Reaching Net Zero will require companies to rethink their business models. For the consumer electronics industry, this means enabling consumers to reuse and recycle mobile devices. To make this happen, a common language for communicating the benefits of refurbished devices is needed. Tianqi Li, an expert contributor to the Net Zero Intelligence Unit, and Chloe St George explain how.
The opportunity and the challenge
The two billion mobile phones sold each year have a hefty environmental footprint. Each new phone depletes scarce natural resources, and production processes lead to air, soil and water contamination. Vast numbers of still usable phones end up as toxic e-waste, or lie unused and depreciating in end-users’ drawers. The production and use of mobile devices (including smartphones and tablets) also generate greenhouse gas emissions. They constitute over half of the global ICT sector’s footprint already, and smartphone volumes are rising.
Reaching Net Zero emissions will require the industry to adopt the principles of a circular economy. These include the promotion of reuse, repair and refurbishment to reduce the number of new devices being produced. The most carbon intensive stage in a smartphone’s lifecycle is production and manufacturing (around 80% of its total footprint). Giving an old phone a new life through refurbishment can therefore avoid significant emissions. In fact, based on today’s production processes, adding just one year onto the lifetime of all smartphones in the world could save the same volume of carbon emissions by 2030 as taking 4.7 million cars off the road.
However, despite these clear benefits and burgeoning demand for refurbished devices, challenges remain. One is identifying a carbon footprinting methodology which demonstrates how refurbished devices can help a mobile network operator meet its emissions reduction targets. A mobile operator buys mobile devices to sell on, but does not manufacture the hardware itself. Unless carbon accounting and a wider business case can fully reflect the benefits of refurbished devices, there will be limited incentive for companies to put circularity at the heart of their business plans.
Adding one year onto the lifetime of all smartphones in the world could save as much carbon emissions by 2030 as taking 4.7 million cars off the road.
Carbon footprinting: a current barrier to the circular economy
The Carbon Trust has been working with a number of clients to address the difficulty of evidencing the carbon reduction benefits of refurbished devices. The underlying problem is the lack of a commonly agreed methodology for calculating how a refurbished device contributes to a mobile operator’s Scope 3 emissions. In the absence of an agreed methodology, mobile operators are faced with three challenges of implementing a circular economy:
- Mis-matched incentives: When a refurbished phone is sold instead of a new phone, the manufacturer can calculate the emissions saved through avoiding manufacturing and raw material extraction and refinement. However, these savings will not be reflected in a mobile network operator’s Scope 3 emissions, which their Net Zero targets are based on. A company’s Scope 3 emissions include the embodied emissions of all the phones they sell that year. This means that whether they buy and sell 100 new phones or 100 refurbished phones, they would still need to account for the emissions released when the devices were originally manufactured. If it is only possible to evidence the benefits of refurbished devices to the environment broadly, but not how they support a mobile network operator’s emissions reduction targets, it masks the significant emissions benefits of the circular economy.
- Influencing suppliers and consumers: Mobile network operators need to see how product design and procurement decisions influence their carbon footprints. This information will help them prioritise the changes needed to drive their progress towards Net Zero. They then need to be able to communicate this value to suppliers, encouraging them to design attractive long-lasting phones1 which can be easily refurbished and repaired (at home or via the ecosystems of service providers). They’ll also need to persuade consumers to: hand in damaged phones instead of keeping them in drawers; buy refurbished ones; and use them for longer, perhaps through warranties. Without the ability to evidence the emissions reductions achieved by buying and selling refurbished devices, convincing suppliers and consumers to change their behaviours becomes challenging.
- Incomparable data: Mobile network operators need to be able to compare the carbon reductions promised by different suppliers of repair and refurbishment services. However, unless the suppliers use the same approach to footprinting, their claims will not be comparable. Vodafone recently decided to offer discounted rates for suppliers who disclose their emissions through CDP and otherwise improve environmental performance. Initiatives like these, to establish greater transparency and data sharing throughout the mobile supply chain, are also crucial to establish a baseline carbon footprint for new phones. This is central to understanding the relative benefits of refurbishment. Equally, a significant proportion of consumers across the world struggle to trust sustainability claims surrounding recycled and refurbished products, despite growing demand for durable, second-hand phones. Industry initiatives like EcoRating, which score products based on their sustainability credentials (including circularity criteria), rely on consistent information to help customers make informed buying choices.
Hover over each stage of a smartphone’s lifecycle to read more
One industry, one approach
In the absence of a common approach for estimating the carbon impacts of refurbished devices, there is an important question to be addressed. If a device is going to be refurbished and sold on, how should the responsibility for the original manufacturing emissions be split between the multiple sellers? The Carbon Trust has developed a methodology which links the product footprint of a refurbished phone to the Scope 3 emissions of the company selling it. Each time a mobile operator sells a new phone, their Scope 3 footprint includes all the emissions released during manufacturing. If they sell a refurbished phone instead, the Carbon Trust’s methodology ensures they are only allocated a portion of these original manufacturing emissions.
This approach rewards companies for refurbishing used devices and operating closed-loop systems. Companies minimise their share of the original manufacturing emissions by selling phones which were in use for longer before being refurbished, and by sourcing phones from their own customer-base. Conversely, a company selling a phone with a shorter first life would be responsible for a greater proportion of its original manufacturing emissions.
This methodology allowed one Carbon Trust client to communicate the positive impact of their mobile phone recycling and take-back offering. Specifically, they were able to calculate how much mobile phone operators had shaved off their Scope 3 emissions targets by buying this client’s refurbished smartphones. The Carbon Trust’s calculations also enabled the operator to express the benefits of refurbished devices to consumers; purchasing one of their restored phones resulted in as much as 50% fewer emissions compared to a new device. The environment isn’t the only winner here; selling pre-used phones (whether refurbished or just pre-owned) makes commercial sense, as it allows operators to expand their customer base by reaching more price-sensitive customers.
There are alternative methodologies within academic literature which, like the Carbon Trust’s approach, assign a proportion to each seller, but use the economic value of a phone after refurbishment to determine the exact ratio. The Global System for Mobile Communications Association (GSMA), along with the Global Enabling Sustainability Initiative and the International Telecommunication Union are considering the question of whether and how to divide responsibility for production emissions as part of their upcoming guidance on calculating Scope 3 emissions for the ICT sector. There are merits to both methods for quantifying the carbon impacts of refurbished devices, but a shared industry-wide approach is needed to provide the information and incentives to accelerate progress towards Net Zero.
A common approach to quantifying the carbon benefits of refurbished devices will incentivise action on Net Zero.
The challenge facing the ICT industry reflects a broader challenge: businesses and consumers need to understand the connection between efficient use of scarce materials and reaching Net Zero. Getting carbon accounting right will incentivise action by demonstrating the link between the two. A standardised methodology for phones could provide a template for capturing the benefits of all reused and refurbished products.
Of course, the success of the circular economy relies on more than just good carbon accounting practices. At present, it’s not always economically viable to repair phones, and mobile network operators will need to overcome problems with uptake to see the benefits of selling refurbished devices fully reflected in their value chain emissions. But a common methodology is an important piece of the puzzle, allowing organisations to fully capture the positive impacts of refurbishment and communicate these to stakeholders. As carbon footprinting standards like the GHG Protocol are being revised and the GSMA hones its Scope 3 guidance for the ICT sector, there is a clear opportunity to establish an industry-wide standard, which would accelerate the sector’s carbon reduction efforts.
The Net Zero Intelligence Unit would like to thank the members of its Knowledge Network of Carbon Trust experts who contributed to this publication.
1A separate issue is that longer-lasting phones will use more electricity over their lifetimes. This increases use phase emissions which, following SBTi rules, must be included in Scope 3 targets.