Insuring a more sustainable future: The shift to a circular economy for electronics

The reality is that our relentless consumption of electronic devices, particularly smartphones, is pushing our planet to its limit. Currently, we use the earth’s natural resources in a way that corresponds to 1.75 Earths – a rate faster than nature can regenerate. Without radical intervention, this linear take-make-waste model means that we have just decades before we run dry of precious materials.

The circular economy has long been touted as the solution, promised to decouple the pursuit of continuous economic growth from resource extraction. Yet, despite increasing consumer interest and an impetus for businesses and governments to act – progress has remained elusive. Often hampered by ingrained and rigid consumption habits, a lack of meaningful regulation, and industry inertia.

In fact, despite growing awareness and interest in the circularity concept – global progress remains alarmingly insufficient and declining. In the last six years, global circularity has dropped from 9.1% to 7.2% – meaning that only 7.2% of the materials we use globally are being cycled back into the economy, while 92.8% is wasted or discarded after use. So, what can we do?

Deprogramming decades of consumer behaviour 

At the core of the problem lies a complex web of challenges. Consumer habits, shaped by generations of convenience and affordability, have seen that too often we prioritise new electrionics rather than extending the lifetime of the device through repair, refurbishment and reuse. While in recent years, circularity has achieved the status of a megatrend, many consumers feel alienated about the practical steps they can take. This is compounded further by misinformed beliefs that refurbished products are in some way inferior.

This is where device insurers can come in. There exists a profound opportunity for the insurance sector to drive progress toward a circular economy model for consumer electronics. Insurers are uniquely positioned to bring together an ecosystem of partners across the value chain (or value circle). This can help consumers to break down barriers, making it easier and even rewarding to repair, refurbish, repurpose, and recycle their devices.

Customer must be provided with clear, concise, and easy-to-understand information about the environmental impact of their choices, including device lifetime, repairability, and carbon emissions from future activities (e.g. repair versus replacement).

We have also seen that when consumers have the chance to make a circular choice, they invariably embrace the opportunity. For instance, our partnership with the We Forest incentivises consumers to choose to repair their device rather than opting for a replacement by offering to plant trees in Mount Mulanje on their behalf. This simple incentivisation has resulted in a 6-12% increase in repair rates, and restored 22.7 hectares of forest to date.

Creating an enabling environment 

Beyond influencing a shift in consumer behaviour, it’s clear that without a robust regulatory landscape, progress will remain woefully inadequate. Fulfilling the shift to a circular economy won’t just happen on its own, it requires innovation and a collective commitment from all stakeholders.

Regulation and government pressure is central to driving this impetus, and while there has been an increase in some policymaking, for instance, the EU’s introduction of Right to Repair – it by no means goes far enough yet. We need to see a concentrated effort from governments to deploy policies that create radical change such as the EU’s Right to Repair and Ecodesign legislation.

This could take the form of governments accelerating legislation that mandates manufacturers design products with repairability in mind, thereby extending the lifespan of devices and reducing electronic waste. Legislation can also be used to mandate minimum levels of recycled materials in new products or to ban single-use and disposable electronics.

In its most basic terms, this means creating models that entrench in law the expectations of achieving a circular economy across industries, ensuring that mechanisms are in place to support the financial cost of such a transition for businesses.

We have seen that when enabling policies that call for such transformative change are enacted, they can have immense impact. For instance, it is estimated that the US’s Inflation Reduction Act (IRA) will lead to greenhouse gas emissions reductions of up to 42% by 2030. Putting the US back on track to meet the Paris Agreement climate goals.

To maximise the potential of the circular economy, we need to see governments supporting it. While there has been an increase in some policymaking, a more concentrated effort is still needed to ensure that players across industries are incentivised to act.

Working together to make circularity a reality

Addressing planetary problems is a feat that cannot be achieved in isolation. Cross-industry collaboration and innovation are critical. To achieve a truly circular economy, we need to see symbiotic partnerships that foster innovation in product design, business models, consumer education and technology – united by a shared goal.

For instance, collaboration between electronics manufacturers, recyclers and technology innovators holds the potential to develop future modular, repairable devices that are designed for circularity. This is a future that’s possible if we can work together.

Joint initiatives for consumer education from across the electronics ecosystem can ensure that we are raising awareness about the environmental impact of electronic waste and the benefits of adopting circular practices across every consumer touchpoint.

By reshaping these systems, we can create lasting change. It is our collective responsibility to prioritise resource conservation, waste reduction and environmental protection. The time for incremental change has passed. We need to break free from disposable habits and embrace a circular mindset that values longevity, repairability, and responsibility. The future of our planet depends on it.

 Quinton Goddard is the head of solutions and sustainability at SquareTrade.