Can Leasing Be an Efficient Approach To Achieving Circularity For Smartphones?

Can Leasing Be an Efficient Approach To Achieving Circularity For Smartphones?

Can Leasing Be an Efficient Approach To Achieving Circularity For Smartphones?

 

When was the last time you replaced your smartphone? How long did it last?

 

After a little more than 5 years, I finally replaced my old iPhone 5 last month. While looking for a phone that can last another 5 years (ideally), I found myself totally overwhelmed by the endless number of references, slightly different features and brands out there. But the truth is that every year technology brings us better performance and higher quality photos in smartphones. However, the lifespan of these seems to shorten at the same time.

Nowadays the average lifespan of a smartphone is around 2 years1, and this could be attributed to two main reasons. Firstly, the so called “planned obsolescence” is well known and it brought even more attention at the beginning of this year with the news about the “Batterygate”, as Apple would need to pay up to $500 Million due to software updates resulted in the throttling of iPhones with older batteries, in effect slowing down older models, leading users to believe that they needed to replace their phones2. In fact, to keep up with my old iPhone 5 for that long time, I had to give up on some basic apps that were no longer compatible with the last version of the available IOS. Secondly, the devices are designed thinking about adaptability, convenience, and appearance; as we do not see them as merely an electronic device but rather a fashion accessory; with modularity sometimes paying the price for that. The focus of Apple design is, for example, the full integration of software and hardware and visual simplicity is a must. They look clean, elegant, with a lot of attention to details, they perform very well until we drop them, and we need to replace a component. The problems really start with the expensive bills because it is not always possible to do it for ourselves.

Taking this into account, if every user on average replaces the smartphone every 2 years or sooner, what happens with all the smartphones we have had along the way? According to The European Economic and Social Committee (EESC)3, only between 12% and 15% of mobile phones are properly recycled in Europe. What is more, there is a large stock of old-abandoned devices in EU households. The idea to keep devices as back-ups, intrinsic concerns about data privacy, or simply because people do not how or where to dispose them properly, are factors why user prefer to keep them at home. A study by Bitkom estimates that in Germany alone 124 million unused phones rest in homes, while this stock can rise to almost 700 million devices for whole Europe4, both functional and defunct devices.

This is a remarkable number to keep in mind. Smartphones contain valuable and non-renewable resources including gold, copper, silver, and palladium; without mentioning rare earth minerals. The extraction and processing of these raw materials required for their production entail considerable emissions of CO2, pollution of waterbodies and soil, poor working conditions and adverse effects on health. Therefore, recovering these materials after the use phase of the phones is fundamental.

 

So, how to face the increasing amount of valuable materials that are hidden in our houses?

 

In a circular economy, the waste is first avoided and then reduced to a minimum by keeping the resources available for repeated reuse. Circular economy approaches for smartphones have emerged and gained traction in recent years, which can have benefits for both the environment and consumers. However, the hibernating devices in people’s homes are a significant barrier to implementing circular economy approaches in the value chain.

One alternative to avoid this accumulation of devices in households could be the redefinition of ownership of our smartphone. By switching from ownership to ‘usership’, the user could enjoy the device without the need of purchasing it. This alternative would be hard to process at the beginning because smartphones have become an extension of ourselves. However, it is a model that has been proved successful in other markets. In music and video, for example, streaming is what drives the current trend, while physical sales are declining every year. Many of us find it more practical to rent content instead of owning it. What if this attitude is extended to smartphones?

A leasing model which promotes greater flexibility and lower outlay for the user, would at the same time make responsible the manufacturer for the whole value chain. If manufacturers own the devices, these would be better designed to re-use and recycling. Even hybrid concepts can be applied here. A study conducted by the School of Geography and Planning in the UK5 proposes a design by rethinking the fundamentals of current smartphones, separating them into three distinct parts. First, the part that the user interacts with directly, labelled as the ‘skin’, which has a high emotional value and can be long lifetime designed. This part can be owned and personalized by the user. Second, the critical support components inside the device or the ‘skeleton’, and third the hi-tech electronics that deliver the function or the ‘organs’ of the phone. These two last parts have shorter lifetime and low emotional value that could be leased.

Manufactures benefit from these kind of initiatives in mid-term by taking back the materials that are largely bypassed. For instance, gold comprises around 80% of the economic worth of valuable metals in mobile phones and its recovery is the main economic driver for recycling phones. With a solid leasing model, the logistic channels could strongly improve and not only the materials that are already in use can benefit from better recycling strategies, but also those materials that are momentarily out of the system. If we assume that all those roughly 700 million devices in Europe’s households are collected and recycled, approximately 15.000 tonnes of gold, silver, copper, palladium, cobalt and lithium with a value of over €1 billion could be recovered. To give an idea, my old iPhone 5 contains $1.58 of gold (0.0012 oz.), $0.36 of silver (0.012 oz.), $0.05 of platinum (1.2e5 oz.), and $0.12 of copper (0.56 oz.)6. Those numbers may sound small, but in fact the phone holds from 6 to 300 times more precious metal than the equivalent number of ore from a mine.

Additionally, further possible opportunities arising from implementing a leasing model in the smartphone value chain would include job creation in the refurbishment sector. In a scenario where manufactures own the devices, it is on their interest to use the components for as long as possible. EESC estimates if 20% of devices were to be refurbished, approximately 29,000 jobs would be required for this process. Under a more ambitious scenario assuming a refurbishment rate of 30%, 43,600 jobs would be required.

In Munich where I live, I see leasing models from the retailer’s stores. It is a start but to achieve an effective circular economy model, it should come from the manufacturer. To increase the implementation of this model the participation of the users and regulatory entities is needed. With more conscious consumer’s habits and different business models from the manufactures, the reusable and recycling levels would increase considerably decreasing the environmental impact. The components would last longer in the system moving from one user to the next one, and the raw materials would be better controlled and traced leading to higher recyclable rates. For example, during a 10-year period, between 20 and 30 million tonnes CO2e could be saved by extending the lifespan of each device by one and two years, respectively. These emission savings would largely come about through extraction and shipping of products. In conclusion, after 5 years with my iPhone 5 I bought a new phone. I expect that after some years (hopefully more than 2), I can have the option to rent a new one directly from the producer.

References:-

⦁ Guvendik, M. (2018, 06 20). Next step in Life Cycle Assessment: Inventory Analysis. Retrieved from Fairphone: https://www.fairphone.com/en/2014/06/20/next-step-in-life-cycle-assessment-inventory-analysis/

⦁ BBC News. (2020, 03 02). Apple settles iPhone slowdown case for $500m. Retrieved from BBC: https://www.bbc.com/news/technology-51706635

⦁ Rizos, V., Bryhn, J., Alessi, M., Campmas, A., & Zarra, A. (2019). Identifying the impact of the circular economy. Brussels: The European Economic and Social Committee EESC. https://circulareconomy.europa.eu/platform/sites/default/files/impact_of_ce_on_fmcg_-_mobile_phones_case_study.pdf

⦁ Bitkom. (2018, 12 03). 124 Millionen Alt-Handys liegen ungenutzt herum. Retrieved from Bitkom: https://www.bitkom.org/Presse/Presseinformation/124-Millionen-Alt-Handys-liegen-ungenutzt-herum.html

⦁ Hobson, K., Lynch, N., Lilley, D., & Smalley, G. (2018). Systems of practice and the Circular Economy: Transforming mobile phone product service systems. Environmental Innovation and Societal Transitions, 147-157. https://doi.org/10.1016/j.eist.2017.04.002

⦁ Koetsier, J. (2013, 04 03). Mining your iPhone: Recycling iPhones yields gold, silver, platinum, and more. Retrieved from 911 Metallurgist: ⦁ https://venturebeat.com/2013/04/03/mining-your-iphone-recycling-iphones-yields-gold-silver-platinum-and-more-infographic/#:~:text=911%20Metallurgist%2C%20which%20helps%20mines,05%20of%20platinum%2C%20and%20%24.

 

 

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