The business case for sustainable electronics
It doesn’t take a genius to see that electronics are more widely used than ever before.
People have become nearly inseparable from their smartphones, tablets and laptops. And they eagerly await the release of newer devices promising faster processing, better screen resolution, more apps, more functionality, more everything.
The magnitude of the market for digital devices is staggering. It’s estimated that by 2020, 5.5 billion people will own a mobile phone and over 50 billion devices will be connected to the internet. To put it in perspective, by that same time, it’s estimated that only 3.5 billion people will have running water.
But the electronics industry is also evolving — and it has to in order to stay competitive.
In the late 1990s, the main goal was simply to create electronics that worked. Then, concerns about emissions prompted IT manufacturers to implement health and safety protocols. Environmental concerns emerged at the dawn of the new millennium, ushering in the green manufacturing era.
Most recently, social responsibility has become an issue as reports of labor abuses and unethical manufacturing practices have come to light. With growing consumer awareness of all of these issues, finding a path to sustainability is becoming increasingly important.
Beyond "doing the right thing," there is a powerful business case for sustainability, including:
1. Competitive advantage
In fact, consumers are increasingly demanding more consideration of environmental impacts. Eighty-six percent of global consumers believe that businesses need to place at least equal weight on society’s interests as on business’ interests.
2. Attracting and retaining top talent
According to a Nielsen (PDF) survey, 67 percent of employees prefer to work for a socially responsible company. The book "The 2020 Workplace" states that by 2020, millennials will be 50 percent of the workforce and 80 percent of those surveyed wanted to work for a company that cares about how it affects and contributes to society.
3. Reign in risk
Consider the financial impact on brand value from bad supplier practices (child labor) and the cost of supply chain disruptions (noncompliance with environmental or workplace regulations). The ROI for implementing sustainable and socially responsible supply manufacturing practices can be 85:1 (PDF).
4. Cut costs
Consider this one facet of sustainable electronics: in a recent TCO Development report on plastics in IT products we found that using recycled plastic could lead to up to 80 percent lower energy consumption in manufacturing when compared to virgin plastics and it also required less raw material.
In a report on the value of sustainable procurement practices, sustainability programs reduced energy costs, reduced consumption and reduced social and environmental compliance costs resulting in a 6:1 ROI.
5. Improve stock performance
Newsweek conducted Green Rankings in 2014 and companies in the top 100 working with sustainability and sustainable supply chains outperformed the SNP 500 by nearly 5 percent.
All in all, the World Economic Forum found that sustainable and socially responsible supply chains can result in average revenue increases between 5-20 percent, cost reductions between 9–20 percent, and a boost in brand value between 15-30 percent.
Racing the regulators
In addition to all of these benefits, making your electronics sustainable and socially responsible helps you stay ahead of regulations, which also reduces costs and risks. Consider the ever-changing landscape of chemical regulations.
The European Union's 2006 Restriction of Hazardous Substances (RoHS) Directive restricted six substances from electronic and electrical products in mid-2006 followed by the EU's late-2006 REACH Regulation that so far has placed 151 substances on its restriction list.
Similar regulations are appearing around the globe, in countries including China and South Korea. Even here in the U.S. California passed a Restriction of Hazardous Substances law several years ago, along with the more recent California Transparency in Supply Chains Act.
Transparency and responsibility in supply chains is a critical factor for ensuring your company’s longevity. With increasing pressure from stakeholders, in the not so distant future your company may not even be viable if you’re not engaged in an environmentally and socially responsible supply chain. When examined from this perspective, addressing sustainability isn’t just an environmental or ethical issue, but also the sustainability of your business.
The world of electronics continues to expand at an astonishing rate as the need for constant access permeates more and more product categories. Experts say we are venturing into a new economy.
"The Internet of Everything," according to Plamen Nedeltchev, Ph.D., Distinguished IT Engineer at Cisco, is "potentially the biggest business opportunity in the history of mankind."
If you’re in the electronics business and want to remain there and thrive as the boom continues, it’s time to embrace sustainability and social responsibility.