Circular IT: for a Better World and Better Business
Circularity can be an important pathway to reduce organisations’ environmental footprints and supports the transition to a system that addresses energy and resource scarcity. Additionally, it offers clear business opportunities such as boosting innovation, attracting new investors, proactively addressing regulatory requirements, and managing sustainability-related risks.
Circular IT is still in its infancy, but not due to a lack of ambition. Sustainability is high on the agenda for IT suppliers and major IT users, with goals being set for the next decades, and suppliers working on prototypes of circular IT assets. The positive effect of corporations going circular can be huge, but there is still a gap between ambition and action, due to a series of obstacles such as circular design not yet being the industry standard, lack of recycled materials available at competitive prices, technical limitations, and much more.
European regulations and pressure from consumers and investors are pushing companies to become increasingly transparent about their activities and their supply chains. Transition to a circular economy is one of the upcoming EU Taxonomy’s six critical environmental objectives. Organizations distinguishing themselves in this area and that are able to anticipate new sustainability regulations are winning over consumers and investors.
Breaking down the barriers to circular IT
The burning question is: how can IT users and suppliers overcome these barriers and contribute to the circular economy without sacrificing competitiveness?
Deloitte and Impact Institute have worked together to analyse the barriers that IT suppliers and their corporate clients still encounter on the road to becoming more sustainable and the actions to take down those barriers.
Barriers to the spread of circular IT concern both IT buyers and suppliers. This POV lists the most important steps for breaking down the barriers, which can be summarized as follows.
For IT buyers:
- Buyers should establish a roadmap towards circularity, with long-term, tangible and achievable targets. They need to organize a structure with clear responsibilities and KPIs.
- Central IT databases should contain information on circularity, such as circular inflow and outflow.
- Circularity must be added as a differentiating factor in the procurement process.
For IT suppliers:
- Strive for collaboration with partners in the value chain, clients, and competitors.
- Push for more standardization in definitions and scopes within the industry, to enable comparable and efficient measuring and reporting.
- Fill the gap between circularity ambitions and action.
- Collect and manage circularity data on the product or product-type level.
- Include circularity in the procurement process and request transparency throughout the entire supply chain.
Measuring the environmental and social impact of circular IT
Measuring the impact of circular IT can improve decision-making by explicitly managing risk impact tradeoffs (such as the impact on climate versus scarce material availability) and understanding the impact of circular strategies on different capitals and stakeholders. This goes beyond environmental impact and should include social and human impacts as well across the whole value chain and life cycle.
Measuring the impact of circularity requires primary data from the IT suppliers and departments and circularity KPIs to be coupled with secondary data sources such as life cycle analysis and social survey databases. Improved insight into IT equipment from the suppliers will enable the measurement of ‘bottom up’ impact, being more representative of individual suppliers and reflecting the strategies adopted by them.
Think big, start small, and act now.
As Arjan Udding, consulting principal at the Impact Institute comments: “Our clients often choose one of the following two routes: they make an organisation-wide report to create transparency around value creation for all stakeholders and then start to optimise, or they start small to understand how decision making around impact can be enhanced and then slowly expand across the whole organisation”.
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