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The Circular Economy. What matters most? The ideal or the impact?
We often talk about the ideals of the circular economy, of a world where consumers recognise the value in reusing products and materials rather than buying new and then disposing of them. Many people have a growing awareness of the pressing environmental need to create circular economies. Some passionate individuals and organisations are innovating ways to re-use and refurbish. But broader economic adoption is still slow. The sad reality is that idealism doesn’t seem to be enough to galvanise people into taking lasting and meaningful action. However, there is something else which might – the rising cost of living.
As much as people want to have the latest tech, it is becoming unaffordable for many people. And this is not only a challenge for consumers. Manufacturers are well aware of the impacts of scarcity and inflation relating to material costs. With so many precious metals going into the manufacture of electronic devices, it doesn’t make economic sense to simply discard them. They hold value. If they can be repaired, they can be resold. And if they can’t, components can be extracted, processed and used to manufacture new devices.
Circular solutions are more effective when they have more than one driver
A handful of manufacturers have implemented buy-back schemes. Some say that this is less about achieving environmental aims and more about customer retention. This may be true, but if it has the impact of keeping materials, components and devices circulating in the economy, does it matter?
Ultimately the trade-in policy wins on both fronts. By offering a trade in of an old device, customers are more likely to stay with the brand than switch to a cheaper alternative. Plus, if they are environmentally minded, they can justify their upgrade by saying that their old device can be refurbished and reused.
For the brand, it’s an opportunity to engage in the secondary market, by repairing and reselling devices to customers. This means that they’re not really losing on the buy back, and from a customer point of view, it’s giving them the brand they want at a price they can afford.
Still the volume of e-waste is estimated at more than 53.6 Mt. Of which only 17% gets properly recycled. Buy back schemes may be a part of that, but more is needed to accelerate recovery rates. Many believe that the legislation has a big part to play.
In 2023 the EU adopted a proposal outlining the right to repair. This is aimed at curbing the modern trend of designing for obsolescence in manufacturing. Over the years, warranties have slowly declined with most now not exceeding 12 months. Often, out of warranty repairs become too expensive for customers, which results in them discarding appliances and replacing with new. The new EU legislation aims as making repairs more affordable and more attractive for consumers. It also, more importantly, makes it obligatory for manufacturers to carry parts for longer time periods and for older models so that repairs can be made.
Even though the UK is no longer part of the EU, the markets remain inextricably linked. What will the impacts of this legislation be for the UK? Not only in terms of products exported but also products imported from the EU. Will the UK follow suite with similar legislation, making it obligatory for manufacturers to expand their repair capabilities?
Opportunities in secondary markets:
From an industry perspective, repair and resell represent a viable commercial opportunity. There’s no longer a stigma around buying second hand goods. Instead, for many it’s a preferred choice.
Retailers and manufacturers in tune with this are reaping the rewards. Startups entering the market are proving it’s viability. Companies such as Back Market, many others are available, make a very attractive offer to customers. A wide range of electronic products at up to 70% less than new products, but still carrying a 1-year warranty and a 30-day money back guarantee.
The driver may primarily be price, but environmental awareness is also having an influence on buying behaviour. Especially when consumers are made aware of the far-reaching impact of their choices. It is estimated that the impact of buying refurbished is an 89% reduction of waste, a saving of 77000 litres of water and 243kg of raw materials.
Recycling electronics is challenging, as is highlighted by the low recycling rates. Whilace very necessary, it’s a complex and expensive process. Could secondary markets present an opportunity to divert electronics from recycling to repair and reuse?
More importantly how can this be incorporated into collections and processing? And what is the role of local authorities in all of this? Take-back and buy- back schemes through retailers are a good start, but there’s potential to do much more. The ideals of a circular economy may give direction, but maximizing impact is a vital consideration too.