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Sustainability in the Supply Chain

Sustainability in the Supply Chain

by Paul Admson, Director of Business Development and Marketing for Spinnaker, Spinnaker Management

Reverse Logistics Magazine, Edition 72

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Riches to Rags and Back Again: The Challenges and Opportunities of Electronic Waste

It is often said that technology outpaces policy; this notion is certainly illustrated with the rapid growth of the electronics industry. Cell phones, tablets, and televisions are slimmer, sleeker, and smarter than ever, yet the global policies that govern the final resting place for these devices lack teeth. Rich nations continue to consume electronics at an astonishing rate and then export obsolete electronics to developing nations for reuse or final processing. Electronics can contain up to 60 elements, which are valuable, yet highly toxic if not disposed of properly. In addition to the moral question of exporting toxic trash to developing countries ill equipped to dispose of e-waste, this practice also masks an incredible financial opportunity for American companies to recover valuable materials.

E-waste could be treasure for American companies…if we solve the policy and collection issues that remain.

Leaving Money on the Table: The Hidden Value of Junk
There is a clear incentive for companies to dispose of electronic waste responsibly. E-waste contains valuable metals, including copper, silver, gold, palladium, lithium, and platinum. In fact, nearly 15 percent of mined gold is used in the production of electronics.

One cell phone is worth very little, but for every million cell phones recycled, we can recover valuable metals that normally end up in a landfill. According to our calculations below, the total market value of the copper, silver, gold, and palladium recovered from one million cell phones is valued at $2,076,670.

E-Waste Contextualized
Electronic waste is growing at 8% per year, which is three times faster than other forms of waste. The Environmental Protection Agency estimates that about 9 million tons of e-waste are collected each year in the United States, of which only 20% is processed domestically. Therefore, 50-80% of America’s e-waste is sent outside the U.S. where health and safety regulations may not be as prohibitive.

The rise of e-waste is directly related to the diminishing life span of electronics. Designing products for planned obsolescence artificially limits the life of electronics, forcing customers to upgrade or replace. Not only is this strategy environmentally disastrous, it is also risky because consumers may turn to a competitor that offers a more durable product.

E-Waste is growing
3X faster than
other forms of waste

The exponential growth of the electronics industry is nothing short of staggering. Despite incredible technology advancements, the pace of consumption of electronics is unsustainable without regulations that incentivize recovery and recycling.

The Dark Side of Technology: Environmental and Health Impacts of Electronics
Telecomm companies that export obsolete electronics to developing markets create a two-fold problem related to the health of workers and the environment. Recycling valuable elements is a source of income in the informal sector; often the most marginalized people in society work in landfills using primitive recycling techniques. Sometimes scavenged by children, these electronics must be baked, burned, and ripped apart to extract copper coils and valuable metals to be sold on the spot market.

Unsafe handling and disposal of e-waste has been linked to poor air and water quality and serious health issues such as reproductive disorders, endocrine disruption, and cancer. According to the World Health Organization, the United Nations public health arm, exposure to lead, cadmium, and mercury can threaten child development and cause irreversible neurological damage (“Where Gadgets Go to Die”). A jarring photo expose of the Guiya, China landfill published by Time Magazine showed a grim picture: impoverished workers soaking circuit boards in acid to dissolve out the valuable metals. Not only are these practices unsafe, they put businesses at risk of human rights violations.

E-Waste Regulations
While individual consumers do not have to adhere to strict e-waste regulations, increasingly Manufacturers, Distributors, Retailers, and even Scrap Dealers must dispose of e-waste according to federal guidelines. The WEEE forum, which stands for ‘waste electrical and electronic equipment’ is the largest member organization in the world involved in e-waste. Founded in 2002, the WEEE forum is comprised of 39 producer responsibility organizations that seek to share best practices and ideas related to the management of e-waste. In addition, the WEEE forum promotes European legislation concerning WEEE. In Europe, product take-back is required by law. The rise of regulations for the electronics industry does not adversely affect the bottom line, but rather it can spur innovation.

In fact, in 2013, an entrepreneur from Togo built the world’s first 3-D printer made from e-waste. Kodjo Afate Gnikou built the 3-D printer using parts from old computers, printers, rails and belts from scanners. Increased regulations regarding the responsible disposal of e-waste can spur innovation, in addition to maximizing recovery of valuable metals.

Changing Hearts and Minds: Consumer and Government Behavior
Outside of Europe, the United States is making great strides on the regulation of e-waste. The U.S. Federal government is a huge consumer on electronic products and is leading by example. According to the OMB Office of E-Government and Information Technology, in 2012 the government spent nearly $82 billion on purchasing, supporting, and recycling electronics. The U.S. government started to improve recovery by looking within their own operation. Currently, 95% of electronic product acquisitions must be EPEAT®-registered products. The Electronic Product Environmental Assessment Tool (EPEAT®) is an independent rating system that identifies products that contain less toxins, use recycled materials in both the product and packaging, consume less energy, and are designed for re-use (“Moving Sustainable Electronics Forward”).

At the state level, governments are taking action to change consumer behavior. In fact, 25 states have producer responsibility legislation in place mandating e-waste recycling. In New York beginning January 1, 2015, obsolete electronic equipment must be recycled and not thrown in the trash. In addition, electronic equipment manufacturers in New York must accept their brand back for recycling or reuse. The state announced a slew of new initiatives to aid electronic recycling. Any apartment building with more than 10 units can enroll in a free pickup service. Partner organizations are organizing recycling events to encourage citizens to recycle e-waste. In addition, New York established partnerships with Best Buy, Staples, and Dell.

National Strategy for Electronics Stewardship
In July, 2011, leaders of government and industry, including the EPA, GSA, WHCEQ, DELL, and Sprint met in Austin, TX to execute the National Strategy for Electronics Stewardship (the Strategy). The Strategy provides a roadmap of how the Federal Government can use its authorities and leverage resources to improve the design of electronic products and enhance the management of used or discarded electronics.

The Strategy called for the U.S. government to exclusively use certified partners for the reclamation and recycling of disposed electronics. Layered on top of the Federal Governments requirements to purchase from EPEAT®-registered companies, the Strategy clearly demonstrates the government’s desire to build a U.S.-based green economy and limit the export of hazardous materials.

Green Design Standards
One of the most important initiatives to reduce e-waste is “design for remanufacturing.” The lifecycle of electronics has continued to diminish. On average, Americans keep their smart phones for two years. Today, phones are designed to wear out quickly, thus perpetuating the consumer culture. The United States government has taken steps to incentivize green design. Electronics that are more environmentally friendly contain less toxins, use less energy, have a longer life cycle, and are designed to be disassembled. If electronics are more easily broken down to be refurbished or remanufactured, valuable metals can be reused rather than end up in a landfill.

Collection Challenges
Just because an electronic is sent to a recycling center does not mean that the item was disposed of safely. Many times, recycling centers cut corners. The Strategy established a voluntary certification program for recycling centers to encourage strict regulations and standards for electronic recycling. Between 2011 and June of 2014, the number of recycling facilities to undergo certification has increased from about 100 to 565 facilities (“Moving Sustainable Electronics Forward”).

The Roadmap Ahead
While the United States has taken positive steps in the collection, recovery, and monetization of recyclables, as a nation we still significantly trail European adoption and collection rates at both a consumer and manufacturer level. The wave of adoption that saw 25 states enact recycling laws has receded and the momentum appears lost. It is imperative that federal legislation support broader state regulations to create standards of best practices in collection and recovery of electronic waste. The financial incentive of managed e-waste collection, combined with enforceable legislation, will evolve the e-waste challenge into significant financial and sustainability opportunities for domestic companies.

A culture of change to recycle core assets has emerged, but there must be national support of recycling programs for continued growth. It will take collaboration between public and private institutions focusing on education of the next generation of consumers to instill the desire to grow the green economy, conserve national resources, and design products to match evolving recycling streams.
Paul Adamson is the Director of Business Development and Marketing for Spinnaker. He has over 20 years of industry experience in Returns Management, Service Operations, and Sustainability. A recognized subject matter expert in Electronics Remanufacturing, Recycling, and Second-Life Applications, Paul has been a regular moderator and panelist at regional and national conferences on reverse logistics, material reuse, and recycling. Throughout his career, Paul has worked in leadership positions for a variety of industries including Consumer Electronics, Distribution, Retail, and Sustainability.

Prior to joining Spinnaker, Paul founded two successful electronic test and repair companies with global operations. Paul’s diverse background includes strategy, operations, and business development roles for other high-tech repair and remanufacturing companies. In these roles he has helped develop reverse logistics, remanufacturing, and recycling strategies for clients with operations across the globe. Most recently, Paul worked to establish collection and processing capabilities in Central America for universal waste, electronics, metals, and plastics. Paul received his B.S. in Business Administration from LeTourneau University.

Delana Lensgraf is the Research Content Specialist for Spinnaker’s Supply Chain practice. An expert in international relations, Delana blends a unique skillset of global supply chain operations and corporate social responsibility. At Spinnaker, Delana is responsible for driving thought leadership across the firm’s four lines of business. In this role, Delana collaborates with practice leaders to publish innovative pieces on topics from Remanufacturing to Omni-Channel to Electronic Waste.

Prior to joining Spinnaker, Delana’s career in International Development brought her to five continents to work with leading non-profits and consultancies. This time abroad fostered Delana’s passion for sustainability in global supply chains. Fluent in Spanish, Delana completed three years as a Teach for America corps member serving in a low-income Latino school in Houston, Texas. Delana holds a Bachelor of Arts in International Studies from the University of North Carolina at Chapel Hill and a Master of Science in Foreign Service from Georgetown University.
Feng Wang is a research associate at SCYCLE.
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