Exploring the circular economy: how giving electronics a new lease of life could also help save the planet

By Professor Kieran Fernandes, August 2022

As the UN’s 2030 deadline for meeting SDGs gets ever closer, Professor Kieran Fernandes explains how academic research can help industry make smarter, more sustainable decisions. 

For those unfamiliar with the term, Circular Economy (CE) simply describes a model of production and consumption in which we make the most out of as little resource as possible. We share and lease items, we repair and refurbish goods and we recycle unwanted or unfixable materials to make new products, extending their lifecycle for as long as possible and reducing the need for us to further plunder our Earth’s all too finite resources. 

Understandably the notion of a CE has recently gained significant attention, both in research and practice, due to increasing sustainability concerns. Our world is racing towards the United Nation’s 2030 deadline of meeting its Sustainable Development Goals, and despite having had these goals set for a number of years, we’re still woefully short of the targets set. There’s also now more legislative requirement for some sectors of industry, which have come in as a bid to boost engagement and compliance with more eco-friendly practices. 

A growing number of businesses want to be seen to be doing the right thing by the planet — whether by governments, trade bodies or associations, potential investors or even customers, who are becoming increasingly aware of how their lifestyles and purchasing habits impact the world around them. 

While the concept of a circular economy is no doubt a benefit to the planet, it’s not as simple to put the idea into action. As well as environmental considerations, we must also consider the economic factors for industry. For all their planet-saving positives, it can often be much more costly and time-consuming for companies to act in a responsible or more considerate manner — particularly if it poses significant risk to financial stability. 

In enabling industry and society to tackle some of the most pressing and confounding problems, it often falls to the researchers, analysts and exploratory thinkers housed within universities and think tanks to provide solutions, new approaches and evidence to help prompt change. 

However, in the fight for the adoption of CE by industry around the world, despite extensive research having been undertaken in this area, there’s a gap when it comes to both the development of decision-making models for managers and manufacturers which may consider the life-cycle span of product returns, and the selection of an appropriate reprocessing option for value reclamation. 

My own research, completed in collaboration with colleagues at the Indian Institute of Management, Huddersfield Business School and the University of Warwick, has contributed to filling this gap. Our work explored the possibilities of developing an effective CE within the Indian electronics industry that could benefit customers, organisations and the planet. 

One of the most challenging aspects in the implementation of a CE is managing product returns from customers and recovering the residual value of unwanted or faulty items through reprocessing them. There are a number of options to take; through resale, repair, refurbishment, cannibalisation, recycling, or disposal of the entire product, or some of its modules, components, and parts.  

To tackle this, first we developed a comprehensive decision-making model for organisations within the sector to test. The model makes a trade-off between different recovery alternatives while considering a wide range of significant criteria to help organisations to determine the optimal recovery option for their returned products on a case-by-case basis. Most of the existing research until now has been based solely on the cost-benefit analysis of CE and hasn’t focused on additional but vital factors for such decisions, such as a product’s life-cycle, usage duration and other aspects which influence a product return. 

Secondly, we proposed a two-phase mathematical model to help organisations overcome issues related to uncertainty and incomplete information in the decision-making process.  

Thirdly, we focused on both action and effect. Our work is one of the first studies in this field which both investigates and compares the implementation of product recovery in CE for short life cycle (SLC) and long life cycle (LLC) electronic product returns. To ensure our work provides directly applicable value for industry we also made sure to validate the industrial applicability of our proposed model by using real-world data collected from the Indian electronics industry.  

By taking such steps, our results provide managers with a tested, reliable insight into what might be possible if they were to implement a circular economy strategy for their own products, including a focus on repair strategy for SLC returns and on remanufacturing strategy for LLC returns.  

One of the key implications for managers is that they need to develop different recovery strategies to manage SLC and LLC returns in a CE to ensure the most environmentally and economically sustainable performance. Our results indicate that, in most instances, choosing to repair a product is the optimal recovery strategy for SLC returns which typically have fast value erosion rates, while for LLC returns with slower value erosion rates, remanufacturing is the best-suited option. This particular point is important as there’s often a conflicting paradigm of effectively managing the recovery operations for both SLC and LLC returns whilst also ensuring both economic and environmental benefits. 

Additionally, the decision-making model also enables managers to make their CE decisions and strategies in a timely manner, which holds multiple benefits. Not only does this ensure swifter recovery and processing of returns, helping to minimise the risk of financial loss, but also decreases the potentially harmful environmental consequences, as reusable materials are made more readily available, decreasing the need to find fresh materials. As a result, another key benefit to be gained is the avoidance of negative societal consequences, such as potential backlash from customers who may boycott a company or its products, or government-imposed penalties if a company is not seen to be doing the right thing. 

There are important findings to be gained by both shareholders and policy makers who wish to influence the further development of a CE in this sector. By differentiating policies between SLC and LLC returns, they can encourage companies to better appreciate the environmental aspects of a CE rather than solely fixating on costs and potential profits. Offering benefits and support such as subsidies for effective implementation, technical support and even public recognition for their efforts could all serve as motivations to improve their operations. For investors, using such measures to screen and vet potential new projects can also provide organisations with encouragement to implement more ethical practices. 

The fact of the matter is that, at some point, our world’s resources will run out unless we take action now. And the electronics industry is not the only one which needs to be held accountable for its actions. Only by supporting industry to make better, smarter decisions can we expect change to happen, and this is where academic exploration becomes an invaluable resource. With our study we’re encouraging one industry to take a small but significant step towards a more sustainable future. It’s our hope that, in the not too distant future, many more will follow.  

More information on Professor Fernandes's research interests.