Recently, the telecoms industry has seen a heightened focus on sustainability practices. While the advancement to 5G brings with it positive outcomes, and more connectivity and advancements in societies we had never imagined previously, there are also concerns around the environmental impact of the technology—both from an energy consumption perspective, but also because of the deluge of 3G and 4G/LTE devices it will bring, which could contribute significantly to the growing e-waste dilemma.
With so much attention on sustainability, European operators, including Deutsche Telekom, Orange, Telefónica, Telia, and Vodafone, have come together to start an Eco Rating labelling scheme that will score the sustainability of smartphones. And rightly so, too—we are at the beginning of a 5G supercycle, and more and more devices will be traded-in as consumers make the upgrade to the next generation of cellular technology.
So, what does the Eco Rating scheme mean for the smartphone and secondary device markets?
What is the Eco Rating scheme?
The scheme, which started in June, scores smartphones based on how environmentally friendly they are, and will consider the devices’ sustainability throughout its lifecycle. Devices will be marked across 19 criteria, and will factor in durability, repairability, recyclability, climate efficiency, and resource efficiency. As part of the scheme, devices will be given a score between 0-100, and the higher the score will mean the more environmentally friendly the device is.
The scheme rightly puts sustainability and the environmental performance of devices as a primary focus. 5G is the technology responsible for driving upgrades and trade-ins, and understanding how devices can be recycled and repurposed is important—especially to ensure devices stay out of landfills.
Smartphones are often given a second or even a third life, which means knowing what a device’s durability, repairability, recyclability, and resource efficiency are crucial factors when re-selling in secondary markets.
What does the scheme mean for the secondary device market?
In mature markets, some consumers are opting to buy refurbished devices due to growing concerns around sustainability and increasing levels of e-waste. But in emerging markets, refurbished smartphones fulfil an even greater purpose, reducing the price point of mobile broadband adoption and driving digital inclusion.
Which means knowing the recyclability, reliability and durability of devices is important for those looking to re-sell devices. Being able to repair devices is critical, especially for the re-sale into emerging markets, as this will ensure they can perform as a like-new device, as they may have to put up with different climate conditions, like extreme heat.
The repairability criteria would need to factor in the policies that OEMs put in place that dictate not only who, but how devices can be repaired—including the use of certified after-market parts, or harvested parts to be used in repairing, ensuring that device quality and functionality are not impaired. The initiative should provide transparency on such restrictions, and should create a culture where repairing devices, rather than discarding them, is championed.
As the scheme is focused on improving the lifecycle of smartphones, and encouraging consumers, as well as operators and OEMs, to prioritize more environmentally friendly devices, the devices’ trade-in value and average selling price (ASPs) into the secondary market should be a factor to consider.
Having an economic model is imperative to the success of any environmental, social and governance (ESG) initiative. As part of the scheme, it may be a consideration that those with higher scores have higher trade-in values or have higher ASPs when it comes to the resale of devices in other markets. Or, another way to drive economic value could be to offer tax incentives to those that adhere to the criteria when it comes to the sale of new devices. Whichever way it is decided, having an economic incentive attached to the scheme will ensure it is successful.
The importance of recycling and reselling devices
With the 5G supercycle underway, and with more 5G devices set to come to market over the next few years, the Eco Rating scheme will have a positive impact on the secondary device market. It will ensure that devices being sold are capable of having multiple lives, guaranteeing devices stay out of landfills, bringing more affordable connectivity to consumers, as well as driving revenues for operators, retailers, and OEMs.