Circularity is the new IT imperative

The circular economy, an economic model of minimising waste and making the most of resources through reuse and recycling, has gained new relevance in recent years as the impact of climate change, ocean pollution, and the environmental impacts of rampant disposal have become more pronounced.

Many organisations now embrace sustainability as a core corporate social responsibility (CSR) objective. More than 90% of CEOs say sustainability is important to their company’s success, according to the Stanford Social Innovation Review. 98% of S&P 500 companies published a sustainability report in 2022, up from just 20% in 2011, according to the Governance & Accountability Institute’s 2023 Sustainability Reporting in Focus research.

This issue is particularly applicable for IT executives, whose organisations are major electric power consumers and a growing source of hazardous waste. Electronic waste (E-waste) created by the disposal of end-of-life equipment such as computers, servers, smartphones, and printers is the fastest-growing solid waste stream in the world, according to the World Health Organisation. And the issue continues to escalate. Over 61 million metric tons of electronic devices were discarded in 2023, and the annual total is expected to increase to nearly 75 million metric tons by 2030. Less than 18% is currently being recycled.

E-waste is a problem on two levels. Environmentally, it is a ticking time bomb. IT assets contain hazardous materials such as mercury, lead, arsenic, beryllium, and cadmium, which can leach into the environment if disposed of improperly. Heavy metals pollute the soil and groundwater, creating health hazards for people and wildlife, and they are difficult to clean up. A slew of new regulations in the European Union, China, India, and portions of the U.S. impose severe penalties for irresponsible dumping of electronic gear.

There are also privacy and data security hazards. Discarded or recycled devices frequently contain sensitive data such as personally identifiable information and intellectual property. A 2021 Kaspersky audit of second-hand devices in the U.K. found that 90% contained traces of private and business data and 74% held data that could be recovered with special tools. That confirmed a 2019 experiment by the University of Hertfordshire that found that more than two-thirds of second-hand USB drives sold on eBay included sensitive data. Failure to scrub data from discarded devices can result in regulatory fines and reputational damage that can take years to repair.

An economic model for the new world

The linear build-use-discard model of resource usage is a vestige of a time when resources and energy were abundant and “out of sight, out of mind” thinking dominated the approach to disposal. This mindset became so entrenched in the 20th century that a 1955 issue of Life magazine celebrated the virtues of “throwaway living.” This model needs to change as the environmental and societal impacts of excessive energy use and reckless dumping have become more compelling in recent years.

The emerging circular economy seeks to keep resources in use for as long as possible, extract the maximum value from them during use, and recover and repurpose products and materials at the end of their service life. For IT asset management, this means reusing, refurbishing, remanufacturing, and recycling assets to minimise waste and resource consumption.

The circular economy model envisions making something that is old new again. As a closed-loop cycle, it pays off in lower capital expenditures, improved resource efficiency, and reduced risk by keeping resources within a managed system.

Even more important for business leaders is that circularity is economically superior to linearity. It avoids the costs of disposing of old equipment and purchasing new supplies. Organisations can also lower their Total Cost of Ownership (TCO) by remarketing end-of-life equipment and components that would otherwise be discarded. Revenue generated from circular economy transactions is expected to more than double from $339 billion in 2022 to nearly $713 billion in 2026. In addition to the economic benefits of extended asset lifecycles and resale, a circular approach to IT asset management can reduce greenhouse gas emissions, generate less e-waste, and lower manufacturing costs.