at the centre actually of how do we promote circular economy models, because without demand, the offer cannot thrive. So you think about the clear objective to use more recycled content. We need government through its procurement processes and through all your RFTs and contracts to promote circular economy models, including the use of recyclable content. So that’s where it sits, circular procurement within all of that.
How do you then make it happen?
So procurement is sometimes complex. Sometimes it’s as easy as clicking on an e-catalogue and choosing a product. Sometimes it’s as complex as a mid-year program to develop a new asset or to put in place a new IT system. So there is different I guess levels, different sizes and complexity of procurement. The first thing to bear in mind is that when you’re trying to implement sustainable procurement, there is that international standard called ISO 20400, and that standard has been developed by hundreds of people across the globe to respond to the expectation of how do I manage sustainability within procurement when some of my suppliers are offshore, my supply chains are international, so we need a consistent way of thinking about sustainable procurement. So the ISO standard gives you that, and it’s a guidance document basically that describes how to successfully implement a sustainable procurement program from looking at [0:48:15] or [0:48:16] impacts and drivers, putting in place policy and a strategy, so not only a policy, but a work plan with objectives, accountabilities in the monitoring framework. Then we have the enablers, which are a bunch of middle management practices that are going to help all of you on the webinar today to do it, making sure it’s included in your performance objectives, making sure you’re trained, [0:48:41]. Today is a good example of that, providing some guidance in how we make sure we report on all of that.
All of that is very useful, the red, the green and the orange, but really in the end we’re doing all of that to make sure we are able to change the way we manage our procurement processes, so the way we think about our procurement strategies, the way we select our suppliers, and the way we include sustainability into contract and supply management. So really the idea is that you infuse sustainability with each step of the procurement process before you actually go to the market, before you actually share any information with the suppliers and you engage with the suppliers. But making sure we think strategically about sustainability within that particular context of an RFT or contract or panel or prequal, then it’s making sure we include that into the requirements that we put on suppliers, the evaluation criteria, clarification processes, negotiation when it’s possible, and contract award, making sure that’s part of the contract at least.
And then post-contract award, making sure that we include that in the implementation of the contract, the ongoing supply management, and the actual management of performance and supply and continuous improvement. So you’re going to tell me ‘That’s very nice, but I’ve got to do this on recycled content. I still need to do that on Indigenous procurement. I still need to think about my modern slavery risks. And I still have health and safety and all the environmental management issues, and more’. So is it overwhelming? Is it impossible? My view, my advice to you is make it strategic. So don’t try to do it on everything from the start. Don’t try to infuse a little bit of use of recycled content into everything. Think strategically about your pipeline of RFTs and new contracts. Think about your current suppliers and those where you have a long term relationship and you can work with them throughout the term of that relationship. And pick those that are really essential, and where you think you can achieve outcomes. And this is maybe something you won’t do alone, but is an element of alright, why don’t we try it on that RFT? Why don’t we think strategically about it? We try to do it in a smart way and overcome some of the challenges we may find.
And what are those challenges? So you may have thought already about some of the challenges that you face when thinking about recycled content into a procurement. I’m just going to share two slides with you. The first one is on internal challenges. The second one is on market challenges. Very important to acknowledge that sometimes the supply market isn’t the issue. The issues, the barriers, the challenges are internal. I remember working with a university on sustainable procurement. We had 12 pilot projects that we had prioritised, and then we did an exercise, an internal exercise to think about where are our challenges? Internal or external? And 11 out of 12 had more internal challenges than external challenges. So some barriers. It’s new. It can be a bit disturbing. And sometimes we just have time constraints, so we want to continue as is. It’s much easier to have the same supplier again and again, do the same thing, and maybe it’s been working well so far. But if you want to change something, you may think about how you can review the way you assess costs. That’s what they did in the city [0:53:00] on tyres. You may want to think about how you can concert and engage and again with the end users to understand how a new solution could be implemented. That’s what they did in Denmark on workwear. And you may get some support as well. Sometimes it’s just too hard to do it just with your team, so you may get someone from another team to help you, or an external expert, because some of those issues are technically complicated or there’s regulatory considerations to make.
So basically what we see across the globe, it is possible. It is possible, as long as we think strategically and smartly or cleverly around this. So think about those challenges that you’re going to face and think about how you can manage those. On the screen you have just three examples. There’s so many of those. We could share those later on. But they are some examples that if you have a good internal process to engage with your stakeholders and to think strategically about using recycled content, you will make it happen.
My last slide for this presentation is around market challenges. Internal challenges, they’re hard. You can manage them. Market challenges as well can be quite overwhelming. And again here, nothing impossible. There’s a lot of case studies, great stories, dozens, hundreds of them of how you can overcome market challenges in terms of using recycled content. It’s important to know the standards and frameworks that are in place, understanding those standards, those frameworks, those certifications. There was a question in the Q&A about how can I make sure a supplier is providing truthful information? You can rely on third party information and standards. That’s what they did in the UK on a major construction project. They used some well recognised standards. Understanding available products. The Victorian Government developed that Buy Recycled online directory. What I would say is that a directory is nice, it’s useful, but what’s important is that you understand the list of available products in different locations, understand pricing, understand technical requirements on your specific market. So just like you’re trying to better understand costs and prices in your supply market, or quality issues, if on the product or service you want to look at recycled content, you will need to do your proper market analysis. But that’s an interesting thing to do. It’s a bit new. It’s a bit different. So I really encourage you to think about how you could ask questions to your suppliers about what they currently do.
The last example is from the Dutch Government. The Dutch are so advanced on this. They’ve been doing that for years. They are super-creative as well. And one example of how they did that on a major road reconstruction project is that they said ‘Alright, how can we engage early with the tenderers about what would be the best solution to actually meet on it,’ and they used a competitive dialogue process to do it. And that’s how instead of trying to define the solution for the tenderers, they asked the tenderers to contribute to it and to co-design that solution. That example is for a road, roadwork construction. There’s hundreds of millions of dollars involved. If you’re buying something cheaper, a bit less complex, you will need to find your own solutions to do it. So the idea is that you think about it strategically, you take that topic as something that you would discuss internally with your stakeholders and externally with your suppliers, and that will give you more insights and more input to actually be able to define the right solution with your teams, with your suppliers. I understand it takes time, but my advice is do it well on a few pilots first instead of trying to do it across RFTs using some blanket criteria requirements. It needs to be tailored.
Thank you very much for your time. And I think that’s it for me.
Implementing sustainable procurement for government
Presentation by Catherine Caldwell, acting director for the sustainable procurement team in the Department of Agriculture, Water and the Environment. Video length: 30 minutes.
And now our final speaker today is Catherine Caldwell. Cath helped deliver the Australian Government response to the COAG waste export ban, which included measures to increase demand for recycled content through procurement. She is currently leading the Sustainable Procurement team in the Department of Agriculture, Water and the Environment. The team has been established to assist Australian Government agencies to increase their use of recycled content. Cath will talk us through the opportunity for us to all put sustainable procurement into practice.
Thanks Rachel, and hi everyone. So as Rachel said, I would like to talk us through now what the opportunities are to put sustainable procurement into practice. But as Jean-Louis said in his presentation, we need to think about the relevant policies, and the policy that I want to focus on today is the National Waste Policy. So the government has actually set a target to significantly increase its use of recycled content, and I want to talk today about what products are currently available on the market, and give some examples of how those products could be used by the Australian Government so that we can work towards that goal and that target. I’ll also identify where there’s greatest opportunity for us to buy recycled. So as Jean-Louis was making the point, we need to direct our efforts. So I think that will be helpful for agencies considering how to direct efforts. And I’ll also give some examples of where the Australian Government is already procuring and using recycled content. So in demonstrating what’s available, where the products can be used and how products are already being used, I hope that that will give you some ideas for how to buy recycled within your agencies.
So I firstly wanted to point out that sustainable procurement is not a new concept for the Australian Government. So as Jean-Louis – and I’m pointing back to his presentation, because it was a great kind of concept starter for us. So many of the government’s policies already are kind of working towards sustainable issues. And I also had a look at our website and went through the archives to track back on our sustainability and sustainable procurement policies, and the earliest I could find was 2010 when we had the ICT Sustainability Plan. So that’s a decade ago. And as you can see on the slide, we’ve progressively updated our sustainable procurement policies over the years. And with the release of the National Waste Policy in 2018 and then the action plan to support that policy in 2019, all governments have now committed to use sustainable procurement to help build markets for recycled content. And we’ve updated the Sustainable Procurement Guide, which will be released very soon, to reflect this commitment and to help you in implementing that commitment.
So in March at the National Plastic Summit, the Prime Minister reiterated the Australian Government’s commitment to do its bit. We can play our part by buying goods that are made with recycled materials. But I also just want to say that this isn’t confined just to goods. There are opportunities to also apply this to services where goods are consumed in the delivery of that service. So I think probably an obvious example is cleaning services. So that’s where we can stipulate that packaging of the products is using recycled packaging, and that also we can look to incorporate goods such as paper hand towels and toilet paper that are recycled.
So as Rachel noted in her introduction, the Australian Government does have a significant spending power, and last year we entered into an average of 80,000 contracts worth almost $65 billion. But in order to leverage this power, we need to know where the opportunities are. We need to know what products with recycled content are available, and more importantly, what’s available for the things that we’re buying in the Australian Government.
So we’re seeing an increasing number of brands committing to sustainable products that incorporate recycled materials. So you could assume that the opportunities and what’s on offer is growing. I’ve got a couple of examples of where we might have seen this ourselves. So for example, all made by Google products are now using recycled material, and Google’s committed to using 50% recycled plastic in all its products by 2025. And we’re also seeing Australian brands like Country Road and Oroton who’ve all recently featured recycled content in their products. So even the shirt I’m wearing today, which I went out and bought yesterday from Witchery, contains recycled materials. So it’s becoming common place. And this is great for us as individual consumers, but my team wanted to know if this extended to products that we buy in government.
So we worked with KPMG to have a look at what products are commercially available in Australia that actually contain recycled content, and we searched the existing directories, which Jean‑Louis mentioned a couple of those. So Planet Ark have a directory, Sustainability Victoria and Sustainable Choice in New South Wales. And as you can see from this very busy slide, there are quite a lot of things available at this point in time. And if you look at the products that are on this slide, we can use some of those for all sorts of purposes. So recycled carpet we can use in fitouts of our buildings. Recycled cardboard and paper can be used in the packaging for our cleaning products and ICT equipment. Recycled glass and rubber can be used in road base and asphalt, and we’re seeing that happening in states and territories, and we’ve even got our own Federal Government example which I’ll touch on later. Recycled plastic can be used in clothing. Potentially that could be in the uniforms that we’re buying. And soft plastics can be recycled into many products, including outdoor furniture, decking and bollards.
So next we had a look at where are the opportunities for the Australian Government to buy these sorts of products. So in trying to make it strategic, as Jean-Louis said, we wanted to see where the greatest opportunities were. So what we did was we mapped the available products to the relevant Australian Government procurement categories, and then using the AusTender data for the 19/20 financial year, we looked at the total contract value of each of these categories. And so what this slide is showing is the top nine procurement categories by total contract value, with the highest potential to include recycled content. So it’s essentially the Australian Government procurement categories that have potential to use the most recycled content and where we’re spending the most money.
So I might just pick a couple of categories to explain the opportunity, and if we look at the computer equipment and accessories and the electronic hardware and accessories. So I think the impact of e-waste on the environment and the waste produced from obsolete devices, electronic devices, is a well known contributor to Australian landfill mass, and indeed landfill mass globally. And it has been targeted by local state and federal governments for some time, and we’ve got initiatives like the National Television and Computer Recycling Scheme which has helped divert e-waste from landfill, and encouraged the use of recycled materials in developing these new electronic devices. And this has reduced the demand for virgin materials in this industry. And then if we look at the 19/20 financial year data for the Australian Government, we were regularly procuring goods such as desktop workstations, computer monitors, mobile phones and printing devices, which all have the opportunity for recycled content.
And I might also touch on the project management category, so it might seem a little bit out of place. So in the last financial year, project management contracts consisted of services such as infrastructure, project management, ICT project management and policy and program management. So the opportunity to include recycled content in services is often conceded as low, but if we actually take a step back and think about it, some of the products that are actually consumed in delivering those services have a high opportunity for use of recycled content. So if we think about general consumables such as paper, electronic devices and other stationery items, these can all be sourced from recycled content. So we can talk with suppliers about the goods that they’re using, and encourage them to move to recycled goods. And so this is an example of indirect activities that can contribute to Australia’s achievement of the National Waste Policy.
Now you might be looking at this funnel and thinking there’s not a lot for my agency in here. And while this is about where we can direct our greatest effort, there are categories that do cut across all agencies, like stationery and office supplies. So we’re all buying pens, printing paper and the lanyard clips that we use for our passes, and these are products which we can, and many of us are, buying recycled products. Packaging is also another common product. So we might be buying different things, but it will all come in some form of packaging. And I think a really good example of how packaging is important is a story I heard recently around lanyard clips. So the agency had bought lanyard clips which were made from 100% recycled product, which was fantastic. But when they actually arrived and they opened the box, each of the clips was individually wrapped in soft plastic. So think of the waste that we could have saved if there’d been a conversation with the supplier from the start about how the product was going to be packaged, and if there’d been a conversation about reducing that waste and not wrapping those individually and delivering them in a cardboard box that’s recycled.
So these are experiences that are important for us to share, because I think it helps us stop and think about how this might apply to our own procurements, and helps us learn for the next time.
So from our discussion with agencies, we know that many of you have been embedding sustainability into procurements and your operations, and as I showed from the beginning, sustainability has been around for over a decade now in terms of Australian Government policies. And we know that some of you are already buying recycled content, and I wanted to share a couple of examples which come from the 2020 Sustainable Procurement Guide. So the first one is the National Plastic Summit which happened in March this year and was hosted by the Department of Agriculture, Water and the Environment. And for this event, DAWE worked with the supplier to put a focus on waste minimisation and recyclability, and this was delivered in a number of ways. So the delegate lanyards were made from recycled plastic bottles, and the delegates were required to hand those lanyards back in at the end of the event so they could be re-used at future events. Name badges were printed on recycled stationery and recycled card, and then the signs that were used at the event were made out of recycled corflute.
The other steps that were taken were to ban the use of single use coffee cups at the event, and then also to use technology to provide delegates with the program online. So there was actually no paper programs printed at all. So that was done through a summit app, and that was also used by delegates to network and for the event organisers to be able to push messages out during the event.
So the second example I wanted to touch on is one I mentioned earlier, which was the use of recycled plastic in roads, and this year the Department of Defence delivered its first recycled road at RAAF Base Williams in Point Cook. And they did this by collaborating with industry to come up with an innovative and sustainable solution that was an alterative to using virgin asphalt, but still met the capability outcomes for the project. So this project ended up consuming 180 tonnes of PlastiPhalt asphalt. So that’s asphalt that is made from using recycled toner cartridges. And in that project, that consumed 600 kilograms of plastic and 210 tonnes of concrete waste rubble that had been crushed and re-used as sub-base material.
So these are just a couple of examples of where procurements are using recycled content or where we’re working to minimise waste. And with the government’s commitment to increase our use of recycled content, we all need to consider how our agencies can buy recycled.
So I wanted to leave you with a case study from Parks Australia on Christmas Island, which although it’s a small procurement, I think it’s a really lovely illustration of what I’d say hits a national waste policy trifecta. So Parks Australia has just bought a table which is being made from 100 percent recycled plastic, which will be placed in the Christmas Island National Park. And the majority of that table is being made from reclaimed ocean plastic, and then the rest is coming from plastic waste collected from the local community. So the table’s going to be located in a reclaimed mine site, which is now overgrown with vegetation and home to native birds, and also marks the former lookout point. Now Parks Australia could have bought a cheaper table, but they saw the value in supporting a local start-up, which is called Eco Crab, who are working in the community to avoid waste, improve the Island’s resource recovery, and improve the use of recycled material.
So Eco Crab was established by a couple of Christmas Island locals, Tanya and Jake, in March last year, who had returned to the Island and were quite shocked at the tonnes of plastic waste that was washing up on to the beach from the Indian Ocean region. And they were also surprised at the lack of recycling services in the community. And so what they did was set up bins where the local community, school groups etcetera, and households could come and drop off their plastic waste. And they also run beach clean ups at Greta Beach, and then they take the plastic from those beach clean ups and from the community and are creating recycled products. So at the moment they are making tables and boardwalk planks. And I think this is a great example of a local community taking responsibility for its waste, and how Australian Government procurements can support this sort of innovation.
So now you’ve got some insight into what products are available and some examples of how they can be used by the Australian Government, I hope that you’ll consider the opportunities for your agency to buy recycled. Thanks