I had the pleasure of attending RLA’s Annual Conference for the first time this year. I was particularly interested in learning more about how companies were approaching the Circular Economy and came away from the conference feeling very excited about the potential for the electronics industry to create not just a closed loop material stream, but also decrease their footprint through further utilization of the secondary market.
With regards to the secondary market, one of my key takeaways was the tension between the business incentives of the OEM’s and the secondary market solutions providers. While both parties clearly derive value from their partnerships’, I couldn’t help but wonder what percent of OEM’s saw the predicted future growth of the secondary market as a threat to their existing business models versus an opportunity to create new markets.
From my perspective, I’m not sure the partnerships can always be a win-win, especially in the consumer electronics space. Some premium brands may be able to reach customers that couldn’t otherwise be able to afford their products and thereby increase market share. However, as more transparency around the quality of refurbished or repaired products percolates through public perception combined with growing cultural acceptance for used, refurbished, or repaired items, I would expect that the secondary market would take a share of the OEM pie. While this might not be a zero sum gain at the global level, it could depress the growth rate of new product sales.
Which leads to an interesting dilemma. As returns are projected to grow, as consumers and businesses are demanding more sustainable materials/product management processes (witness the fury over Burberry’s burning of unsold merchandise), and as issues of waste more broadly become top of mind for consumers and policymakers, secondary market solutions will become more and more integral. Going forward, it will be interesting to see how and if OEM’s will embrace the after market. Conversely, there could be a shift in the balance of power and secondary market solutions providers may act more as independent disruptors as opposed to services providers to OEM’s.
One possible solution to combating any loss in sales would be if OEM’s create more product as a service or leasing models as companies such as HP and Dell have already done. Or perhaps some brands will embrace the after market as part of their business model. For example, Dana Inc, a maker of heavy duty parts such as drivetrain, sealing and thermal-management products for commercial, automotive, military and off-highway vehicles has launched a new training portal to help resellers better repair their products to sell on the aftermarket.
Another topic mentioned frequently during the RLA conference was around the predicted growth in e-waste. As the fastest growing type of waste, it was fascinating to learn more about the recycling, takeback, and materials collection efforts by companies such as Best Buy and Cisco to help address what some call are calling a future “tsunami” of waste.
I am particularly interested in E-waste in the context of the Upcyclers Network. This is a network I am currently building focused on supporting the creation of a closed loop materials economy. The impetus for the creation of this network was the result of a conference I organized this past December. The event brought together over 70 thought leaders from the policy and business space to discuss how to better support demand for recovered and Upcycled materials. Unfortunately, at the event there was no representation from the e-waste or consumer electronics sector!
After attending the RLA conference, I believe that engaging with the electronics community to discuss how to create a closed loop materials economy is extremely important. Given the forecasted growth of e-waste as well as the relatively favorable economics behind e-waste recovery as compared to the recovery of materials such as plastics, glass and OCC, there is truly an opportunity to drive both business and societal value.
Consider this. A tonne of ore from a gold mine produces just 5 grams (0.18 ounce) of gold on average, whereas a tonne of discarded mobile phones can yield 150 grams (5.3 ounce) or more.
Furthermore, the environmental impact of not just reducing e-waste, but keeping the materials that go into the production of electronics in further circulation and thus reducing the need for further extraction is extremely impactful. Mining causes severe environmental issues including water contamination, habitat destruction, and soil degradation; not to speak of acute health impacts to miners. If materials and products can be circulated in a closed loop system, the real gain from both an economic and societal perspective will come not from the reduction of waste but from the reduction of virgin resource extraction.
Lastly, when thinking about e-waste, there is plenty that the electronics industry can learn from the current frenzy over plastic pollution. While it took years for plastic pollution to enter mainstream consciousness, it is now an issue that the packaging, consumer goods, and petrochemical industry are having a difficult time managing. 127 countries are regulating the use of plastic bags with more fees and bans being placed on other single-use products. Brands such as Danone and Coca Cola are taking it upon themselves to commit to recycled content and volume requirements. Even those within the plastics industry have publically voiced concern over the growing negative consumer sentiment around plastics.
Thus, the electronics industry has a unique chance to start addressing issues of e-waste before they reach crises proportions or relying on EPR mandates. The industry could pro-actively start focusing on solutions around recirculation and recyclability for products that could drive design and business model innovation. Besides ensuring a continued license to operate and decreasing chances of increased regulatory pressure, creating closed loop materials solutions and circular business models could also help future proof business models from a materials standpoint.
There is an opportunity by this industry to make a difference and increase business value. If you are interested in exploring pathways to reach these goals in collaboration with other industry innovators, I would welcome your feedback. Please feel free to email me at firstname.lastname@example.org.
Gina Lee is the Founder of Circular CoLab, an organization dedicated to empowering the adoption of the Circular Economy. She is the author of The State of the Circular Economy in America, the first United States focused Circular Economy landscape study which analyzes over 200 Circular Economy initiatives.
Gina has over 15 years of experience working in Corporate Social Responsibility and Social Impact in the United States, China, and Germany. Her past roles include overseeing partnerships with Fortune 500 corporations and top-tier business schools for the Aspen Institute, working with the Schwarz Group in materials management, and leading programming and corporate relations for Mercy Corps Beijing. She is skilled in engaging with organizations from across the policy, government and private sector and has managed workshops and pilot programs with organizations including TATA, the American Sustainable Business Council, TEDxLA, and the Los Angeles Cleantech Incubator.
Gina has a BA in international relations from the University of Pennsylvania and an MBA from Columbia Business School. She believes that social entrepreneurs will change the world and is a judge for the Echoing Green Fellowship Program and a Mentor for the Mentor Capital Network.