“When Commercial People Start Using Green Thinking” – Reimagining the Circular Economy Beyond 5G

May 29, 2023

Written by 6GWorld

In the UK there is a phrase “Where there’s muck, there’s brass,” implying that there’s money to be made from dirty and unpleasant jobs.

The phrase dates back to the 19th century. At a time before social security this could literally be true not only for industrialists – who could make good money selling cheap clothes made of ‘shoddy’, fabric made from the shredded fibres of waste cloth and clippings – but also for the most desperate of society who could earn a bare subsistence mudlarking or toshing.

The sterile environments used to create the most delicate electronic components could hardly be further in the imagination from toshing, but e-waste is – depending on how you look at it – either a huge global problem or a huge global opportunity.

Misaligned Incentives

While governments worldwide are calling for net-zero emissions and improved sustainability, through policies such as the European Commission’s 2020 Circular economy action plan or China’s 2021 plan for building a circular economy, more than 57 million tonnes of e-waste was generated globally in 2021. There is estimated to be almost 350 million tonnes of e-waste yet to be recycled. Surely there has to be a good deal of ‘brass’ amid all that.

In fact, there are huge amounts. Joost de Kluijver, CEO of Closing the Loop, is taking a gold bar assembled from reclaimed e-waste to a conference soon as an example. De Kluijver is unusual, however.

“There’s a reason why only 17% of all electronic waste is currently being recycled globally,” he commented to 6GWorld in a recent interview.

“It is because the industry doesn’t have a financing mechanism that’s strong enough to fund all the work that you need to do to collect, ship, recycle, etcetera.”

This is… unfortunate. Building a circular economy is theoretically sensible – indeed, the only sensible approach to ensure humanity is capable of enduring – but incentives are misaligned between different stakeholders.

6GWorld challenged de Kluijver on this, as there has been a good deal more in the way of shareholder activism and a demand that companies show their ESG credentials in recent years.

“You want to save the planet? That’s probably why you’ve been focusing solely on the shareholder value for the last 50 years,” de Kluijver tutted.

“You don’t want to save the planet. You want to make money and make you a shareholders happy. And that’s not a bad thing, but when you start telling people that you want to save the planet it is just ridiculous.”

At the same time, sustainability is only one piece in consumers’ considerations.

“We’ve been working on waste reduction for 10 or 12 years now. We’ve learned that you can’t get the masses interested by using sustainability arguments or sustainability stories because those are interesting for sustainability-centred people and that’s right now, just a very small part of the market.”

This is particularly true for electronic items such as phones, where historically there has been little or no emphasis on green credentials in marketing, unlike products such as toilet paper or packaging.

“So what do they want? They want to be cooler than their neighbour. They want to have something nice to show off in the bar and they want to feel special… customers don’t really want green. I mean, they don’t have a problem against it but they’re just not looking for it.”

A further challenge is that, for several decades now, conversations about sustainability have tended to set up green considerations in opposition to business and profitability. This tension has been very much internalised and is a far cry from the likes of rag-and-bone men of previous centuries or even the reality of the recycling industry today. It has created a challenge for the likes of de Kluijver, though, when trying to take a pragmatic and economics-led approach to the situation. 

“When you start talking about the commercial benefits of green, then people just disconnect. They can’t understand it because we are not used to accepting that you can use a green or circular service for commercial benefits, it’s meant to be driven by ideology.”

De Kluijver’s work with Closing the Loop has been driven by the need to align those commercial and ethical incentives. The company’s business model is to work with companies who pay an extra few euros when selling new equipment so that they can link that equipment to old devices which de Kluijver’s company buys and recycles. Today there are a variety of established buy-back and refurbishment companies, who will typically take used devices – often as part payment when customers trade-in for new devices – refurbish them and ship them as low-cost devices to countries in emerging markets. This is good for cutting down on e-waste in the primary markets but does not prevent those devices from ultimately going to landfill.

An African Gold Rush

“That’s the main thinking behind waste compensation – you can only compensate a new device here in Europe by collecting waste that otherwise will not be collected,” de Kluijver explained.

And why Africa? Because on the entire continent there are no facilities for e-waste recycling.

“On the African continent, 220 million phones are sold each year and the official recycling rate right now around 1%. So it is quite a lot of devices that at some point reach end of life. Over there it’s really the end of life, you know. When it’s still usable, when it can be repaired and have components replaced people will definitely do that. They will not throw away a device as we do here in Europe – in Africa, a device will be used until it’s completely broken.”

True to the concept of keeping commercial realities foremost, the business model for collection and recycling is pragmatic and driven by economics.

“The reason why electronic waste is being burned in Africa today isn’t because people like electronics to be burned, is because that’s the only way they can extract some value,” de Kluijver said.

“I think it’s most important that recycling isn’t just good for the environment and so on, but especially that it’s profitable, and right now people are not seeing any of that. We pay a certain amount per device, and as a result we make sure that the waste is turned into income. We do that in collaboration with repair shops, schools, churches or anywhere the phones end up before they end up in the ground.”

Closing the Loop’s clients are mainly based in Europe today, including the Dutch national government (who uses the service in their employee device procurement), Vodafone Germany and T-Mobile. The scale of their work is quite impressive. With Vodafone Germany, for instance, “we should be approaching the one million devices mark somewhere after the summer. We just passed the 500,000 milestone. When I talk to people about the program they are impressed by how in so little time we can have so much scale.”

This is, however, a reflection of the scale of the industry and potentially a drop in the ocean.

“We want to collect 200 million devices per year in 2030,” de Kluijver noted. Replicating the partnerships with T-Mobile and Vodafone would go a long way towards helping accomplish that, but working with OEMS to close the loop at the start of the cycle may be the simplest way to build that scale.

Aligning business with ethics, the work can help to fuel economic growth within Africa too.   

“At some point, we can fund the local recycling capacity to be built. We need to start that in the next 3 to 4 years, which will be quite unique… And of course if they’re going to benefit from doing things in the right way by recycling, then they’ll do that.”

Scaling up to 200 million devices per year is no small feat, but recycling at this scale and larger would have a range of impacts which might justify the additional cost on an OEM’s bill of sale. While it is difficult to get accurate figures for quantities of materials in devices, if this BBC article is a guide then those devices are holding 68 tonnes each of gold and silver, 3 tonnes of palladium, 3000 tonnes of copper and so on – manganese, nickel, lithium, cobalt, tungsten, rare earths… and, of course, huge quantities of plastics.

“You do need to change quite a bit to insert recycled content into the production process. That’s why everyone focuses on packaging or plastics,” de Kluijver explained. However, there are two potential economic benefits to doing so which leap out to 6GWorld on a casual glance:

  • Recycling mobile phones on this scale creates new supply chains that diversify risk for the telecoms industry. Cobalt is today sourced principally from the Democratic Republic of Congo; palladium from South Africa and Russia; many rare earths mainly from China; and so on. This makes electronics manufacturers susceptible to high degrees of risk and associated price volatility for these rare materials. In the course of the past year, the price for a kilo of palladium has varied between £36,400 and £65,800. By building up globally diversified supply chains of recycled materials it helps insulate OEMs from economic shocks and supply chain disruptions.
  • Recycling e-waste can contribute to lower commodity prices overall, especially when reaching economies of scale. To use the 200 million devices example, this would produce almost 1.5% the total global annual production of palladium and around 2% that of gold. There is, of course, scope to recycle many more devices than that, including digging into the 350 million tonnes as yet unprocessed. By increasing the supply of these valuable materials it can keep commodity costs down, for everything from the rarest metals to plastics. Indeed, those millions of tonnes of e-waste can function as a reserve of strategically important materials to counterbalance increasing costs of extraction – but only if the capability to extract it exists.

Reframing Circularity

There is a genuine opportunity ahead in developing a circular economy. The challenge today, as de Kluijver sees it, lies in changing the understanding and mindset of businesses and consumers towards the concept of recycling and sustainability.

“If we rely on the sustainability departments or, even worse, the compliance department to make green services and offerings work, we’re all screwed,” he stated bluntly.

“We need to get the Sales people interested; we need to get the Marketing people involved, we need to get engaging customer propositions. How are we going to use sustainability to boost sales? Or how are we going to talk about the green or circular results and talk about them positively?”

Equally, to de Kluijver there is a responsibility for companies with a green focus to pay more attention to the realities their customers face.

“The key skill that I see missing in sustainability service providers for companies is that they just cannot accept that their service needs to make customers happy. It cannot be just about increasing recycling or other positive impact stuff because that’s not a business case,” he noted.

“The only reason why tech brands are going to change anything is because they think or they observe that their customers want it. And we can be very upset about it ethically, but tell them “If you do this your customers will be happy, or your customers will pay more or they will stay longer,” then they start listening.”

From a conceptual perspective this is something de Kluijver gets excited about, because it moves the conversation about commercial value beyond simply the economic value of materials.

“It’s a beautiful thing to see waste being transformed into gold, silver etcetera, but it’s also very limiting. That’s what people have been talking about for many years, a lot of the time they think that that’s the only thing that you can do about circularity.

“So I think to get people’s interest, to get them excited let’s be a little bit more positive. Instead of talking about just metals, let’s say ‘this is future watches’ or something.”

There are signs that this is starting to happen, according to de Kluijver: “I’m very excited to see the companies like Vodafone, companies like Google talking about circularity as something that they actually want to offer to their customers, make valuable for the customers – you know, align their story to their pitch. Because then you get the whole organisation on board for this type of a service instead of just the two people in the sustainability department.

“What I’m looking for is when commercial people start using green thinking. I think that will be really powerful.”

Image courtesy of Mirrorpix

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