There are almost 34 billion items of IT equipment in circulation globally today, and this could double by 2030. The figures are sobering. Every day, each digital user is responsible for consuming 27 litres of water, and consuming natural resources equivalent to 197 kilos of excavated earth. What’s more, the greenhouse gas emissions associated with daily usage are the equivalent of travelling six kilometres in a car.
It’s no surprise, then, that digital technology accounted for around 4% of all greenhouse gas emissions in 2020, and when it comes to retiring equipment, only 20% of the electronic devices scrapped each year are collected for recycling.
Need for circularity
It’s clear that change is needed in our approach to managing IT equipment lifecycle. The good news is that by rethinking current production and consumption patterns, there is an opportunity to reduce the environmental impact of IT equipment.
We need to focus our collective efforts on a systematic collaboration with all parties in a deliberative process to reorient the way in which we make, consume and dispose of tech.Isabelle Loc, Chief Executive Officer, BNP Paribas Leasing Solutions
In particular, key efforts should include extending the service life of equipment, as well as driving better production and purchasing practices. Alongside the environmental benefits, a more responsible approach to IT equipment lifecycle management can bring:
- Societal benefits, such as creating local jobs and opportunities, from refurbishing and recycling activities, for example.
- Economic benefits, such as reducing the cost of IT capex investment.
- Environmental benefits, such as improving companies’ carbon footprint.
First, though, manufacturers, financial institutions, managers and users of IT equipment need to be educated and incentivised to consciously make efforts to improve the ways that IT equipment is produced, purchased, used, returned, reconditioned and recycled.
Isabelle Loc, Chief Executive Officer, BNP Paribas Leasing Solutions, explains: “According to the United Nations E-waste Coalition, the global economy generates approximately 50 million tonnes of e-waste every year. This is a huge amount, equivalent to the mass of all commercial aircraft ever produced. So it’s evident from this that a clear step change is needed in the way we manage the full device lifecycle – from manufacture and use through to refurbishment and retirement – ensuring we maximise the economic value of the scarce resources that were used to produce the device. We need to focus our collective efforts on a systematic collaboration with all parties in a deliberative process to reorient the way in which we make, consume and dispose of tech.”
So what does this mean in practice?
Driving best practice
Actions speak louder than words – which is why BNP Paribas 3 Step IT and BNP Paribas, have been working with a group of companies within the Movin’On Lab programme to drive change in IT equipment lifecycle management. In 2021, the programme worked with firms including Accenture, OCTO Technology, Air France KLM, 3stepIT, Dell Technologies, Groupe La Poste, MACIF, Michelin, Microsoft, Orange and Saint-Gobain to share expertise and explore ways to tackle this issue.
In its report ‘Minimizing the environmental footprint of your IT equipment’ , the Movin’On Lab programme identified best practices across several areas:
- Responsible production. The production of IT equipment accounts for three quarters of its environmental impact throughout its lifecycle. And that footprint is significant: producing a desktop computer results in 340kg of greenhouse gas emissions and uses 1.5 metric tons of water.
As such, there is plenty of room for reducing the carbon footprint. For example, manufacturers should prioritize using recycled materials in product design, eliminate unnecessary packaging and work only with partners who are committed to an eco-responsible approach. Other best practices including increasing the reparability of equipment, and promoting products in a way that encourages buyers to consume more responsibly.
- Responsible purchasing. Companies have an important role to play in encouraging sustainable procurement practices. As such, firms should look to adopt a responsible purchasing policy, for example by monitoring suppliers’ environmental, social, governance (ESG) commitments and favouring IT equipment that is fit for purpose, easily repairable, and preferably reconditioned or easy to recycle. Surplus equipment, meanwhile, can be minimised by analysing whether users can limit their IT needs (i.e. do they need both a desktop and laptop computer, and do they need a mobile as well as an office phone?)
- Responsible use and lifecycle management. Our environmental footprint can be reduced by extending the life of our equipment – so all parties should understand the role they play in making sure equipment is reused as much as possible. Best practices include using bar codes to keep track of IT assets, providing cases/sleeves/screen protectors for smartphones and laptops, and raising employee awareness around electronic waste.
- Responsible returns. Companies that look to extend the usable life of their IT assets need robust logistics and processes to ensure that equipment is easy to send for onwards refurbishment and recycling. Appropriate protective materials should be used for packaging to ensure safe transport of equipment for refurbishment and reuse. In addition it is important to highlight the environmental, social, financial and technical benefits of reuse, and to include reuse in the company’s CSR policy, as reuse of IT equipment is not always accepted by companies due to lack of awareness, organisation, and/or security concerns of using refurbished equipment.
- Responsible recondition and resell. Reconditioning and resale are the last phases before reuse, and they need to be carried out with care – otherwise the second life of IT equipment may be shortened, reducing the environmental benefit of reuse. From a data security perspective, companies also need to ensure that data on hard-drives/memory is deleted in its entirety and track all work carried out on the equipment. Notable initiatives include a diagnostic tool for smartphones developed by BNP Paribas Cardif, which can be used to gauge the condition and operation of the phone, and check whether the phone was previously blocked or stolen.
- Responsible recycling. Finally, it is important to reduce the environmental impact of equipment both by recycling it at the end of life, and by reusing recovered components during manufacture. Today, the annual weight of waste, electrical and electronic equipment (WEEE) equates to 4,500 Eiffel Towers – and this is on track to double by 2050. To address this, recycling should only be considered as a last resort, as the recycling process also consumes resources. Repair and reconditioning should be encouraged in order to limit volumes of waste – and when reuse is not possible, accredited channels should be used for recycling WEEE.
With the vast environmental cost of IT equipment, it is vital that manufacturers, users and other parties work together to reduce emissions and preserve resources. By adopting best practices, we can not only drive environmental improvements, but also achieve societal, economic and financial gains.
Helping the I.T. sector transition
Finance has a key role in helping all sectors and industries transition to a low-carbon economy, in order to achieve the target to become a net zero emissions world from 2050. BNP Paribas CIB continues to support its clients worldwide in their transition, including through sustainable finance. Some key transactions in the IT sector include:
- Joint Global Coordinator for Lenovo’s US$625 million 10-year green bond issued in July 2022 as part of a US$1.25 billion dual tranche notes offering. BNP Paribas was also the Sole Green Structuring Advisor for the company’s Green Finance Framework.
- Joint Bookrunner for Intel Corporation’s inaugural US$1.25 billion 10-year Green Bond issued in August 2022, as part of a US$6 billion multi-tranche offering.
- Sole Sustainability Coordinator, Joint Lead Arranger and Joint Bookrunner on HP Inc’s US$5 billion five-year revolving credit facility structured as the company’s inaugural sustainability-linked loan in June 2021, and Joint Bookrunner on its subsequent US$1 billion, 10-year sustainability bond.