The 21st century has been the stage for unprecedented growth in new technologies; first through the rise of the internet, the rollout of smartphones and, more recently, the adoption of AI. Such expansion of modern technologies has led to an ever-increasing consumption of raw materials, depleting natural resources and fuelling emissions as the ‘take-make-waste’ mindset prevails.

Hailed as a go-to solution, a circular economy minimises the demand for new materials and lowers technology’s environmental impact. In a circular economy, initiatives like maintenance, reuse, refurbishment, remanufacture, and recycling keep materials in circulation, reducing the need for new extraction, its associated energy consumption and wider environmental impacts.

Our current level of material extraction requires the resources of nearly twice our planet’s capacity, causing growing expectations on businesses to act responsibly and adopt the core principles of a circular economy. On top of that, regulations such as the EU Corporate Sustainability Reporting Directive now require businesses to report on their resource use.¹ By implementing circular initiatives, businesses can progress towards corporate decarbonisation goals, reduce dependence on the extraction of the scarce materials routinely used in electronic devices, shorten and localise supply chains, and create new revenue streams for refurbished products such as smartphones. Circularity can also have significant benefits for nature and biodiversity due to reduced resource extraction, making it a fundamental pillar of ICT companies’ sustainability strategies.
 

Key considerations

While the need for circularity is clear, developing a robust and successful circularity strategy for your organisation can be challenging. Implementing it to its full potential can be even more complex. So, what are the key considerations that can make or break your approach to circularity?
 

Connect circular business models to emissions reductions

The scope of circularity-related actions is significant. For example, businesses can extend product lifetimes by offering repair and maintenance services; giving products a second life through refurbishment and resale (as seen in the growing refurbished phone market); or recycling a product back to its raw materials for reuse.

When implemented well, these interventions will lead to fewer emissions, but they must be carefully planned. For example, an organisation looking to resell refurbished computers may generate a net increase in emissions if the upfront savings are outweighed by long-distance transportation to new markets or an emissions-intensive refurbishment process. The benefits from ineffective implementation are marginal and may still increase net emissions, particularly if circular practices and design are not fully embedded within the business model.
 

Design an effective implementation strategy

Once an approach for circularity is defined, the focus should be on understanding its implementation. Should a smart appliance manufacturer develop an in-house refurbishment team or outsource? Does a lease model rather than sales better serve more expensive, longer-lifetime network equipment? Do customers need incentives to return old devices?

It is important to look at circularity from a business-wide perspective, considering the whole business model; otherwise, poor implementation may drive a lot of expenditure with limited impact. Product lifetime extension will reduce the frequency of replacements, which initially may be a hard sell internally. However for some products, such as headphones, high durability can be a key differentiator to command premium pricing or, combined with a refurbishment and resale scheme, open up new revenue streams that compete with lower-cost competitors.

For service-driven organisations such as telecommunication operators, a take-back and reuse scheme for customer premise equipment may be the best approach, which will need to be scaled up and iterated over time.
 

Secure buy-in from your stakeholders

The most crucial factor to navigate falls outside of strategy and implementation: getting organisational buy-in. Cultivating buy-in across the organisation for each iteration is a must from day one. This buy-in ultimately hinges upon the ability to demonstrate that any implementation challenges are considered, and adequately addressed, and that the expected benefits stack up favourably against the costs. Businesses should analyse the cost of circularity against other decarbonisation levers to identify the most cost-efficient strategy. The benefits need to be quantified not only in terms of emissions reductions, but also in terms of opportunities for new value streams, the cost of inaction, and risk mitigation.
 

Coming full circle

Circularity has the potential to be a win-win for organisations: good for the planet and good for the bottom line. Successful adoption of a circular business model requires a considered strategy to realise the benefits, thoughtful planning to navigate implementation challenges, and a robust argument to persuade key stakeholders. Having supported organisations with circularity strategies across fashion, technology, consumer goods and other sectors, the Carbon Trust has the expertise required to help your business succeed in circularity. Learn more about navigating these challenges at our webinar on circularity in the ICT sector on 28 January.

Register

¹ Disclosure is only required when an organisation’s double materiality assessment identifies resource use as material – ESRS 1 General Requirements First Set of draft ESRS | EFRAG