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The Circular Economy and ITAD’s Role In Sustainability

The Circular Economy and ITAD’s Role In Sustainability
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The Circular Economy and ITAD’s Role In Sustainability

The global emphasis on environmentally sustainable business practices has paved the way for the boom of the circular economy–an economic system underpinned by a waste-not-want-not philosophy. That same philosophy distinguishes the global economy's forward-thinking and dynamic companies from the antiquated enterprises profiting at the expense of maintaining a sustainable environment. Companies that embrace environmental, social, and governance (ESG) initiatives of the circular economy–like Server Monkey–illustrate how resilient business models and sustainability can complement each other while creating a more sustainable future for the broader public.

Impact of the Circular Economy

The global economy has predominantly followed a linear model since its inception. A linear economic system has no “life cycle” for goods or products–only take, make, and waste. A take-make-waste linear economy is exactly what it sounds like. The extraction of resources from the environment’s finite supply, produced or manufactured into a final good, and eventually discarded as waste. This economic system effectively compounds the effects of “take” and “waste” by extracting finite or scarce natural resources without attempting to recover or repurpose the raw materials found in the final good once they are no longer used and discarded. To make matters worse, haphazard and negligent disposal of end-of-life products containing already limited and rapidly depleting resources can negatively impact the surrounding environment. Though the linear model has dominated our economy for centuries, its fatal flaw is that it can’t last forever–it is unsustainable.

There is no contesting that a planet with finite natural resources is ill-suited for an extractive linear economy–at least in the long run. Fortunately, the circular economy’s sustainable economic model can offset the negative impact of the linear economy’s extraction and disposal practices. The circular economy merges the concepts of economic growth and environmental sustainability by encouraging businesses to reuse, repair, and recycle already manufactured goods. 

Transitioning industries to a circular economy model is timely, given that our rate of resource consumption has far outpaced the available supply. In 2021, the World Resources Institute reported that out of the 100 billion tons of resources used by our economy each year, only 8.6% are reused or recycled. Adopting circular economy practices seems much more feasible since it would require 1.5 Earths to keep up with our current resource consumption and waste rate.

Whether it is manufacturing, agriculture, or textile production, there is a measurable impact in shifting from linear take-make-waste business models to a sustainable and ethical circular economy. Here are some of the most environmentally harmful industries and how the circular economy can alleviate their impact.

Textiles

The textile industry relies on 98 million tons of non-renewable resources annually. From the oils used to create synthetic clothing fibers to the land, fertilizers, and water needed to grow cotton, it is a resource-intensive industry with a sizeable environmental impact. Currently, textile production results in 1.7 million tons of emitted CO2 and a 4% withdrawal of global freshwater. Implementing circular solutions to the textile industry could reduce its current water consumption by up to 85%, its global land use by 40%, and its carbon footprint by 44%.

Manufacturing

Manufacturing and product use alone account for almost 50% of global greenhouse emissions. Doubling the practice of global circularity, however, could reduce those emissions by 39% and ensure our climate remains well below the annual 2-degree temperature increase.

E-waste

Electronic waste, or e-waste, is the fastest-growing waste stream on the planet, with a 3-5% annual growth rate. Roughly 60 million metric tons of e-waste was generated in 2022 alone, while only 17.4% of e-waste gets collected and correctly recycled yearly. Failing to recycle or properly dispose of e-waste has numerous negative implications. The millions of metric tons of discarded e-waste each year contain unrecovered high-value metals critical to the world economy. Since 2019, that has accounted for a resource loss worth nearly $50 billion–annually. The same metals and chemicals in electronic devices significantly threaten public health and ecosystems when haphazardly discarded into the surrounding area, polluting the air, soil, and water. While proper disposal of e-waste will undoubtedly alleviate some of these immediate risks, recycling electronics in the circular economy via IT Asset Disposition (ITAD) has significant long-term benefits–environmentally and financially.

Environmental and Financial Benefits of ITAD 

The production and use of electronic and electrical equipment (EEE) shows no signs of slowing down. From 2022 to 2023 alone, the EEE market grew at a compounded annual growth rate (CAGR) of 8.2%, with projections to achieve a CAGR of 7.5% by 2027. The EEE growth market growth rate and the low e-waste recycling rate of 17.4% will exacerbate environmental sustainability issues. Fortunately, the EEE market and amount of e-waste aren’t the only things expected to grow. The ITAD industry has effectively responded to global demands for its e-waste management services while demonstrating the positive spillover of its environmentally sustainable business model.

Environmental Upside

ITAD has mainly helped offset the EEE industry's wasteful and environmentally harmful impacts via two services. The first is proper e-waste disposal, which keeps dangerous chemicals and metals out of landfills, mitigating the surrounding areas' air, water, and soil pollution. Second is the ITAD industry’s ability to refurbish, redeploy, and reuse discarded electronic assets. Recycling e-waste extends the original asset’s life while reducing the environmental impact of digital and electronic equipment production like mining and manufacturing. Repurposing EEE and its components reduces the need to mine for additional raw materials from the earth–like copper, aluminum, cobalt, indium, antimony, and palladium found in the components–to produce new equipment. Reducing unnecessary mining is critical to decreasing the negative externalities of the mining industry, such as greenhouse gas emissions, death of flora and fauna, and erosion of land and habitat. By extension, reusing the metal and plastic components from old equipment helps reduce GHG emissions created by manufacturing facilities where final good production occurs. While measuring ITAD’s overall impact on environmental sustainability is still an evolving science, the industry undoubtedly contributes to sustainability initiatives around e-waste recycling.

Financial Upside

Like tax breaks for making energy-efficient improvements to infrastructures, enterprises can financially benefit from utilizing ITAD companies' services. After ITAD companies have evaluated enterprises’ end-of-life IT equipment, the refurbished IT equipment can be listed and sold for reuse via websites, auction sites, and direct retail locations. Partial profits from the refurbished and resold IT equipment are returned to the originating enterprise, unlocking new revenue streams from recycled e-waste that would have otherwise ended up in a landfill. Alternatively, the originating enterprise can internally redeploy the refurbished IT equipment for employee use–a cost-saving strategy for enterprises–or allow employees to purchase it at below-market prices. As ITAD services become more prevalent, ITAD companies will likely continue to expand value recovery opportunities for their clients to remain competitive with other providers in the industry.

The ITAD Industry’s Outlook 

It is nearly impossible to discuss economic growth and technological innovation today without addressing the impact of e-waste on environmental sustainability. As the public discourse on environmental sustainability grows, companies’ approach to e-waste will face greater scrutiny from consumers and the broader public. Whether companies cave to social pressure or not, in many cases, legislation will ensure that decisions related to e-waste management are no longer discretionary issues falling strictly under the purview of private enterprises. In other words, sustainable e-waste management strategies like ITAD will be compulsory and subject to fines in the case of non-compliance by enterprises. Regulatory and social pressures aside, the financial benefits of ITAD provide lucrative incentives for enterprises to utilize ITAD services in their operations.

With that in mind, it begs the question: How will these social, governance, and economic forces affect the ITAD industry’s outlook? The answer is growth. The estimated ITAD market value was  $16.8 billion for 2022, with projections varying somewhere between $ 30-34 billion by 2030. That represents a CAGR between 8–9.2%. Of course, these are mere estimates based on the current social, environmental, geopolitical, and economic landscape. However, it is worth noting that disruptions to any or all of these factors could quickly increase the demand for ITAD companies in the circular economy to increase the supply of their goods and services. 

Regardless of what may happen between now and 2030, ITAD companies like Server Monkey are already proving their value today. See how Server Monkey’s ITAD services can simplify enterprise IT management while supporting sustainability and revenue goals.

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