By Piyush Jha, Managing Director – India and APAC, GlobalLogic
In an age where environmental concerns are growing, and the chance of running low on resources is looming, the concept of a circular economy becomes crucial. The circular economy emerges as a pivotal paradigm shift in our approach to production, consumption, and waste management – a significant change in how we make things, use them, and handle waste. Departing from the traditional “take-make-waste” model inherent in linear economies, the circular economy introduces a comprehensive cycle that encompasses making, repairing, refurbishing, reusing, remanufacturing, and recycling.
The Global Circularity Gap Report by Deloitte issues a significant warning, revealing that only 7.2% of the global economy follows this circular approach. This emphasizes the urgent need to shift away from the linear model, which rapidly depletes our finite resources.
Moving towards a global circular economy isn’t just a nice option for sustainability – it’s something we absolutely need. Embracing the circular economy doesn’t only benefit society but also eases pressure on crucial planetary boundaries. This transformation, centered on reducing reliance on fossil fuels and high-volume minerals, could potentially cut global material extraction by a third, representing a crucial stride toward a sustainable future.
Current situation: Tech’s impact and the call for change
Mapping the current situation reveals a pressing concern in the form of escalating environmental issues and resource depletion. The global generation of electronic waste hit a staggering 54 million metric tons in 2019, fueled by increased consumer spending and the widespread availability of electronics. This surge has made e-waste the fastest-growing waste stream worldwide, with projections suggesting a concerning 30 percent increase by 2030, as reported by Statista.
Within the tech industry, waste generation poses a significant challenge to sustainability. The relentless demand for cutting-edge hardware, coupled with inadequate consideration for circular equipment lifecycles, leads to severe environmental consequences. Existing regulations, such as the Waste from Electrical and Electronic Equipment (WEEE), address the growing e-waste issue.
But now, companies are under close watch because of Environmental, Social, and Governance (ESG) standards. Companies are increasingly expected to be accountable for their commitment to recycling, repairing, and reusing technology, crucial steps in curbing the mounting e-waste problem. This push for a circular economy highlights the need to rethink how the tech industry usually does things in a straight line.
Need of the hour: Harnessing circular economy’s true potential
Efforts to cut waste directly align with efficiency and cost reduction goals. Embracing a circular approach in business yields substantial commercial benefits, enhancing capital expenditure efficiency. Beyond individual companies, marketplaces facilitating equipment exchange among entities reduce the need for new purchases, contributing to a circular economy that aids in emissions reduction. Organizations that manage production inputs through material recycling can endure supply chain instability, product shortages, and unpredictable suppliers, thereby safeguarding themselves against price fluctuations. Additionally, linear economy models, centered on user ownership, lead to poor utilization. Product-as-a-service and sharing economy models ensure that product utilization is increased, enabling higher income per unit. Circular products are crafted for a life beyond the first use—they’re meant to be reused, fixed up, revamped, and upgraded, boosting their overall utilisation.
What businesses must do?
In response to the escalating demand for sustainable practices, businesses must actively showcase their commitment to reducing e-waste. This involves the establishment of appropriate Key Performance Indicators (KPIs) and the implementation of effective processes, data management systems, and controls. These tools are essential for transparent, comprehensive, and consistent measurement of e-waste, guiding the formulation of concrete steps for waste reduction and enhancing credibility with stakeholders.
Embracing circular principles not only leads to financial savings and improved brand reputation but also secures stakeholder support, paving the way for a brighter and more sustainable future for all. According to EY’s research, 43% of investors increasingly prioritize climate change and sustainability in their investment strategies, and an overwhelming 83% consider ESG factors when making investment decisions, businesses that commit to reducing e-waste and adopting circular approaches position themselves for long-term success.
In this era where stakeholders demand sustainable practices, committing to environmentally and socially responsible strategies not only ensures success but also shapes a more sustainable future. By aligning with these priorities, businesses can create a positive impact, fostering innovation and resilience in the rapidly evolving landscape of the tech industry. Transitioning from a linear model to a circular economy in the tech industry is a necessity amid current environmental challenges. Prioritizing resource efficiency, sustainable practices, and responsible end-of-life management not only leads to cost reduction and revenue generation but also contributes to a cleaner, healthier planet by minimizing waste and conserving resources.