The Circular Electronics
System Map

Pre-competitive alignment between value chain partners and competitors facilitates the exploration of new materials suitable for use in circular products (see the Collaborative material exploration case study above). These materials represent a safe, reliable and affordable option to be included in electronic products – also in a recycled form – and can be recovered and kept in the loop without considerable downcycling.

Electronics companies are not only collaboratively exploring new materials for a circular economy. They are also standardizing material specifications and use. Such standardization increases scale and results in more reliable supplies, potentially at lower prices. In addition, it reduces the complexity of downstream activities, as more products with standardized materials mean more incentives to collect and recycle. Alignment also exists on the use of specific substances that are not easily recoverable. For instance, agreements encourage the avoidance of specific additives in plastic that make such plastics harder to recycle. In general, going beyond pre-competitive alignment, legislation also prescribes standards, as do incentives stemming from circularity labels that, for instance, companies can only obtain if they avoid certain “banned” materials. In this context, organizations such as the ITU shape a common understanding of such standards.

As described in the first attribute, verified product characteristics need to be present for secondary resources. The establishing of industry-wide standards and definitions for chain of custody and production characteristics, such as recycling processes, material handling, worker safety or the environmental management systems applied, enables transparency and verification. On a material level, multi-party systems leveraging technologies such as blockchain deliver this traceability. Cryptographic anchors, for instance in the form of programmable and tamper-proof chemical codes that can be incorporated into materials to enable traceability beyond the first cycle, enable the identification of materials and provide access to the respective characteristics. The data stored on the ledger might vary for different materials. For conflict minerals such as tin or tungsten, the source of the materials may need to be transparent in compliance with existing regulations, while plastic requires proof that it is actually recycled. By creating such transparency around material properties, technological solutions such as blockchain mitigate fraud (for example, claiming that materials are secondary even though they are not). However, where it is not possible to apply such technologies, there needs to be clear accountability in case fraud is detected.

Prior to even starting a product’s physical design, development teams need a detailed life-cycle strategy, as product design solutions depend entirely on the product’s intended use, repair, refurbishment, collection and recovery. Since a myriad of different actors along the value chain beyond the OEM are ultimately executing this life-cycle strategy, it is necessary to undertake product development for circular products collaboratively. Each stakeholder must articulate their requirements for product design to fulfill their roles and responsibilities throughout the life cycle. For instance, OEM engineering and design teams collaborate with recyclers to explore whether certain materials and their foreseen use in the product allow for efficient and effective recovery at end of life by gaining better insights into the current recovery practices and technologies in the countries in which their products will likely end up at the end of their lives. Only then can OEMs design electronic products with the end of their lives in mind. Another example is that engineering and design teams interact with repair service providers to understand the tools available for repair so that they can adjust product design and the ability for disassembly accordingly.

Analogous to materials, value-chain actors or competitors standardize parts and components – or even accessories such as chargers – in a collaborative effort provided it does not hinder innovation. This eases downstream activities, especially for players working with different brands or product types. Generally, collaboration during product development could, for instance, happen through digital open-source design tools set up as interactive platforms available across the value chain, allowing actors such as recyclers or repair service providers to provide feedback on the circularity of designs. Such solutions allow for collaboration with no risk of increasing the time to market.

In a circular system, circular products are offered in both sales-focused and as-a-service models. In as-a-service models, incentives are in line with those of the circular economy (see the PC as a Service case study on page 28). First, as-a-service model operators profit from products designed for circularity, as they can internalize the economic benefits from designing for durability or repairability. Because service fees occur over a longer product lifespan and service costs such as for repair are lower, as-a-service models have the potential to be highly profitable in a circular system. Second, as the consumer is required to turn in the product after the service contract ends, operators can better plan collection. Third, as ownership of the product remains with the operator, they can more easily generate and store data, such as on the use, maintenance and repair of the product, in the product passport, enabling better management and monitoring of the use phase of a product and providing transparency over a product’s condition at end of life. Despite these advantages, for some products (low-value items, for instance) or certain customers, sales-focused models may be preferable. For models where ownership of the product is transferred to the consumer, offering attractive additional services for the product is even more relevant to keep the product in the loop.

Based on the defined life-cycle strategy, companies design services to prevent products and materials from “leaking” out of the system during use and collection. This is where circular service design comes into play. Maintenance, repair, upgrades or reuse services can help consumers to verifiably do the right thing. Hence, companies think carefully about what a consumer needs at what point in time to keep the product in use. Once identified, they develop suitable services that answer this need. While a company who plans to offer circular products is involved in designing the services and implements its life-cycle strategy, it does not have to provide these services itself. Instead, it can find specialized partners and ensure that these services are known to consumers, that they are accessible and affordable and that the partners provide them in a way that preserves the value of the product as much as possible. If done well, these services also have the potential to shape the quality perception of brands as much as product design. Therefore, companies should carefully consider them as a real differentiator over competitors.

In a circular system, OEMs, retailers or telecommunications companies inform the consumer at the point of purchase about the product’s use and maintenance and what services are available. Further, as these companies can track product conditions and use through sensors and derive information about past repair and maintenance transactions through the product passport, they can strategically incentivize the services necessary to maintain the highest value of the product when needed. For example, through predictive maintenance, they can inform the consumer that a part of the product is about to break if not maintained or repaired. Through such predictions, it is usually possible to repair the product at a lower cost and with fewer resources than if the part or component is used until it breaks completely.

In a circular system, services are accessible for ICT equipment and all other types of electronic products. Widespread service networks, where possible, are responsible for individual products or brands and cover a large number of different products. If local accessibility of services is not possible, they are made available through other channels. For instance, for smaller items, mail-back options are available. To ensure that services such as repair or upgrade services can be offered over a long period, the corresponding spare parts are available for circular products for longer than for linear products.

Further, services need to be affordable. From an industry perspective, revenues from services will compensate for reduced product sales in a circular economy; hence,

it is necessary to maintain a certain level of profitability. However, from a consumer perspective, prices for maintenance, repair and upgrade services should not represent a significant financial burden that could be a barrier to their use. In an as-a-service model, the respective operator will carry the costs for these services. However, when the customer purchases the product, the company could mitigate the financial burden by offering these services directly with the sale of the product as a sales bundle, such as through dedicated insurance or by extending the warranty, which is already common practice for some ICT equipment such as phones. In addition to the absolute cost of these services, the relative difference compared to the price of new product versions is also decisive. Therefore, the price difference should represent a clear incentive for consumers to repair or upgrade existing products instead of buying new products prematurely. To achieve such affordable prices for these services, reducing operating costs is a key priority. In particular, in developed countries with high labor costs, better product modularity in combination with automation enables more cost-effective ways to perform these services.

To ensure the sufficient quality of these services, providers have access to training and certification programs for repair and refurbishment in a circular system. These programs are aligned with OEM specifications for maintenance, disassembly or repair. In addition, consumers can receive manuals for the products that they can repair and have access to manufacturer-approved parts.

A prerequisite for keeping products in the loop is consumers being willing to bring back products at the end of the product’s life to a proper collection agent. All stakeholders that want to drive change to a circular system take part in educating consumers (such as through communication and marketing channels) on the importance of returning electronic products. Where needed, companies can incentivize bring-back schemes through discounts and cashback schemes or centrally mandate them in a B2B context.

To stimulate collection, consumer trust in the proper handling of end-of-life electronics by collection and subsequent value-chain actors is essential. It is especially critical when any sensitive data is stored on the device. Whether personal or company-related, fear of data misuse through the collection agent represents a very real barrier for consumers to bring back their electronics. In a circular system, simple and secure data sanitization solutions are required (see the Data sanitization for data-bearing devices case study below). Electronics manufacturers have jointly developed a best-practice approach to integrating secure data-wiping software into all electronic devices that store personal data. Where feasible, the user of the device or equipment is empowered to perform data cleansing themselves.

To ensure that consumers not only want to bring back their electronics but can actually do so, in a circular system, every consumer has easy and convenient access to a collection pathway. Companies offering circular products have transparency regarding the collection of their products at end of life and collection pathways. The most adequate pathways established for a product depend on factors such as existing local collection infrastructure, costs for downstream logistics, product properties and the customer segment (B2C, B2B or B2G), and need to be selected on a case-by-case basis. The excursus on the advantages and examples of various collection pathways on page 31 provides an overview of four common collection pathways.

There are different ways to establish and finance a widespread collection network in a circular system, such as through carbon credits or voluntary or mandatory extended producer responsibility (EPR) schemes. If EPR is a legal requirement, legislation should be simple and lean. In general, EPR obligations are harmonized across jurisdictions to reduce complexity for producers. In countries with large amounts of electronics, establishing producer responsibility organizations (PRO) might be reasonable. A PRO is a professional organization authorized or financed by producers that takes on the collective responsibilities for collecting end-of-life electronics, ensuring the recovery of products in an environmentally sound manner. In such cases, the targeted use of financial funds for the collection network is necessary, especially in countries where corruption is a major problem.

In a circular electronics system, reverse logistics are fast and cost-effective. In such a system, both local and centralized recovery facilities have their place. While local recycling facilities minimize the cross-border transportation of materials, reducing time and carbon emissions related to reverse logistics, centralized recycling facilities are needed where sufficient scale is required to ensure cost-effective operations.

Due to the presence of substances classified as hazardous, the Basel Convention covers the cross-boundary movement of many end-of-life electronics globally, with varying degrees of implementation at the national level. The Basel Convention involves trade controls, financial guarantees and documentation requirements for the shipping of hazardous and other controlled materials. In a functioning circular economy, companies can obtain certified exemptions under the Basel Convention to ship and repurpose materials in an environmentally sound manner. High-frequency shipping sources and destinations can use expedited shipping permits through a fast-lane system, while for others, a standardized electronic PIC (prior informed consent) procedure and harmonized material classifications will allow for the well-documented yet fast processing of shipping permits. Fast permit applications and shipping routes are essential for feedstocks to reliably arrive at recovery facilities so that they can in turn plan their supply of recovered materials to their customers. Detailed information on what solutions related to reverse logistics need to be in place can be found in the World Economic Forum’s Facilitating Trade Along Circular Electronics Value Chains white paper.18

Once electronic products reach recovery facilities at the end of their lives, recyclers sort, disassemble and recover products and their components. Efficient and effective processing makes recovered materials economically viable and ensures that they are high-quality alternatives to virgin materials.

The recovery infrastructure is optimized to obtain the most efficient and effective processing in a circular system. Recyclers leverage advanced technologies to sort products and identify the most suitable recovery pathway. Due to the diversity of the countless products available and the associated difficulty of product identification, artificial intelligence helps to recognize and sort products, potentially via unique product identifiers. Once they have identified the product, these technologies instantly analyze its material composition using product passports, which include data regarding, for example, its valuable materials or batteries requiring special treatment. Further, as the product passport contains data on the condition and remaining life expectancy of certain components, sorting and triage can happen based on product age and outer appearance as well as on actual recovery potential.

Once the system has sorted the product and identified a suitable recovery path, where appropriate and beneficial, recyclers in a circular system deploy robotics to disassemble products effectively and cost-effectively. Robots fed with model-specific disassembly instructions stored in the product passport can optimize automatic disassembly for each product. Higher effectiveness in disassembly can reduce contamination and, in the end, contribute to high-quality secondary material feedstock.

Recycling technologies are capable of processing the materials included in circular electronic products, as these technologies are developed in conjunction with the introduction of new materials. Sufficient investment is available to enable the development and use of the latest recycling technologies. Investors have increased interest in recycling and secondary markets due to higher and more reliable demand for secondary materials. Further, pricing in externalities, such as carbon emissions, will generally change profit margins in global commodity markets to the benefit of secondary markets, attracting further investments. While the technologies keep up with new and innovative materials, infrastructure is also in place that can process legacy materials included in products years ago – especially against the backdrop of the long life cycles of products such as washing machines.

To close the loop, recyclers also collaborate and align with material suppliers to prepare secondary materials with properties as requested on secondary material markets. This ensures that products and materials are recycled for use in new products (see the Collaboration between recyclers and material suppliers case study to the left).