Q+A: Why Consumer Electronics has a Sustainability Problem

With suspicion about built-in obsolescence and an insatiable customer demand for the next new gadget, it is little wonder that consumer electronics struggles to be sustainable.

Raj Shah, Managing Partner, North America Lead for Technology, Media and Telecommunications at Publicis Sapient, goes further – arguing that the industry has “a big problem”.

So what can be done to introduce circularity into a throwaway industry? Sustainability asks Raj a series of questions.

Why do you think the consumer electronics industry has a sustainability problem?

Consumers generally treat electronic products as if they were disposable. Many are discarded well before they’ve reached the end of their useful life.

What’s worse, the consumer electronics waste stream contains resources and components that could be recovered and recycled. These rare-earth metals are worth about US$18bn annually.

The lack of recycling leads to more extraction of these scarce commodities, which comes with environmental impacts, geo-political constraints and labour abuses in some cases.

In short, the consumer electronics industry has a sustainability problem – a big one.

Traditional economic theory and many in the business community view sustainability initiatives as cost drivers – and that’s frequently true in the short term

The outlook changes when sustainability investments are evaluated over longer time horizons, according to an analysis of more than 1,000 research papers from the NYU Stern Center for Sustainable Research, which found that when studies of corporate ESG results implied a long-term focus, they were 76% more likely to find a positive or neutral result.

Sustainability is no barrier to profitability.

Consumer electronics firms often face low margins and intense competition. Their revenue is buoyed by continuous innovation that encourages consumers to upgrade with the latest and greatest – even if their current device is in good condition. 

This business model’s sustainability implications are stark: a belief that the only viable economic model is a linear one, which draws a straight line from resource extraction to the factory and, invariably, to the landfill.

What incentives and circumstances will it take for companies to drive sustainability while maintaining growth?

In contrast to the linear model is the idea of a circular one. Rather than developing products destined for the trash heap, the circular economy envisions ecosystems that keep products in use for longer through repair and reuse strategies, increased recycling and a rethinking of waste streams as inputs for other businesses.

Four pillars can help electronics companies achieve this vision:

• Prolonging the lifespan of devices;
• Utilising cloud computing to improve energy efficiency;
• Providing suitable services to customers;
• Cascading products and components to maximise resource utilisation.

Do you have some examples of companies that are transforming sustainability within the industry?

I’d like to discuss three examples that I admire:

Grover

Grover offers more than 3,000 types of electronics for consumers to rent through a flexible subscription model.

This model promotes sustainability by extending device lifecycles, reducing e-waste and keeping electronics in circulation longer.

Since its founding in 2015, Grover has circulated over 500,000 devices from major brands like Apple and Samsung, saving 1,500 tons of e-waste.

Two aspects of Grover’s model infuse pillars of circularity into traditional electronics buying patterns.

First, users can purchase items they rent, with the rental cost applied to the purchase price. This allows consumers – especially early adopters – to make informed decisions.

Second, Grover’s model also increases the utilisation of each product.

Many people buy drones, for example, only to use them once or twice per year until they lose interest. After that, the device gets shoved into a closet and, eventually, it’s thrown away.

The subscription model keeps products in circulation much longer.

Back Market

Specialising in refurbished electronics, Back Market connects buyers with certified refurbishers, offering affordable devices like smartphones and laptops.

This French-based company ensures quality and reliability through rigorous vetting of sellers and uses algorithms to highlight optimal deals.

By leaning on strong digital skills, Back Market has increased consumer confidence in refurbished electronics and helped sustain a market for them.

Skullcandy

Skullcandy integrates sustainability into its business model through initiatives like carbon-neutral purchases and partnerships with environmental organisations.

To meet its 100% recycled packaging goal, Skullcandy overcame a potential US$1m annual cost increase by rethinking product and packaging designs, enhancing supply chain and transportation efficiency.

Additionally, the company introduced a feature upgrade service for existing devices, which extends product life, generates new revenue and helps keep e-waste from landfills.

Finally, Skullcandy’s return programme in the US and Europe involves inspecting returned items for reuse or recycling. This initiative even

extends to competitors’ products, which prevents one million pounds of e-waste from reaching landfills.

What role can green innovation play in business growth?

Brands that have adopted an approach toward sustainability have delivered one-third of recent growth in the consumer packaged goods sector.

It’s clear consumers are concerned about climate change and some are willing to change their behaviour in response, which includes shifts

in the products they buy and whether to buy at all.

Adopting sustainability as a core element of a business helps retain and motivate top talent.

It creates brand preference among younger consumers and demonstrates to the investment community that your stated aspirations are achievable.

Meanwhile, brands are evaluating circular economics as a means to create growth, both by evolving existing business models and creating new ones to capitalise on gaps within the industry.

In each case, the hard work begins with understanding where opportunities and challenges toward sustainability may exist.

In many cases, senior leadership may need to set goals to work across the organisation to evolve existing business models and prioritise a commitment to sustainability as a core business strategy.

It isn’t easy and it often involves significant effort. But it is possible and the benefits are significant.

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