Why introducing financial incentives for the adoption of circular IT will make a difference in the sustainability initiative  

Leon Timmermans, CEO and board member at Flex IT Distribution explains why introducing financial incentives for the adoption of circular IT will make a difference in the sustainability initiative.

The Netherlands has taken the lead in establishing the Circular and Fair ICT Pact, an initiative in which seven countries share the ambition to make the production of laptops and smartphones sustainable, circular and fair. Although this is undeniably an important step, the pact alone is not enough to make the kind of difference that the world really needs.

The mountain of discarded IT hardware in the Netherlands alone grows by more than five million products annually. Each year, 860,000 more IT products are thrown away than in the previous year. According to the Amsterdam Economic Board, by 2021, over 50 million IT products will be ‘released’ annually. Although a shift to circular procurement can accelerate the transition to a sustainable IT chain, it’s essential this pact doesn’t become an empty promise.

Combining forces
The pact’s current focus is mainly on demand. The participating countries want to promote the circular procurement of IT products by setting up ‘buyer groups’. By joining forces and using their joint purchasing power, buyers can demonstrate their intention to operate more socially and sustainably in this area. The idea is that this will encourage producers to accelerate the development of circular IT. However, this still leaves out an important element. To reduce the mountain of waste from discarded computers, laptops and smartphones, the focus must also be on extending lifespans. Today, the lifespan of IT hardware is only three to five years, so the annual IT waste mountain continues to pile up. The solution lies in extending this lifecycle to at least five to ten years – drastically reducing the burden on the environment and creating less reliance on mining scarce raw materials, as well as less CO₂ emissions during production and transport.

Arms race
However, in the competitive, price-driven IT market, more is needed to encourage those buyers to get moving. To start with, it means abandoning the persistent misconception that ‘circular’ is by definition inferior to ‘new’. Buyers think that end-users only want the latest generation hardware with the best specifications, while usually only a small part of the functionalities is used.

Moreover, thanks to the cloud, the ‘arms race’ between software and hardware is a thing of the past. Now, end-users only need a screen and a fast internet connection. Circular products meet virtually all quality requirements for IT, plus also extends the lifespan of IT products.

No concessions
Research by the European Commission shows that two out of three European consumers want to be able to use their IT devices for longer, provided they do not have to compromise on the performance and computing power of their equipment. End-users, therefore, are actually ready for the transition to circular IT.

If we want to achieve the objectives of the Paris Climate Agreement, it is high time that buyers open their eyes too. In practice, unfortunately, there are still too many incentives to choose ‘new’ over ‘circular’. The government can make this attractive with the right financial incentives. A good example of how this works successfully are the tax schemes and subsidies for electric cars. After a hesitant start, citizens and companies have embraced this form of transport en masse. In terms of adoption, the circular IT market is just as much in its infancy as in the early years of electric driving. At first, the market and suppliers were reluctant to accept electric cars, until legislation created a situation in which the market could start moving. After many incentives and subsidies, this relatively new market received an enormous boost, resulting in them achieving their desired social impact. Why couldn’t this be replicated for circular IT? There is no reason why not.

It is now a matter of lowering the threshold for companies. For example, during the rise of the electric car, the government withheld additional taxation but failed to provide similar incentives for circular IT – which was a missed opportunity. If this level of incentive was applied to IT then there is no doubt you’d kill the proverbial two birds with one stone: it is less expensive, more in line with the preferences of end-users and it makes a substantial contribution to achieving our climate objectives.