New Business Models Paving the Way Towards More Sustainable Production and Consumption of Plastics in Electronics
As part of the Horizon 2020 project PolyCE, researchers of the Technical University Berlin, Fraunhofer IZM and University of Northampton have identified five business models which may induce a circular economy for plastics in the electronics industry.
Business Models for a Circular Economy
The electronics industry has experienced rapid growth ever since the onset of the digital revolution, and so it is no surprise that waste electrical and electronic equipment (WEEE) is amongst the fastest growing waste streams [1] with a projected volume of more than 12 million tonnes by 2020. [2] On the other end, the WEEE Directive sets targets for collection and recycling of such electrical and electronic equipment. The combination of decreasing use phases and frequent innovations in product design and technology has helped stimulate an expanding and profitable market.
An economic concept that strives to tackle this problem is the Circular Economy (CE). Contrary to the current prevalence in some industry sectors of linear economic structures which are commonly described by the catchphrase take, make, waste, the CE follows the idea that material flows within an economy must not be viewed as a one-way road. Rather, resources are considered as reversible flows, circulating back and forth between product manufacture and end-of-first-life, following the example of nature where resources are constantly reused and recycled within a system. [3]
The Challenge
The lags in transition to a circular economy are largely due to the scarcity of circular business models, both as theoretical concepts and in real-life implementation, as well as the lack of innovative design strategies. Furthermore, circular business models are generally more complex and demand more of a global systems perspective which in turn requires the cooperation of various players along the supply chain in order to function. This structural complexity increases the business risk and often implies a high initial investment and additional bureaucracy at business launch. Therefore some companies hesitate to adopt this new business model even though the potential financial savings and the long-term risk mitigation are significantly higher with a circular approach [4]. On the other end of the market, the consumers too are accustomed to the workings of linear economies, benefitting from the ease and comfort of traditional consumption patterns. In fact, even if an alternative circular product is available, the consumer might still hold on to the previously known option, because choosing the former may require a relearning of consumer behaviour. Others might simply not be aware of alternative consumption patterns and thereby might miss the opportunity to transition into a Circular Economy.
Depending on the type of product, different company approaches can be promising to move towards a CE. For some product groups, alternative business forms such as pay-per use might play a big role, while for other products groups new material design aspects will be a key driver.
The Approach
The European Commission-funded Horizon 2020 project PolyCE is dedicated to finding solutions to the hurdles in the implementation of CE, specifically for the electronics. As a first step, researchers of the PolyCE partner institutes Technical University Berlin, Fraunhofer IZM and University of Northampton have collected and categorized a multitude of available circular design strategies and business models. The aim was to draft a systemic pool of tools for the realization of a circular business that could assist companies in creating their own customized circular business model
PolyCE’s Results
The following is a description of the five main types of CBMs applicable in the electronics industry inspired by the book “Products That Last” by Conny Bakker et al.
The Re-Value Model
The Re-Value Model describes businesses that focus on adding new value to products and/or materials when normally they would go to waste. This includes collecting devices at end-of-first-life and offering second life sales, possibly conducting product repair, refurbishment or material recycling. The scope of the PolyCE project is following this ambition and taking a close look at the hurdles of establishing a re-value model for recycled plastics, by investigating the entire value chain and how plastics can be better collected, separated and treated to be able to re-enter the value chain for advanced appliances instead of going to waste. Not only the EoL value chain is the focus here, but PolyCE is taking a wider approach by working with industries as potential end-users on material design aspects to pave the way for recycled plastics as a high-value material in the future. Furthermore, the consumer market for high-value second life plastics is strengthened by identifying drivers and barriers with possible stakeholders. The Re-value model covers a wide spectrum of circular business options. Increasing the value of second- life plastics for appliances in the electronics sector tackles a key problem in moving towards a CE in view of WEEE currently being the fastest growing waste stream. Depending on the product type, other circular business models can also play an important role in the transition towards CE:
The Long Life Model
The Long Life Model is characterized by the sales of high-quality long-lasting products. Such devices are associated with circularity because the time of disposal in prolonged through a long use-phase and the probability of reuse after end-of-first-life is high.
The Modularity Model
The Modularity Model requires a complete rethinking of traditional product design. Components of the device are built to be exchangeable, allowing for defect parts to be replaced or outdated components to be upgraded, thus keeping materials in longer use.
The Access Model
In the Access Model, customers obtain temporary access to a product. This may be via leasing (e.g. equipment rental services) or pay-per-use schemes such as laundromats. As a result of this approach, the total number of certain devices put on the market might decrease while product utilization rises.
The Service Model
Contrary to the Access Model, a business applying the Service Model performs a service for its customers using selected products. The customer has no contact to the product itself but pays only for the profits of a service provided without possessing ownership of the product itself.
The analysed circular business models employ two major design strategies; closing and slowing down the material loops. The deceleration of material loops can be realized through the following design strategies: design for durability, design for maintenance and repair, design for standardization and compatibility and design for upgradability and adaptability. To close the loops, the product can be designed for recycling, which includes the option of up- and down-cycling.
An Outlook
The upcoming results throughout the four-year PolyCE project will highlight incentives for the consumer market as well as produce policy recommendations for lawmakers and technical guidelines for plastics recyclers in order to support the development of a circular economy of WEEE plastics. In the end, the realization of a circular economy will be a joint effort between product designers, manufacturers and material recyclers as well as consumers. A company cannot sell circular products if there are no buyers, much as a consumer cannot purchase circular products if none are available. To this end, PolyCE will also design and conduct education campaigns in order to raise awareness about the necessity and value of designing, manufacturing and marketing of circular products.
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[1] R. Widmer, H. Oswald-Krapf, D. Sinha-Khetriwal, M. Schnellmann, and H. Böni, “Global perspectives on e-waste,” Environmental Impact Assessment Review, vol. 25, no. 5, pp. 436–458, 2005.
Link: https://www.sciencedirect.com/science/article/pii/S0195925505000466
[2] European Commission, Waste Electrical & Electronic Equipment (WEEE). [Online] Available: http://ec.europa.eu/environment/waste/weee/index_en.htm. Accessed on: Sep. 25 2017.
[3] Korhonen, Jouni & Honkasalo, Antero & Seppälä, Jyri. (2018). Circular Economy: The Concept and its Limitations. Ecological Economics. 143. 37–46. 10.1016/j.ecolecon.2017.06.041.
[4] Ellen MacArthur Foundation, Granta Design, Circularity Indicators: An Approach to Measuring Circularity — Project Overview,
