The concept of circular economy was created in the 60s, the idea of a cyclical system of production. Today, the principles of the circular economy are clear: tackle environmental and social challenges such as global warming, pollution, and waste. The circular economy aims to transform our economic systems into regenerative systems.
One of the growing models for manufacturers or integrators to integrate circularity in our economy is Product-As-A-Service (PaaS).
PaaS allows customers to meet their needs without the burden of ownership. It means that the manufacturer or integrator owns the product and is in charge of maintaining the product in as near to purchase day condition as possible. The main advantage for the user is the access to state of the art tools without making a large investment. To be profitable, the manufacturer or integrator has to offer strong and durable products that will satisfy the users for as long as possible, thus improving the Return On Investment (ROI).
One of the most suitable industries for As-A-Service is the IT industry because users change their equipment rapidly and there is a strong second-hand market.
The IT industry is facing challenges when it comes to waste management. As more and more people get connected, more challenges will rise: growing energy demand, raw materials scarcity, etc.
This article will focus on the best practices when it comes to communicating the circular benefits to the end user in the IT industry.
Certifications are one of the most used tools to show if a product is more sustainable than the others. They are used by customers as well as other interested stakeholders: investors, shareholders, employees…
The main certifications are the following:
- TCO certified: an ecolabel that drives responsible manufacturing, product lifetime extensions, materials recovery, etc.
- EPEAT: this ecolabel provides different categories to show how sustainable an IT asset is.
- Energy star: this label helps consumers identify equipment that are energy efficient.
- The EU flower: this ecolabel helps consumers, retailers and businesses make sustainable choices.
- ISO family: standards that show that the manufacturer or provider has sustainable processes in place and monitors its progresses.
- ISO 9001: quality management
- ISO 14001: environmental management
- ISO 45000: occupational health & safety
Some certifications are local:
The EU digital product passport (DPP) is a new European initiative whose objective is to gather information about a product and its supply chain. Therefore, all parties, including customers, may better understand the products they use and their environmental impact.
Some of the expected benefits of the DPP include:
- Tracking of raw materials extraction and production to know where and when materials can be recovered.
- Tracking the lifecycle of a product, enabling services to extend the equipment lifespan.
- Allowing transparency to all stakeholders on the products’ components.
The DPP is still a project, but it has many supporters and might become a reality in the near future. It represents many advantages for As-A-Service and for the preservation of our planet.
Benefits for manufacturer / for customer / for the planet
For the manufacturer or integrator, the benefit resides in keeping the ownership of the equipment and the valuable raw materials inside. A strong take-back strategy makes more equipment available for reuse and therefore a better Return On Investment of the manufacturing costs.
Fairphone: “We have the ambition to keep phones in use as long as we can. By retaining ownership we can control this and can ensure the phone and its parts are used as long as possible. In the end we will recycle all materials.”
For the customer, it is the possibility to return equipment that would otherwise take space, and to know that it does not end up in a landfill. These IT equipment are restored to their original operating condition and all the data are completely wiped. Customers are more and more aware of global warming, the e-waste pollution and their impacts on the planet. Repairability is also an important point as the “Right to Repair” movements are growing in Europe. A repairable equipment (either by the manufacturer or the user) means that it is in use for a longer period of time, therefore less polluting.
For the planet, less waste, less pollution, better air quality, preserved biodiversity… The circular economy has both economical and environmental benefits. A longer use for the equipment means less CO2 emissions in the atmosphere.
To facilitate the take-back process, it needs to be easy for the user to do so. If it is complicated or even costly, the user will rather forget the IT equipment in a drawer instead of sending it back to the manufacturer or integrator.
Some techniques employed by IT manufacturers and integrators are the following:
- Upon request from the user, deliver take-back packaging. It avoids costs for the user and guarantees a protective packaging to receive the IT equipment in a good shape.
- The possibility to take-back other brands. The manufacturer or integrator can take other brands and integrate them into their reuse or recycling processes. The equipment is different, but the raw materials inside are still very valuable.
- Offering a financial incentive in the form of a discount, or a compensation. For example, Fairphone has a “no damage discount”, if the user treats the equipment well and does not declare any damage then the user receives a discount on its next invoice.
Ready for reuse
Data erasure is one of the main concerns for users as they store sensitive data in their IT equipment. However, there are many third-parties that handle a thorough cleanup and data erasure to ensure that the IT equipment is in original operating condition.
These services give an erasure certificate to the last user to confirm that the data have been safely removed from the equipment.
You can read more about the data erasure procedure in our White Paper “Reuse Recycle Refurbish in the Electronics Industry”.
Key Performance Indicators
To show transparency to stakeholders, here are some KPIs that support circularity monitoring and improvement strategies:
Amount and/or percentage of
- product returns in weight, volume, currency, etc.
- products reused
- products refurbished
- products recycled
- reused/recycled components in the asset
To be able to properly compare each data, the value should remain the same. For example, a manufacturer received back 100% of the end-of-lease equipment in 2023, 70% have received a second life (reuse), 20% had to be refurbished and 10% could only be recycled.
Another KPI that is of value for many stakeholders is the C02 emissions from extraction and production saved thanks to the As-A-Service model.
For example, Cisco has an ESG reporting hub that everybody can access, the measured data are compared to the previous years and embedded in the company’s vision and sustainability goals.
As a circular business model, Product-As-A-Service in the IT industry can have a great positive impact on reducing e-waste pollution. It is more and more important for users to access equipment that does not endanger the future generations’ lives. Therefore, it is important to show and prove how sustainable As-A-Service can be.
At Black Winch, our team of Experts hold over 25 years of experience in the leasing and As-A-Service sector. Book a call with us for an inspiration session on how we can help you build your sales and circularity message.