Sustainable Public Procurement and the Circular Economy: the State's purchasing power as a driver of the transition

By Heloisa Candia Hollnagel *

Sustainable public procurement (SPP) expresses a new paradigm in public management, based on a simple premise: the State, as a buyer, is one of the most influential agents in the economy. When purchasing goods, contracting services and carrying out public works, the public administration accounts for about 12.5% of GDP, according to an estimate by Ipea (Brazil's Institute for Applied Economic Research) covering the three levels of government and state-owned companies from 2006 to 2017. When the transition to more sustainable models of production and consumption is discussed, attention usually falls on companies, consumers and supply chains, and this role of the State is often underestimated.

Yet, by buying, the public sector signals to the market which products, materials and practices will be valued. Each call for tenders is therefore also a choice about the model of production and consumption to be encouraged, at local, regional or national scale. Guided by the principles of the Circular Economy (CE), this purchasing power can stop prioritising only the lowest price and start valuing the preservation of resources over time.

What changes with Lei 14.133/2021

Lei nº 14.133/2021 (Brazil's Public Procurement and Administrative Contracts Law) replaced Lei nº 8.666/1993 (the former Procurement Law), the Lei do Pregão (Lei nº 10.520/2002, the reverse auction law) and the Regime Diferenciado de Contratações (Lei nº 12.462/2011, the Differentiated Procurement Regime), unifying procurement rules for the Union, states, the Federal District and municipalities. Until 2021, procurement was guided predominantly by the logic of the lowest immediate price, which, although understandable from the standpoint of spending control, tends to ignore costs that come after the purchase: maintenance, energy and water consumption involved in the production process, early replacement, disposal and other environmental impacts. The lowest-priced purchase is not always the lowest-cost one when sustainability is taken into account. The new law therefore includes sustainable national development among the principles and objectives of public tendering and requires that the most advantageous procurement outcome for the Administration be sought, including with regard to the life cycle of the object.

This change takes shape in concrete instruments throughout the process. At the planning stage, the Preliminary Technical Study must describe the possible environmental impacts of the procurement and the corresponding mitigation measures, including requirements for low consumption of energy and other resources, as well as reverse logistics for the disposal and recycling of goods and waste, where applicable. At the evaluation stage, indirect costs related to maintenance, use, replacement, depreciation and the environmental impact of the object may be considered in determining the lowest expenditure, whenever they can be objectively measured. During execution, variable remuneration linked to the contractor's performance is allowed, based on targets, quality standards and environmental sustainability criteria.

The law also provides mechanisms for market inducement and governance. It authorises a preference margin for recycled, recyclable or biodegradable goods, regulated by Decreto nº 11.890/2024, and includes, among the tie-breaking criteria, actions for equity between men and women in the workplace and integrity programmes, the latter mandatory in large-scale contracts, under Decreto nº 12.304/2024. At the operational level, the Guia Nacional de Contratações Sustentáveis (National Guide to Sustainable Procurement), prepared by the Advocacia-Geral da União (Brazil's Office of the Attorney General) and updated in 2025, advises that, when it is not possible to adopt sustainability criteria, this impossibility be justified in the case file. Sustainability ceases to be an option to be defended and becomes the rule, with the exception requiring justification.

Circularity in Brazilian legislation

In Brazil, the promotion of circularity is supported both by conceptual frameworks and by environmental legislation. According to the Ellen MacArthur Foundation, one of the main international references on the subject, the CE is guided by three principles driven by ecodesign: eliminate waste and pollution, circulate products and materials at their highest value, and regenerate nature. Therefore, by proposing that products, components and materials be kept in use for as long as possible, the CE shifts the question that guides the public manager: instead of asking only how much it costs to buy, it becomes necessary to ask how much it costs to use, maintain and properly dispose of the good, and what will happen to it when it is no longer useful. In practice, this means preferring durable, repairable and recyclable goods, valuing recycled content and considering, where appropriate, contracting services and performance instead of simply acquiring ownership of the good.

This perspective was already present in environmental legislation. The Política Nacional de Resíduos Sólidos (Lei nº 12.305/2010, Brazil's National Solid Waste Policy, PNRS) establishes priority, in government procurement, for recycled and recyclable products, and enshrines an order of priority that starts with non-generation and reduction, moves through reuse and recycling, and reserves final disposal for tailings only, an essentially circular hierarchy. The reverse logistics provided for in the PNRS has been reinforced by recent regulations, such as Decreto nº 12.688/2025, focused on plastic packaging. The Estratégia Nacional de Economia Circular (Decreto nº 12.082/2024, the National Circular Economy Strategy) expressly included the encouragement of public procurement of circular goods and services among its instruments, and the Plano Nacional de Economia Circular (National Circular Economy Plan), launched in 2025, gave SPP a place in one of its strategic pillars. Public procurement is thus formally recognised as an instrument of the circular transition.

Practical challenges and barriers

However, practical challenges and some barriers remain to implementing both SPP and CE-aligned choices in government procurement processes in Brazil. Procurement officers do not always have the training, time and information to formulate consistent environmental criteria, and there is still fear of being challenged when the chosen bid is not the lowest-priced one. Not all suppliers, especially micro and small enterprises, are able to demonstrate the environmental attributes of their products, and there is a risk that criteria become merely documentary requirements or, if poorly formulated, unduly restrict competition.

Measurement thus becomes decisive, because without life cycle costing methods, environmental performance indicators and reliable information provided by suppliers, the circular perspective tends to remain at the level of discourse. Public sector accounting and the new sustainability reporting standards have a direct contribution to make, and Higher Education Institutions have a strategic role in training professionals and producing evidence that supports safer decisions by managers and oversight bodies.

What drives the shift

Nevertheless, there are drivers for this paradigm shift. There is a direct relationship between SPP and the CE and the Sustainable Development Goals (SDGs) of the 2030 Agenda. Target 12.7 of SDG 12 (Responsible Consumption and Production) explicitly addresses the promotion of sustainable public procurement practices, in accordance with national policies and priorities. The agenda also relates to SDGs 8 (Decent Work and Economic Growth), 9 (Industry, Innovation and Infrastructure), 11 (Sustainable Cities and Communities), 13 (Climate Action) and 16 (Peace, Justice and Strong Institutions), the latter through the requirement of transparency, integrity and good governance in procurement.

When the State starts buying with the life cycle of goods and services in mind, it not only reduces the impacts of its own activities but also helps the market learn to produce in a more circular way.

This publication is part of the partnership between Circular Movement and the Programa de Pós-graduação em Administração (PPGA, Graduate Program in Business Administration) of the Universidade Federal de São Paulo (Unifesp) for the production and dissemination of knowledge on the Circular Economy. The opinions expressed are the author's responsibility and do not necessarily reflect the institutional position of Circular Movement.

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Heloisa Candia Hollnagel - Professor and Researcher at the Programa de Pós-graduação em Administração (PPGA): Transformação Digital e Sustentabilidade nas Organizações e Sociedade (Graduate Program in Business Administration: Digital Transformation and Sustainability in Organizations and Society) at the Universidade Federal de São Paulo (Unifesp), working in socio-environmental accounting, ESG and entrepreneurship. Coordinator of the CNPq research group “Organizações e Sociedade” (Organizations and Society). Instagram

*This text was automatically translated with the help of artificial intelligence and reviewed. Still, there may be slight differences compared to the original version in Portuguese.

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