Sign Up Early for SB'24 San Diego and Save! Spring Rate Ends June 23rd.

The Next Economy
Circularity Is the Future — But Getting There Means Facing Some Fears

Building a circular economy to deal with our e-waste challenges means embracing a new level of industry-wide transparency.

As new ESG reporting mandates start going into effect in the US, it’s easy to think that this new focus on corporate consciousness means that a specific effort to tackle e-waste might be right around the corner. It should be an exciting time, especially for those in the IT asset disposition (ITAD) industry that have already championed circularity — a process that avoids waste by either reusing or breaking down electronics into materials that can be used in the next generation of products and devices. But slow widespread adoption of circularity is also a reminder of our industry’s deeply ingrained transparency problems.

Transparency in ITAD has always been a difficult sales pitch, despite its obvious benefits. In the short term, giving open access to your reuse and recycling processes offers better overall traceability, more streamlined introductions between parties, and new business opportunities for those that adopt it. Longer term, it’s essential to building better client/vendor relationships, improved communication, industry-wide standardization, education for the public and for proving out circular applications of materials. A circular economy relies heavily on supply chains regularly filled with well-processed, accurately tracked materials in high quantities; so, cooperative transparency across the industry is key. Yet, even as companies such as Dell have been working really hard to make this happen; and organizations such as the Open Compute Project’s sustainability working group has attracted representatives from Microsoft, Facebook and Intel; the overall industry still lags behind — hampered, in part, by a series of long-standing fears.

Facing our fears

Despite the benefits, common fears about transparency persist — that if recyclers and ITAD companies are open about their practices or processes, then those processes will be stolen and clients lost. Many are afraid that competitors will use transparency as a Trojan Horse to take their vendors and disrupt their pricing. Many companies consider their supply chain as their Intellectual Property. After all, finding good, reliable vendors can be difficult — and, in theory, if several companies vie for the same vendor, the competition for quantities and quality materials could negatively impact the current rates.

Other companies legitimately have something to hide — they don’t want people to know that they aren’t doing as much business as they say they are, that their processing capabilities are lackluster or just that they use bad vendors. Or, more commonly, they have a mix of reuse versus recycling that isn’t favorable — recycling can be costly and companies would rather work with ITAD vendors that remit value-recovery dollars on their assets, rather than be hit with out-of-pocket fees for processing and recycling. But all of these fears are worth confronting in order to increase transparency and make a circular economy a reality.

Making real progress

Breaking through these fears means recognizing some basic realities. Firstly, leveraging the same vendors can actually be beneficial — both in terms of environmental and business impact. For example, if one company ships aluminum to a vendor because they are doing a great job and have great reporting, this can allow a competitor to ship their aluminum to that same vendor too and reap the same benefits.

This behavior at scale also tells other vendors that they need to step up their game if they want to stay viable. In effect, a little transparency would have the eventual impact of ending the idea of secret vendors’ lists and greatly reducing their value as currency in the ITAD industry. Instead, reporting capabilities and geographic footprint would be what separates companies. This is actually a good thing — steadily increasing transparency using the natural pressures of the market.

Outward transparency could be further encouraged simply by improving communication within companies. For vendors, this means increasing collaboration between outbound sales and compliance departments. Typically, compliance folks are more ready to offer feedback to each other, both good and bad; so, they’re critical in delivering reporting that sales teams can then communicate outwardly. Having worked with various vendors throughout my career, it’s a huge benefit when compliance is involved in organizations from the top-down, and a big headache when compliance has no clue what's happening outside of the warehouse with shipments, sales and inbound decisions.

For original electronics manufacturers (OEMs), better communication means giving sustainability leadership a bigger role and louder megaphone. Yes, we've started seeing some larger companies elevating C-level sustainability personnel who supposedly have "power," yet most aren't allowed to set communications policies or make decisions on vendors. For transparency to flourish, this needs to change.

Our industry needs to put their money where their mouths are when it comes to building a circular economy. Setting sustainability goals is a great first step; but to achieve them, they need to commit to transparency and communication. Yes, it will mean upsetting the status quo — forcing everyone to adapt to a market that looks a little different. But it’s also the best way to create a system that is both beneficial to the planet and profitable for businesses in the future.