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Reducing waste and cutting costs: How digital tech is powering up the circular economy

Digital technology has revolutionized how our economy works, but can it help us become more sustainable?

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Circular Economy and IT

We’re facing unprecedented change; once stable industries are being transformed beyond measure. One thing is known: digital solutions will play a major role in the sustainability of our world. And the principles of the circular economy could help us to become more sustainable.

Since the industrial revolution, businesses have traditionally exploited resources linearly by extracting raw materials, assembling goods and then leaving their customers to dispose of them. With non-renewable resources only getting rarer and populations getting larger and more demanding, it’s time for a new approach. The circular economy principle reduces the environmental impact of industry by designing systems that reduce waste and pollution, investing in renewable resources and keeping materials in use for longer – be it forest wood or computer hardware.

Adopting the principles of a circular economy is vital, not only for sustainability but also for reducing business risk and increasing profitability. And it’s the right thing to do.

Start-ups supporting the cause

Many of today’s fast-moving startups are already building sustainable business models to address some of the most pervasive concerns of our time. Climate Edge uses data to help farmers in developing nations solve crucial agricultural issues. Rubicon leverages the power of big data to enable higher diversion rates from landfill sites and find creative ways to reuse waste materials. Even established companies are getting on board: Apple has salvaged 61 million pounds of reusable raw materials from discarded iPhones using cutting-edge robotics. Also, Nest, an Alphabet company, makes smart thermostats to measure and reduce energy consumption. The list goes on.

From harm to help: how digital technology helps the transition

Technology is often hailed as the solution to all our woes but, depending on how it’s used, it can either help or hinder when it comes to sustainability. We’re already generating around 50 million tons of e-waste every year, and the figure is rising all the time. Only 15 to 20 percent of that waste is currently being recycled. On top of that, the enormous energy consumption required to keep all those data centers, computers and mobile devices running. Some computing workloads are having a particularly negative impact on the environment without giving anything back. Bitcoin mining alone consumes as much electricity as the entire Czech Republic, a country of nearly 11 million people. Additionally, a large portion comes from illegitimate cryptojacking malware.
Circular Economy and IT
In legitimate business, things are changing fast. According to HPE Financial Services, almost half of companies are legally obliged to report on their environmental impact. Sustainability has also become a value proposition in its own right as consumers become more concerned with their environmental footprint. And there are also clear business benefits of adopting the circular economy model, such as reduced costs and greater value creation. These needs and benefits combined have prompted over two-thirds of organizations to incorporate environmental sustainability into their IT strategies.

What technologies are enabling the circular economy?

It mostly comes down to the rise of big data and artificial intelligence (AI) combined to enhance efficiency by doing away with cumbersome manual processes. For example, smart sensors can tag and track assets to reveal potential issues and, in doing so, prolong their lifecycles. In construction, manufacturing and logistics, geospatial information lets businesses track the flow of materials. In every industry, more efficient, AI-enabled management of big data can identify performance bottlenecks and predict energy consumption patterns to boost efficiency.

We live in a sharing economy driven by new business models that are powered by new technologies. For example, cloud computing uses virtualization technology in major data centers to make maximum use out of available hardware resources which are shared between multiple users. That’s a lot more efficient than overprovisioning an in-house server room or having one high-end workstation for every end-user when all they need to do is run a few simple office apps.

The convergence of sustainability and the internet of things

In a constantly connected environment, keeping track of supply chains and asset ownership might seem like an impossible task. As the number of short lifespan devices increases, it often feels like our technology infrastructure is outpacing our ability to manage it. At the same time, innovations that enable a better exchange of information can help us control and improve the tech we use. For example, internet-connected sensors can track the location, condition and availability of assets in a supply chain. Direct exchange of information via secure, decentralized channels like blockchain can keep these communications secure. Together, these innovations can optimize resources, extend lifecycles and help regenerate natural resources.

Making sense of big data to drive sustainable decision making

Technology, in all its forms, plays a pivotal role in reducing our impact on the environment and reducing business overheads. The shift towards more sustainable business models is driven by smarter decision-making, empowered by the ability to make sense out of big data.

Data can itself help fuel awareness and education, and breakdown the information silos that still plague many businesses. With the amount of data in the world now measured in zettabytes (270 bytes), we have countless opportunities to improve efficiency across many systems and processes – from critical infrastructure to online retail. But, given the size of today’s data sets, those opportunities can only be realized by using artificial intelligence.

Moving towards a service-driven economy

Underutilization of computing resources is one of the most common reasons why businesses spend more than they need to on IT. But things are changing fast as we shift towards a more service-orientated economy. With cloud providers offering access rather than ownership, businesses get to pay for performance only, instead of constantly reinventing the wheel by investing in and maintaining their own hardware infrastructures.

Technology also helps support dematerialization by reducing our reliance on physical resources – e.g. retailers selling e-books directly to consumers or digital video and audio being delivered online rather than through physical media.

The circular economy and your IT infrastructure

Want even better news?  If you’re purchasing IT equipment for your organization, the circular economy model can save you cash. By planning the end-to-end lifecycle of hardware using asset lifecycle planning, and avoiding the temptation of always buy more tech when a new project comes along, you can feel virtuous about saving the environment while saving dollars. Depending on your arrangements with your supplier, you may be able to trade-in and trade-up hardware. Or otherwise work with a trusted and reliable recycling partner who can dispose of hardware to meet regulations, particularly to remove data from devices.

The convergence of digital transformation with the circular economy provides many business benefits, both financial and environmental. With almost half of companies now being legally obliged to report their environmental impact, it’s an important compliance issue too. In a time when the environment is a major concern to many, the circular economy can add value, again and again.

Article reflects the opinions of the author. Published in 2019.

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