The default is that if customers are insured and a damage occurs they traditionally expect to get indemnified by getting the product renewed and/or cash to buy it themselves. The more sustainable alternative is to focus on repair and sustainable replacements, yet this makes the business model more challenging. Repairing products and goods traditionally increases the costs whereas customers are not willing to pay more and desire new instead of secondhand. This goes for damaged property, from houses, motor vehicles to furniture. Especially for trendy products the business case is assumed to be challenging. In my paper I zoomed into this challenging product category.
The overall sustainability challenges are large. Only 8,6% of our world is circular. For the Netherlands it is somewhat better, but still 75% of the materials are not recycled or reused.
For smartphones it is even worse. Only 17.4% of e-waste is known to be collected and properly recycled and forecasts show that it will keep on growing. The problem is not only hidden in our drawers (where we store them end-of-life) but also felt in poor nations where e-waste often ends up. A diabolical circular effect: We extract the often toxic materials from poor nations and dump them there again after we are fed up. How to break-through?
Many stakeholders have a role to play to prevent e-waste problems. Producers, resellers, government, consumers, repair service companies and insurers all struggle with multiple sustainability challenges. We need a sustainable market transformation.
Summing up the most important sustainability challenges for sustainable repair for an insurer to provide:
- Cost of repair higher due to handling costs (labor)
- Consumers wanting new and this is socially accepted (triggered by persuasive marketing) and fast replacements (difficult to organize)
- Resources getting scarce, pricy or unwanted
- E-waste impact is getting out of control, legislation is being proposed to incentify circular models
Lots of challenges and actors needed to step up. But there is hope; let me share my vision.
Vision of a real smart product
If a product only lasts 2 years on average it is not so smart right, it’s a dumb product. This will become the general attitude towards all products. For many people smartphones are perceived as very precious objects, but the way we will all value its components and its longevity will become radically different. In 2050 we will treat our smartphones as some of us treat their Swiss watches in the present time. New features and technology can be added modularly and through software updates, repair services are efficient, fast and affordable. (In my paper I mention Fairphone a couple of times as a sustainable leader).
Buying new products is expensive because of a different tax regime and prices of new materials. This will not only apply for smartphones, but for all products, the materials used for your living, mobility and moderate consumption.
There are many hurdles to tackle, system loops to overcome before we are in that zero waste place. The most important two blockers:
- Recycled materials are still more expensive, repair services are increasing the process costs. Government (EU Right to repair) is proposing conditions that enforce producers to build in circularity, reuse potential in the design. That would scale as an alternative for action.
- The current mindset of the average consumer: Overconsumption, not valuing the products, materials used, creating e-waste. Many companies facilitate buying new products over repair.
How to act?
The circular economy is the business opportunity of our time.
For business leaders it is time to take action and make a stand. Especially for improving the longevity of valuables like smartphones there is a competitive edge in leading the way. For sustainable repair in housing it is about collaboration with many stakeholders to create more impact and work towards institutionalization of repair instead of new.
In my paper I worked out a strategic framework for companies to become impactful in with sustainability and commercial success.
BECOME ACTION LEADER IN THE CIRCULAR ECONOMY: Ensuring longevity of valuablers and preventing waste
MEASURE TO MANAGE IN A TRANSPARENT WAY: Be the trustworthy partner in change without greenwashing
INCLUSIVE IN THE CHAIN: Encourage partners and clients to become more sustainable and take their role
In the paper you will read specific suggestions for NN as I derived the management problem from my assignment ‘helping the sustainability core team of NN Non-Life to accelerate sustainability towards their clients and through their products and services’. I was inspired by Dustin - for whom I made a sustainability acceleration plan - to focus on smartphones. Yet, the analysis, advice and strategic framework could be applied to many companies who want to accelerate on sustainability. Many leaders are in the position to improve longevity, create an uphill intervention and be rewarded as there is a higher market value for sustainability and circular led companies. I dare you to try to overshoot in actions to become more sustainable. Let’s move the date.
Thu, 28 July