Companies across the Channel and their customers are embracing the circular economy. Comms Business talks to the experts.

The concept of a circular economy may seem like a new phenomenon, particularly in the IT and telecoms channel. But, in truth, the principle has been around for some time, dating back to 1976 when architect and economist Walter Stahel outlined the vision of an economy that operated in loops in his research report to the European Commission.

Forty-eight years later, the concept has become a reality, accelerated by climate change and net zero agendas, with shareholders and customers increasingly demanding that companies prove their ESG credentials at every turn.

Added to that is the need to eliminate the growing problem of electronic waste (e-waste), particularly given the UK generates the second highest amount of e-waste per capita, with 121,000 metric tonnes of household e-waste collected in Q3 2023 alone. By next year it will likely overtake Norway at No.1, according to Uswitch.

On the flipside of the equation, demand for more sustainable products also presents a huge opportunity for companies to tap into a burgeoning market and build lasting customer loyalty, with 65 per cent of IT professionals surveyed by Frost & Sullivan saying that becoming an ESG leader will be critical over the next year.

“The Channel battles a multi-headed e-waste monster,” said Stephen Mcintyre, marketing director at Nimans. “Fast tech cycles leave mountains of obsolete devices, while consumers often lack awareness of responsible disposal.

“Complex collection and recycling infrastructure, coupled with absent financial incentives, further discourage proper e-waste management. Add opaque regulations to that, which add another layer of difficulty for businesses navigating this crucial environmental challenge.”

With World Recycling Day fast approaching and businesses coming under increasing pressure from inflation and to get the most from existing assets, 2024 signals a major IT hardware and infrastructure refresh. That looks set to be a trend that will only continue to gather pace.

“Recycling and the circular economy are going to be two of the biggest talking points and biggest opportunities for the Channel over the next few years,” said Sophia Haywood-Atkinson, services director, UK, at TD Synnex.

“Over the past year we have seen a rising interest in the trade-in services we make available for all IT products, and we expect that to continue and gather momentum over the next 12 months. There should be a lot of activity this year as organisations push forward with Windows 11 upgrades and take advantage of the AI functionality now being built into PC systems.”

Inconsistent approach

Sebastien Juras, sustainability and transformation director at Alcatel-Lucent Enterprise, said that one of the biggest challenges is the inconsistent approach to engaging with and applying regulatory requirements and sustainability initiatives. While regulations such as the Waste and Electrical and Electronic Equipment (WEEE) directive have set clear expectations for e-waste reporting in Europe, he said that there’s a clear gap in how these reports are used by companies and their clients.

“Many businesses, while compliant with WEEE reporting, often treat these reports as a checkbox exercise rather than a tool for operational improvement or strategic decision-making,” said Juras. “This compliance-focused approach leads to a missed opportunity to use the data proactively to reduce e-waste.”

To ensure they continue to meet regulatory requirements and bridge the gap between compliance and operational application, Juras said that suppliers and clients need to recognise the value of WEEE reports for making better informed, sustainable choices. This shift towards a more active and strategic use of e-waste data, he said, is essential for driving a circular economy and achieving tangible sustainability outcomes.

Juras said that the carbon footprint of businesses reselling electronic solutions is largely linked to the materials that go into the products. To achieve the expected level of emissions reduction, his company has moved its business model towards a circular economy.

“This shift requires optimising resource use, which in turn impacts e-waste management,” said Juras. “To enable this transformation, a re-engineering of our product design is essential, incorporating components from older products into new ones. This approach not only reduces waste but also extends the lifecycle of materials, contributing to a more sustainable model.”

Additionally, Juras said that it’s necessary to trace each hardware component in a product. By using advanced tracking and monitoring systems, Alcatel-Lucent has been able to ensure responsible sourcing of products and provide transparency, he said.

“Traceability allows us to verify the sustainability credentials of our products and contributes to building a more accountable and environmentally-conscious brand,” said Juras.

He added, “By embracing circular economy principles and investing in new design engineering, logistics and traceability systems, we can significantly reduce our carbon footprint and e-waste, paving the way for a more sustainable future in electronic solutions.”

Supply chain issues

Another key challenge is the interdependence of supply chains, said Stephen Warburton, managing director for Zen’s partner division. To tackle the problem, he said that stakeholders from around the Channel need to work collaboratively.

“To really tackle the challenge head-on, we need a behavioural change and shift in mindset,” said Warburton. “Recycle and re-use of equipment needs to become the norm, we need to make it easier for customers to switch suppliers without having to incur emissions from distributing new equipment. The hardware vendors need to put greater consideration in product design through the use of recycle materials and by making equipment future proof to avoid unnecessary replacement.”

Sustainability is also shaping customer choice and purchasing decisions, particularly in the public sector, said Nimans’ Mcintrye. Today’s consumer, he said, is increasingly demanding products that align with their own environmental and ethical values. That shift is being driven by heightened environmental awareness, transparency and trust, performance parity and social responsibility, he said.

Zen’s Warburton, whose company refurbishes its routers and Wi-Fi repeaters, added, “Today, business clients request information regarding climate change ambitions as standard. Consumers want to know not just that a business is carbon neutral, but what initiatives it has in place to get to net zero. As businesses, we have to be informed and demonstrate that we’re not just empathetic to climate change, but that we’re actively engaged and have a real plan to achieve net zero targets.”

The Corporate Sustainability Reporting Directive is also significantly raising customer expectations about the sustainability of solutions. The transparency and thoroughness advocated by the directive has made customers more aware and better informed of the environmental and social impact of their purchases. As a result, they expect suppliers to deliver products and services that are both operationally efficient and sustainably integrated across their entire lifecycle and supply chain.

Sarwar Khan, global head of sustainability at BT, said that while many channel companies understand the e-waste problem, initiatives to tackle the issue aren’t centralised, meaning there is a lack of clarity about who is responsible for cleaning up the mess. He said that it is up to the vendors to kick-start the process of resolving this and the whole ecosystem of resellers and MSPs coming together to address the matter.

“If they haven’t done so already, channel leaders should help customers understand the benefits of a circular economy and provide them with options,” said Khan. “This could be as simple as recycling or upcycling old IT equipment to give it a new lease of life, or migrating to public cloud environments to avoid the need for devices in the first place through virtualisation.

“Channel leaders can work with specialist partners to offer sustainable take-back programmes where devices avoid end of life, but can be either re-manufactured or refurbished. What’s more, by transitioning to digital solutions, such as BT’s Global Fabric network, they can transform their infrastructure while reducing their carbon footprint. A longer-term transition solution that channel leaders can provide end customers include hardware-as-a-service or leasing options where the lessor is responsible for responsibly disposing of devices.”

Nimans’ Mcintyre said that telecoms companies have adopted a multi-pronged approach to tackling e-waste. Chief among them, he said, are lifecycle assessments to track its impact, take-back schemes that collect data and eco-design that extends product life.
Added to that, Mcintrye said, are refurbishment programmes and energy-efficient upgrades that help to shrink the carbon footprint, while partnerships, industry initiatives and ambitious sustainability targets are paving the way to net-zero goals. Data also plays an integral part in understanding and managing the problem, he said.

“Companies are turning to data for a sharper view of e-waste, using it to track device lifecycles: data on usage, repairs and returns helps design longer-lasting products,” said Mcintrye. “They are also using it to optimise take-back programmes: analysing returned devices informs strategic collection and recycling.

“They can also leverage data to monitor partner performance: ESG data platforms track waste management, compliance and sustainability progress. By harnessing data’s power, UK telecoms can make informed decisions to minimise e-waste and build a greener future.”

By using digital solutions to improve visibility and transparency of the supply chain and that are in line with the required sustainability metrics, companies can also deepen their customer engagement, reduce risk and foster trust with stakeholders.

“The emergence of new and exciting technologies like 3D printing and circular economy concepts are driving customer choices and further transforming manufacturing and consumption patterns, promoting resource recycling and waste reduction,” said Deborah Johnson, head of ESG at Agilitas.

She added, “The Channel can harness the latest technology innovations to reduce resource consumption and waste, increase efficiency and mitigate environmental impacts.”

E-waste initiatives

Many vendors are now incorporating e-waste initiatives into their processes to not only benefit the environment, but to help streamline operations and improve efficiency for channel partners, enabling them and their clients to make a big saving. This is achieved through the use of white-label maintenance, professional services solutions and inventory assurance services, mitigating the need for mass hardware disposal by extending product lifecycles, as well as reducing carbon footprints through the use of dedicated platforms.

Given that around 80 per cent of a product’s environmental impact is determined during the design phase, it’s vital that new product concepts and choice of materials are carefully thought through, said Ross Clinch, enterprise partner manager at Evolve IP, which works with Climate Partner to understand and take action on its carbon emissions.

To reduce the need for new products, his company has a policy of allowing new customers to migrate their existing hardware to its platform, yet he added that the need to maximise a device’s lifecycle has to be balanced with any potential security or performance issues.

“Cybersecurity is a hot topic, therefore it’s paramount that the hardware we deploy on a platform adheres to the latest security standards,” said Clinch. “Evolve IP can also extend the life of devices by recycling them back into the ecosystem and finding new homes for them.”

Components are also being built so that they can be easily replaced if they break. And there has been a big reduction in plastic used in packaging in recent years too.

The number of used smartphones shipped in 2023 rose 9.5 per cent to 309.4 million from 282.6 million in 2022, according to a report by the International Data Corporation. Longer term, smartphone shipments are estimated to reach 431.1 million by 2027, representing a CAGR of 8.8 per cent, while the market value is projected to climb to £86 billion by 2027, from £51 billion in 2023.

One company that has incorporated more sustainable materials is Logitech. In January, the company announced that all its video collaboration devices running on the CollabOS operating system will be manufactured with next-life plastics, thus lowering their carbon impact.

“By transitioning our portfolio of conference room devices to a lower product carbon footprint, we are helping other companies navigate their sustainability challenges,” said Prakash Arunkundrum, chief operating officer at Logitech. “We’re not only designing and manufacturing new products with recycled plastic and other lower carbon materials, but refreshing existing products to provide IT leaders with a new way to evaluate their workplace technology investment in conference room systems - one that includes people and planet.”

Equally important is the need to ensure third-party partners are adhering to the latest ESG regulations and industry standards. Nimans’ Mcintrye said that firms can ensure third-party ESG compliance through stringent selection criteria, clear contractual expectations, regular audits and training, data-driven monitoring and industry-wide collaboration.

BT’s Khan said that accountability is key when selecting a partner, as is one that shares the same sustainability agenda, ethos and vision. BT has set its own standards in this regard, he said, which it has made publicly available for suppliers to access.

“As part of this, all our large suppliers are expected to have science-based targets or have them in place within six months of working with us,” said Khan. “We want to work with the Channel to build an ecosystem that is solid and sustainable.

“Channel companies must vet third-party partners before working with them and conduct regular check-ins with existing suppliers to assess whether they are still adhering to regulations.”

Third-party compliance

Alcatel-Lucent’s Juras said that his company’s approach to ensuring third-party compliance is primarily based on trust. It outlines the principles and obligations that must be followed by suppliers, who are required to provide the necessary certifications for each market.

To standardise requests and maintain uniformity, Juras said that his company uses frameworks such as the Responsible Business Alliance, while carrying out periodic audits to verify their claims and make sure they are in compliance. That ensures they are held to the same high standards of ethical business practices, he said.

“Looking ahead, impending legislation in Europe is likely to push us to extend these efforts further,” said Juras. “Although necessary, these additional measures are expected to be costly.

“To mitigate these costs, several transformations in our approach are necessary. For example, aligning supplier operations more closely with market demands and moving away from a traditional client-supplier relationship towards a model of co-delivery of services. This shift not only helps in cost reduction, but also fosters a more collaborative and sustainable supply chain ecosystem.”

Businesses are also becoming increasingly aware of who they are partnering with for IT asset disposal services, according to Agilitas’ Johnson. But the challenge, she said, is that the data about the full lifecycle of their products isn’t always available from suppliers, so it’s hard to gauge the environmental impact.

“This makes it difficult for companies to visualise the true scale of the issue and also to justify why a company should invest in new technology or pay more for different suppliers who may offer more sustainable processes,” said Johnson.

Johnson added that while steps have been taken to incentivise customers to make any necessary changes that will be environmentally or sustainably beneficial, the technology itself also needs to evolve. That means moving away from throwaway devices, such as laptops and mobiles, she said.

“This has led Agilitas leading the way for channel operators to adopt the ‘repair, rework, reuse’ model, which aims to extend IT hardware lifecycles and reduce the carbon footprint of technology wherever possible,” said Johnson.

She added, “Through the development and implementation of robust sustainability initiatives, vendors, distributors, resellers and MSPs can play a leading role in helping to create a more circular economy, minimising e-waste while also saving money.”

Adrian Sunderland, CEO of Jola, said that environmental measures are considered essential in the majority of tenders his company assists its partners in winning. A prime example, he said, is its SIMs, which are used in machines to signal potential breakdowns, thus lengthening a device’s potential lifespan and reducing e-waste.

“Jola recently introduced RoamNet, a product using QR technology, eliminating the need for a physical SIM card,” said Sunderland. “This is a significant step towards minimising e-waste, as the absence of a physical SIM eliminates the need for

Trade-in increase

Moving forward, TD Synnex’s Haywood-Atkinson expects an acceleration of trade-in activity, as well as a greater interest in remanufactured products. Her company, for example, offers a trade-in service and takes thousands of devices back for fully tracked and documented recycling and safe disposal every year.

“We see trade-in services becoming a routine part of every transaction,” said Haywood-Atkinson. “It makes sense for the customer, for the partner, and the whole circular economy. It gives the customer a better deal, makes it easier for resellers to make sales, and ensures that no part of any product ends up in landfill.”

Agilitas’ Johnson said that to meet their environmental and sustainability goals, businesses need to develop a robust and comprehensive e-waste strategy that aligns their initiatives with the relevant regulations and industry standards, while striving to minimise the environmental impact of their operations. To do so, she said that they must analyse their current operations to minimise waste generation.

Sustainable strategies

The bottom line is that to succeed in maintaining a circular economy, vendors, service providers, resellers and their customers need to be on the same page. With tenders increasingly focused on sustainability, partners must meet those needs and show their credentials to win the business.

As vendors continue to scale their operations, they need to consider their ESG strategies and goals, and how best to meet customer demand, environmental legislation and compliance.

By investing in sustainable strategies, channel partners can gain a competitive edge, enabling them to grow and strengthen customer relationships while adhering to key sustainability principles.

This feature appeared in our March 2024 print issue. You can read the magazine in full here.