SDG 12 - Sustainable Consumption And Production Relevance to the Electronics Industry

SDG 12 - Sustainable Consumption And Production

Relevance to the Electronics Industry

“The earth will not continue to offer its harvest, except with faithful stewardship. We cannot say we love the land and then take steps to destroy it for use by future generations.”

― Pope John Paul II

Introduction

News articles pertaining to harmful effects of waste are becoming commonplace in today’s newspapers. Some of the recent headlines are - “Bacterial communities destroyed in NCR due to electronic waste production”; “Solid waste of chemicals released from e-waste pollutes the drinking water for residents of Kolkata“; “Waste of Electrical and Electronic equipment (WEEE) corresponds to 8% of municipal waste in 2004 and has been growing by around 5% since then”.

These highlight the growing crisis of waste and in particular, E-waste. E-waste is a recent phenomenon that is a byproduct of the electronics revolution. The Sustainability Development Goal 12 for ‘Sustainable Consumption and Production deals with E-waste and if implemented correctly,  such cases of dire negligence would never emerge. The sword ‘negligence’ highlights the magnitude of the problem at hand. There are different kinds of consumption, in the entire supply chain from raw material consumption on the one hand to final product consumption like Electronics, FMCG products, plastics etc. By far, metal and e-waste has been unique in that it is not only extremely harmful with risks of poisoning the basic food and water but also a vast majority of users’ lack information as to how to recycle, discard or consume diligently.

Growth rates of electronic consumption all over the world are accelerating. India for example generates 2 MT of e-waste annually and a surprising 95% of WEEE is recycled in the informal sector. India ranks fifth in the world in the production of e-waste. Developing nations have not formed effective systems in place for establishing policies for foreign deregulation. Short sightedness on manufacturing of PCs, Smartphones etc. in the last decade due to the absolute advantage of cheap labour and fixed capital is haunting countries like India now. Developed nations have been major polluters for a long time  however with the recent news of garbage dumps being imported to USA from Philippines this business must be taken seriously. It is estimated that three earths would be needed to satisfy the needs of the population by 2050 if the present level of consumption is continued and disposal is continued.  Stakeholders from Governments, NGOs, private bodies, corporations and consumers should come together and form robust policies that are not just remedial but preventive in nature.

Analysis

India today has the world’s second largest internet user base, with 12% of all internet users Indian residents. This is a measure of the electronic devices in use in India, as a proportion of the global use. India imports more than half of its electronic goods, with the import of electronic goods in FY 2019 touching 11 trillion rupees. All of this will, one day, need to be disposed of. India’s phenomenal growth since the liberalization that brought the IT and telecom boom, has effectively also brought a mountain of e-waste to our shores with no existing processes in place to handle the sheer volume of the waste.

Today’s markets are driven purely by economic considerations and corporations aim solely toward maximizing shareholder value and minimizing costs. This laissez faire neo-liberalism championed by eminent economists such as Milton Freidman while effective in increasing prosperity have come at an enormous cost of environmental damage. Disposing industrial effluents by dumping them in the Ganges can be a very cost effective solution; but it’s hard to argue that that produces a fair or even an economically efficient outcome in the long run. E-Waste, which contains hazardous heavy metals which pollute groundwater, needs to be handled well (such as by recycling), instead of (cheaply) being dumped.

The solution we need today is dedicated infrastructure, markets, processes and oversight to dispose of electronic goods at the end of their useful lives. Most of the e-waste in India today is handled by the informal sector where processes meant to sustain marginal players such as waste pickers drive the handling of extremely hazardous electronic waste. We need to do much better to improve the life outcomes of people in this industry while ensuring that waste management processes are geared primarily towards safe and sustainable disposal rather than marginal profiteering.

Relevance to India

With a significant increase in per capita incomes of Indians, the consumption of electronic devices (such as mobile devices, televisions, air conditioners, kitchen appliances etc.) has increased tremendously. Apart from the functionality being offered, the devices also serve as status symbols for the people which has given a boost to their consumption and the re-purchase cycles.

Additionally, the longevity of the electronic devices has decreased over the past few years, which is an additional contributor to the increased frequency of repurchase and therefore, increased consumption.

The consumption of home kitchen appliances has been increasing rapidly over the past two decades in the country. These appliances are instrumental in relieving pressures for the time-crunched population. The fast paced lifestyles of the individuals is not the only driving force behind the increase in purchase of such appliances. The increase in employment of domestic help, has further triggered the increasing purchase trend.

A host of economic challenges prevent an environment friendly production of electronics goods in India. The production of eco-friendly components requires expensive raw materials which have a low accessibility. A huge investment is required in the R&D of developing environment friendly electronics. Additionally, setting up a waste processing plant is a major cost head. The increased costs cannot be transferred to the customers, since India is a developing nation and the purchasing power of the majority of the population is not very high. These factors hugely impede the setting up of a more sustainable production process in place.

Business Implications

In 2015, the market size for electronics hardware in India was approximately USD 64 billion. 42% of this market was met by domestic production and electronic items were among the top three imports by value. India imported products due to the high current demand for Electronic System Design and Manufacturing (ESDM) products. With technological progress, the prices of entry-level electronic goods have come down dramatically in recent times and this figure would easily cross USD 100 billion by 2020.

The major contributors to this are people choosing buying over repair and planned obsolescence by major companies. Whether from breakdown, slow-down, or just the availability of a newer model, people discard electronics at the slightest inconvenience. In some cases, for example, buying a new printer is cheaper than buying a set of new ink cartridges and so the economics of gadgets encourages disposal. Built-in obsolescence increased the proportions of all units sold to replace defective appliances from 3.5 percent in 2004 to 8.3 percent in 2012, which also prevents the second-hand markets such as Ebay and OLX to grow.

The potential implications to business include the huge commitment to end unsustainable consumption and production patterns. For about 78% of companies, SDG12 is one of their most important goals for the organisation, which is a good sign. This suggests putting an end to the current practices that are not in tandem with the goal, introduce policies to actively monitor the industry as well as reform techniques that have dominated the sector since years.

Following WEEE laws (Waste from Electrical and Electronic Equipment) around the globe, producers of electronic materials are obligated to take part in industry-wide national reverse supply chains to uphold their producer responsibility by establishing recycling firms or collaborating with the existing ones. Supply chain collaboration involves two or more organizations working together to achieve success while sharing the investments required and collectively find solutions.

The electronics industry can also benefit from analysing opportunities for future innovation in products, services and business models. Investors are increasingly paying attention to environmental, social and governance (ESG) risks when making investment decisions. According to the third EY Investor Survey (2017), weak corporate governance, poor environmental performance, resource scarcity, climate change and human rights risks are most likely to alter investors’ decisions. Consumers can also be called more environmentally conscious, since they are increasingly interested in knowing the origin of their products and what companies are doing in the area of environment conservation and protection. Though many companies engage in green marketing to the extent of green washing to increase their sales by going for a pull strategy, there are some examples such as Samsung Electronics, who have done serious work in the form of door-to-door collection of e-waste at just a call’s length.

The government could impose export limits on manufacturers where the quantity of goods that can be exported should be directly proportional to the amount of e-waste the company has recycled or re-used. Then, there needs to be an effective way to ensure that these returned devices get repurposed. Governments could also give some form of tax break or rebate for companies that effectively process old equipment and companies could reuse recovered parts from discarded goods in newer systems, thus incurring lower costs than having to procure all new parts. Partially recycled devices could be sold in markets where buying capacity is limited but demand exists, so second-hand device or assembled devices would be accepted or they could be marketed as “reclaimed,” offering a social benefit even in wealthy markets. Another lucrative option is committing to repairing smartphones and computers. Electronics repair would not only increase product durability while building customer trust, but also help reduce unemployment. Companies and NGOs could set up simple training centers where people could learn the skills and manufacturers could provide better access to repair options and facilities.

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