COVID-19 Highlights the Importance of the Circular Economy



For cynical companies which are keen to appear ‘green’ both to satisfy their public image and tick a box for their socially-conscious employees, referencing the circular economy in mission statements and strategic plans was a great way to appear concerned.

Yet as organizations prepare to return to work after COVID-19, boardrooms around the world will, no doubt, learn many lessons from the outbreak. On an IT Asset Disposition (ITAD) level, vague aspirations about ‘keeping products and materials in use’ will become established practices, not only from a supply-chain perspective but from the economic fallout from the pandemic.

Supply chains

While the Chinese city of Wuhan was where the first reports of COVID-19 occurred, it also has one of the highest concentrations of high-tech manufacturing firms. As the government shut down that city – and many other cities too – the short-term result was an immediate disruption to global supply chains.

The first consequence of this was felt in terms of laptops. As companies sent people home to work, there was a spike in the demand for such products and associated equipment as people scrambled for them.

The pressures on IT products will continue to be felt as existing IT stock comes to its End of Life (EOL) and IT managers seek their replacement.

Circular economy in action

Apart from a few sectors, the majority of industries will be counting the cost of COVID-19 for many, many years. Any plans that IT managers might have had for 2020 will go out the window and there will be a focus on keeping costs down.

On a basic level, IT departments will no longer look like computer stores full of brand-new kit ready to be dished out, but more like repair shops full of motherboards, chips, wires, and tools at the ready. If something is broken in one PC, instead of raising a PO to buy a new machine, you’ll be getting your hands dirty and taking a used part from an old one. A PC has at least eight basic components – why replace the entire machine when you can swap one of these components out from another?

And let’s say you need a new CPU, but can’t recycle one from your stock, then just source that single component and install it yourself.

Circular economy in global policy

From a global policy perspective, the circular economy will be boosted in two ways. Firstly, if we look at the UN, its Secretary-General wants to link corporate bailouts with sustainable growth and green-job creation. It stated that corporate bailouts must drive a shift to a green economy and make societies and people more resilient.

Furthermore, the EU has stated that it faces major challenges to secure the supply of critical raw materials such as cobalt, lithium, and rare-earth metals used in high-tech goods. Take lithium, for example, Europe is 100 percent dependent on this vital ingredient in battery production, with 78 percent of its lithium supply coming from one country, namely Chile.

Evaluate your supply chain

As part of moving towards a circular economy, a thorough knowledge of your supply chain is essential. According to PWC, ‘This means beginning with the most critical products and looking well beyond first- and second-tier suppliers, right down to the raw materials, if possible.’

It’s highly unlikely that organizations – pre-COVID-19 – were thoroughly aware of their supply chains as they have never needed to be. But in a post-COVID-19 world, knowing where your IT assets come from, and how vulnerable the supply chain is, will form a part of all IT departments’ risk registers.

ITAD and the circular economy

From an ITAD perspective, your supply chain starts with your existing IT assets. Therefore, it is vital to perform an on-site physical audit across all business locations to ascertain the exact number of assets and assess their condition.

Once the asset register is ready, then you will have a list of potential spare parts which can be circulated within your organization. Critical spare parts should be noted, and supplies should be sourced and backed up.

As IT assets come to their EOL, they should be re-used, and if components are no longer functioning, they must be stripped of any precious material and re-sold, if possible.

If any good comes out of COVID-19 it might be a re-evaluation of our relationship with the environment, and how that influences our economic decisions. Why ship a component halfway around the world, when a perfectly good one is sitting in an old PC in your IT department?

If this is one of the lasting effects of COVID-19, then we will all emerge better, stronger, and more prepared for whatever challenges lie ahead.

Author: Wisetek