With sustainability moving up the boardroom agenda, CIOs and IT managers should look to revamp their IT procurement strategies to align with the principles of the circular economy, but why and what does this mean when it comes to managing the lifecycle of their entire IT estate?
EY UK & Ireland
Published: 06 Jun 2022
Sustainability is one of the biggest challenges of our generation. Technology, media and telecommunications (TMT) organisations have a dual role to play in sustainability – to transform their own organisation and ecosystems, and to use their role as digital enablers to drive the sustainability journeys across sectors.
The information and communications technology (ICT) sector accounts for between 2% and 4% of global carbon emissions and up to 7% of global electricity use, with many projections signalling continued exponential increase in data traffic and potential for ICT to rise to 14% of global emissions by 2040.
Meanwhile, the global volume of e-waste is rising relentlessly, forecasted to be 75 million tonnes by 2030, with only 17% recycled. Considering only mobile devices within this context, there are currently 15 billion globally.
The circular economy is therefore a key lever available to organisations to reduce e-waste and its sustainability impacts while also delivering associated business benefits. IT procurement teams play an influential role in how circular economy solutions are implemented across a business.
The starting point in driving circularity is visibility and measurement, because how can we improve if we do not know where we are today?
Corporate devices – such as laptops and mobile phones – are typically well-tracked, but organisations tend to have less visibility around complex equipment deployment such as servers, network equipment or even elements of a datacentre. Organisations should start by putting measurements in place and identifying gaps in capabilities such as inventory and asset management to drive efficiencies through repair, refurbishment and reuse across the business.
Measurement will allow identification of what actions need to be taken to improve circularity performance. Procurement professionals should then put in place plans to improve performance and move their organisation upwards on the waste hierarchy.
Ask key questions such as: How much e-waste are we generating? How much equipment are we buying fresh versus using repaired or refurbished materials? Where are our assets deployed? Are we recovering all materials to maximise circularity potential? And do our employees and customers need a new device at every deployment or renewal?
Having this “circularity mindset” means every function in the enterprise working together to a common goal of eliminating waste and pollution. Professionals need to work not only within one function such as procurement or operations, but across the entire organisation – thereby bridging the worlds of design, sourcing, manufacturing and logistics, all the way through to returns and recycling. Beyond this, enabling true circularity requires going beyond the organisation to work with suppliers and customers, across the full end-to-end value chain.
Taking action to improve circularity performance unlocks three key benefits. First, it will improve sustainability performance. Second, it will drive efficiency improvements both from the need to hold and manage fewer materials, and the ability to reduce lead times through reuse or redeployment of existing equipment. Third, there are typically significant capital expenditure (capex) avoidance benefits from the reduction in capex spend on fresh equipment.
To summarise, enabling circularity first requires measurement to inform targeted actions to change behaviours. In this way, organisations can work in tandem with their ecosystem players such as suppliers and customers to make a tangible impact through circularity.
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