Materials & Inputs

Business Case

Financial resilience

Circular material strategies directly reduce input costs by replacing virgin materials with recycled, reused or salvaged alternatives. Diversifying material sources beyond virgin inputs reduces exposure to commodity price swings and geopolitical disruptions that drive up procurement costs. Extending the useful life of procured materials through reuse, remanufacturing and recovery further reduces spend by turning end-of-life disposal costs into cost avoidance or revenue opportunities.

Investor confidence

Companies with demonstrated circular material practices and verified recycled content strengthen their ESG performance and climate reporting, as recycled and recovered materials generally carry a lower carbon footprint than virgin alternatives, directly contributing to Scope 3 emissions reduction. As investors increasingly screen portfolios for resource efficiency and supply chain sustainability, companies with mature circular procurement programs attract stronger ratings and reduced divestment pressure.

Legal and regulatory compliance

Procuring non-toxic, recyclable and traceable materials reduces compliance risk as substance restrictions and extended producer responsibility requirements continue to expand across markets, such as digital product passports, chemical bans and traceability mandates.

Market access

Companies that can demonstrate circular content and material traceability gain competitive advantage in tenders, particularly with institutional buyers and government procurement bodies that increasingly require evidence of circular practices.

Operational continuity

Maintaining access to secondary and recycled material streams provides alternative supply pathways, reducing the risk of disruption when primary sources become scarce or unavailable.

Strategy & Planning

Assessment

Initial Action

Assess current state of material specific sustainability priorities for the business and conduct analysis of current value chain to determine priority materials and supply chains to target in the context of supply chain-specific circularity based on market research.

Intermediate Progress

Conduct detailed material circularity assessments for priority categories, evaluating the gap between current supplier material practices and the circularity targets set in your policy, including recycled content levels, hazardous or high-risk material exposure, packaging circularity, take back readiness across the supplier base or alternate routes.

Identify the product ranges where recycled materials can be used, replacing the virgin materials and formalise the associated technical specifications.

Advanced Practice

Conduct comprehensive lifecycle analysis across all priority procurement categories to identify remaining gaps in circular material adoption, expanding the LCA to include hotspot quantification (e.g., highest‑impact materials, stages or suppliers) to focus interventions where benefits are highest.

Policy

Initial Action

Define restricted and prohibited substances lists aligned with applicable international / regional regulatory frameworks and industry standards. Require suppliers to maintain compliance documentation and provide timely updates when new substances of concern are identified.

Intermediate Progress

Establish policy for:

  • circular material preference and reuse of currently produced materials
  • phase‑out policies for restricted materials aligned with global regulations
Advanced Practice

Implement:

  • material traceability policy for all priority products, such as a material passport concept, requiring suppliers to disclose material composition to enable future recovery
  • material‑substitution rule requiring viable, safer, circular alternatives to be evaluated whenever hazardous or non‑circular materials appear
  • requirement for suppliers to adopt digital traceability standards compatible with emerging global frameworks (e.g., EU Digital Product Passport)

Targets

Initial Action

Set targets for percentage of priority categories with completed material circularity assessments and percentage of suppliers for high-risk material categories to complete responsible sourcing reporting templates annually.

Intermediate Progress

Work with sustainability leads to determine the right objectives for suppliers and supply chains and set progressive, category-specific circularity targets increasing annually in each subcategory:

  • minimum recycled content and inputs sourced from regenerative sources for top categories
  • material reuse or salvaging
  • sourcing items that were created using renewable energy
  • requirements for non-toxic materials
  • requirements for reusable, non-toxic and recoverable material.
Advanced Practice

Set targets for:

  • percentage of total procurement spend meeting circular material standards, with annual increase in coverage
  • multi‑year circular‑value‑creation, linking procurement savings, avoided waste and recovered‑material value

Supplier Selection

Screening

Initial Action

Add supplier disclosure questions on material circularity into the pre-qualification process, excluding suppliers that use prohibited hazardous materials under buyer's policy: 

  • recycled content and inputs sourced from regenerative sources
  • hazardous materials
  • any take back programs, circularity innovation programs, lease or product as a service they have
  • how suppliers are addressing environmental impacts of packaging.
Intermediate Progress

Require supplier circular capabilities in RFP and tenders (take back, repair) with evidence‑based recycled‑content verification (e.g., certification, lab test results) and a material substitution plan for any restricted substances with a timeline and testing plan.

Advanced Practice

Require the following as prerequisites to participate in the RFP process:

  • traceability of all priority materials in the sourced product, such as a product passport, third-party certification or equivalent performance metrics evidence (EPDs, LCA studies, etc.)
  • alignment with ISO 59004 for all materials
  • packaging that is reusable, recyclable or compostable
  • evidence of material recovery or closed-loop systems for high-impact materials
  • substance declarations and compliance statements for regulated materials, along with verification testing where applicable
  • provision of full lifecycle impact data (carbon, toxicity, water impact) for all priority materials

Selection

Initial Action

Prioritize suppliers that demonstrate circular material practices and can provide basic material disclosure.

Intermediate Progress

Assign circularity as percentage of evaluation criteria for supplier selection process and prioritize suppliers with the most robust material traceability.

Advanced Practice

Run outcome-based tenders: suppliers propose material solutions to meet functional needs with minimal virgin material use.

Contracts

Initial Action

Include contractual clauses requiring continued compliance with prohibited materials list and basic material disclosure.

Intermediate Progress

Include contractual clauses for:

  • suppliers to meet defined circularity content targets and provide periodic material circularity reporting
  • audit rights
  • defined consequences for non-compliance with material traceability and recovery requirements
  • suppliers to notify the buyer within a specified timeframe when hazardous materials, banned substances or traceability gaps are discovered
Advanced Practice

Develop contracting templates for strategic categories that include:

  • responsible sourcing evidence for high-risk materials
  • third‑party verification of material composition and recycled content
  • take back responsibilities
  • periodic circularity reporting
  • multi‑year improvement commitments linked to commercial incentives (price, volume, duration, preferred‑supplier status)

Supplier Engagement

Goal Setting

Initial Action

Communicate circularity objectives and policy requirements to relevant suppliers, assess suppliers' capacity for circular economy adoption using a fair transition framework and establish joint action plans for improving material circularity in priority categories.

Intermediate Progress

Set specific, time-bound circular material improvement targets with suppliers, such as increasing recycled content percentages, eliminating specific hazardous substances, phasing out high-risk materials, implementing take back schemes or co-developing material improvement roadmaps with annual milestones.

Advanced Practice

Co-develop material improvement roadmaps with annual targets and action plans, including working with their suppliers (Tier 2 and 3) to implement circular material practices across the supply chain.

Capacity Building

Initial Action

Develop supplier capacity building on circular materials and circular economy initiatives, covering topics such as:

  • understanding circular economy principles and how they apply to procured materials
  • prohibited materials compliance and safer alternatives
  • how to measure and report recycled content
  • introduction to material traceability requirements
  • basic packaging optimization and reduction strategies
  • material substitution opportunities
Intermediate Progress

Provide in-depth training on topics such as:

  • lifecycle assessment and how to use it for material selection decisions
  • material passport implementation and digital traceability systems
  • designing take back programs and closed-loop material recovery processes
  • certification requirements and how to achieve them for sourced product materials
Advanced Practice

Provide advanced training to suppliers on lifecycle assessment, material passport implementation and circular design principles to support cascading circularity requirements to their own supply chains.

Data

Initial Action

Establish internal traceability program for connecting components/materials purchased to the products sold to accurately understand percentage of recycled materials in final products sold and work with suppliers to collect baseline material circularity data in priority categories, including current recycled content percentages, material composition, packaging types and take back program participation.

Intermediate Progress

Support suppliers in developing structured material tracking systems to enable systematic monitoring of recycled content, material composition and circularity metrics; or support suppliers in obtaining evidence‑based material composition data, not only declarations, to validate circularity claims.

Advanced Practice

Implement material data-sharing platforms with suppliers for real-time transparency on material composition, recycled content and circularity metrics across the supply chain.

Advisory

Initial Action

Provide guidance to suppliers on circular material concepts, identifying opportunities for material substitution and compliance with prohibited materials requirements.

Intermediate Progress

Consult and work with suppliers on identifying opportunities for circular material substitution, designing take back programs and developing material recovery processes.

Advanced Practice

Consult on embedding circular material requirements into their own procurement practices.

Financial Support

Initial Action

Establish material performance incentives linking contract terms to circular material achievements.

Intermediate Progress

Establish pay for performance incentives linked to verified recycled content and footprint reductions.

Advanced Practice

Create supplier material innovation funds where both parties invest in circular material R&D or co-fund supplier trials for recycled inputs including lab testing and production scale runs.

Audits

Initial Action

Require suppliers to complete self-assessment questionnaires on material circularity practices, covering recycled content, hazardous materials, packaging, take back programs and waste management.

Intermediate Progress

Conduct on-site or third party supplier audits on material circularity and traceability-systems, including verification of recycled content claims, hazardous materials compliance, packaging practices, material recovery processes, digital passport data accuracy and upstream transparency.

Advanced Practice

Require and support strategic suppliers to conduct their own material circularity audits across their supply chains and share findings, including recycled content verification, hazardous materials compliance and material recovery rates.

Project Partnerships & Innovation

Initial Action

Create optimization initiatives together with key suppliers for material reduction, such as packaging, sharing models, leasing or products as a service.

Intermediate Progress

Establish joint material innovation teams with strategic suppliers to develop circular solutions, such as launching a pilot to switch one priority input to a circular alternative, reducing material without performance loss or developing closed loop systems where recovered materials are pooled, processed and returned as new manufacturing inputs.

Advanced Practice

Partner with industry peers, research institutions or material innovators to develop next-generation circular material solutions for shared supply chains; or participate in working groups focused on addressing circularity challenges / creating shared standards for high impact products.

Continuous Improvement

Metrics

Initial Action

Track the following:

  • percentage of suppliers providing complete material disclosure documentation
  • circular material percentage of spend
  • percentage of contracts with circular clauses
Intermediate Progress

Track progress indicators such as:

  • progress against annual recycled content goals in category business reviews
  • return on investment for material innovation initiatives and partnerships
  • total cost of ownership / lifecycle cost of current procured materials (not only upfront cost) and total cost of ownership improvements from material selection decisions
  • incidents of material non-compliance and response effectiveness
  • resource Use (reduction in virgin material use, reduction in material consumption, circular material use rates)
Advanced Practice

Track indicators such as:

  • circular material value creation beyond cost savings to new revenue generation
  • material substitution success (virgin material displacement from recycled/renewable material purchases)
  • percentage of strategic suppliers with cascaded circular material requirements

Scorecards

Initial Action

Introduce basic circularity criteria into supplier evaluation forms covering material disclosure completeness, prohibited materials compliance, recycled content status and packaging practices.

Intermediate Progress

Integrate material circularity KPIs into supplier scorecards and contract renewal decisions and require corrective action plans for suppliers with poor circularity performance.

Advanced Practice

Weigh circular material performance in supplier scorecards, with top performers receiving preferential weighting in tenders and bottom performers required to submit improvement plans.

Impact Verification

Initial Action

Gather feedback from suppliers on effectiveness of engagement programs and feasibility of circular material requirements.

Intermediate Progress

Assess whether supplier engagement initiatives are delivering measurable improvements in material circularity across priority categories, with improvements validated through evidence‑based verification (e.g., recycled‑content certification, chemical‑compliance results).

Advanced Practice

Calculate environmental and economic benefits from circular material adoption, including avoided virgin material costs, revenue from recovered materials and total cost of ownership improvements attributable to circular procurement initiatives.

Sources consulted

Design