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There’s no doubt about it, smartphones are big business all around the world. In the first quarter of 2018 alone, 384 million units were sold worldwide, according to analysts at Gartner.
In the UK, Ofcom’s most recent Communications Market Review showed that the smartphone is now the primary device of choice for accessing the internet, with 78% of UK adults using one and 62% of all internet browsing sessions now done on mobile devices.
If mature markets such as the UK seem saturated with smartphones, there’s still plenty of money for the industry to make, with people in developing markets now taking advantage of cheaper, entry-level smartphones in huge numbers.
But the inconvenient truth of society’s growing dependence on the smartphone is a wide and damaging environmental impact that spans the entire lifecycle of a device, from cradle to grave.
For example, producing a single smartphone requires approximately 34kg of ore to be mined, of which around 18kg is mined to extract gold, according to mining expert David Michaud of 911 Metallurgist. In turn, the extraction of gold requires vast quantities of water and poisonous chemicals such as cyanide, which must then be dealt with at cost – or not at all, depending on the ethics of the mine owner.
It’s not just gold. Smartphones contain a vast array of other minerals as well. Just listen to Biju Nair, president and CEO of Hyla Mobile, an organisation specialising in mobile trade-in and re-use.
“These devices have a lot of good materials in them, whether precious metals or rare earths. Every time you produce new products you have to go back and mine these, and this can be gold or silver, non-precious metals like aluminium or copper, and rare earth metals which are hard to acquire – not because they are rare to find, but they are very difficult to mine,” he says.
Take lithium, for example, a key component in smartphone batteries. Lithium is mostly produced in Latin America – the Salar de Atacama dry lakebed in Chile is thought to have accounted for a third of global production as of 2015. But to get at the lithium, one must first extract the sub-surface brine beneath the lakebed, and process it, using more resources to do so.
“The waste product of that is essentially highly concentrated saltwater, which can destroy entire ecosystems,” says Nair.
Richard Peagam, Anthesis
Then there is cobalt, much of which is mined in countries such as the Democratic Republic of Congo (DRC) in central Africa, where supply chain transparency is hard to guarantee and, according to Amnesty International, mine owners still openly exploit child labour.
According to Richard Peagam, associate director at sustainability consultancy Anthesis Group, much of the activity around supply chain transparency has been built around the Dodd-Frank Act in the US, section 1502 of which established compliance practice around sourcing minerals such as gold, tantalum, tin and tungsten, particularly in relation to the DRC and other central African states in the context of conflict minerals.
While compliance with Dodd-Frank is now well-established with regard to gold and so on, it does not cover minerals such as cobalt. The Organisation for Economic Co-operation and Development (OECD) would like to change this, but for now, says Peagam, monitoring of the cobalt supply chain is done on an ad hoc basis by corporations.
“Apple treats cobalt as a conflict mineral already, as is right and responsible, making sure its supply chain is audited,” he says. “Responsible manufacturers must spend time auditing their supply chains, particularly smelters, to make sure they know where materials are coming from.”
This can be quite a challenge. “That’s a big exercise in data management because it involves getting mining companies and commodities brokers involved,” says Peagam.
“The other challenge you have with this supply chain is that getting visibility beyond the first few tiers is quite a challenge, but there is lots of technology coming that could help there, such as blockchain. Of course, the big challenge with metals is that they melt together, so identification can become difficult.”
The circular economy
In light of the challenges associated with resource production, the idea of recycling and re-use begins to make a great deal of sense.
At the end of a device’s first life, many companies are now emerging to support the process of repurposing and reselling it as a used device, and ultimately making sure it is recycled to prevent further environmental damage. This is known as the Circular Economy.
Thomas Rayas is senior vice-president of marketing and customer success at FutureDial, a company that specialises in the circular economy. He estimates the market for refurbished phones is worth around $20bn, and with the popularity of the smartphone, this will only grow.
Initially a consumer-facing company, FutureDial has now pivoted to developing solutions for mobile network operators (MNOs) and logistics companies to manage the reverse supply chain.
It now supports these customers by receiving devices, clearing the stored personal data and running a suite of automated tests to determine device condition and functionality, all geared towards enabling customers to resell the device in the secondary market.
Last year, it integrated its various offerings into a single-touch app, based on the principles behind lean manufacturing and the six sigma methodology to help its customers become even more efficient at device management standpoint by eliminating a number of steps in the return and evaluation process, cutting waste and costs.
Prior to Mobile World Congress 2018, it also spun-up a partnership with a robotics company to further automate functionality testing.
“In terms of numbers in 2016, our software touched about 30 million devices, last year 43 million, we’re tracking further growth this year. Some 80 million to 100 million devices per annum are moving through recycling and repurposing, which is great for sustainability because the more we can keep out of landfills and reduce the e-waste footprint, the better,” says Rayas.
Hyla – which does not yet operate in the UK – works on a similar basis to FutureDial. It claims to have collected over 48 million devices since it was set up in 2009, diverting more than 6,500 tonnes of e-waste away from landfills and averting 59.4 billion gallons of ground water pollution.
Its carrier and retail customers (it does not directly touch consumers) buy into a huge database software package that generates key metrics such as current trade-in value for a returned device, projected trade-in value in the future, and whether or not the device has been reported as lost or stolen.
Based on this information, consumers can then be appropriately reimbursed – a two-year old device can still be worth several hundred dollars – and the devices shipped to Hyla’s facility where it wipes any remaining data and, like FutureDial, runs a series of automated tests to determine an accurate after-market value.
Depending on the results of these tests, the best-performing devices go back into the market, and those which are either too badly damaged or too old are sent to recycling.
According to Hyla’s Nair, around 20-25% of the devices the organisation collects are resold within the US, many of them to insurers which use them as courtesy loaner devices for customers who have had to send their own devices away for repair.
The remaining 75-80% of devices end up overseas, says Nair. “The way they get there for the most part is through two large hubs – one is Hong Kong, the other Dubai – where there are wholesalers who acquire devices from us and dispose of them through other buyers with whom they have relationships,” he says.
These phones can end up pretty much anywhere in the developing world, and the trade is extremely lucrative – although some more advanced economies, such as China and India, have banned these second-hand imports.
“Refurbished and reboxed, with limited warranties, these devices are extremely popular in other parts of the world,” says Nair.
“What drives the secondary market is geographies where individuals either don’t have the means or refuse to pay top dollar for a premium service such as a brand new iPhone,” says Rayas. “However, there is still a desire to obtain that device or product, which is where we come into play.”
When these devices disappear off into the world through various wholesalers and traders, however, the supply chain starts to look a little murky. How confident can one be that, in reality, devices are not ending up in landfill, leaching their valuable minerals into the groundwater supply?
Both Rayas and Nair say that while this is a legitimate concern, the economics of the secondary market means sending devices to landfill no longer makes sense.
“Because you can now have a late model device for a fraction of the price of a new one, the residual value remains high,” says Rayas. “A high-end iPhone or Android may have up to three different lifecycles before it is recycled for parts.
“At the bottom of the scale, when a phone is no longer of use, recyclers take the device, crush it and extract the precious metals, which keeps those from going into the ground. It’s good business sense.
“We can be confident that these devices don’t end up in landfill because the culture of many of these countries is to use these devices to the very end of life. That’s the nature of how people are used to consuming things, and labour and repairs are both cheap,” adds Nair.
Nevertheless, Hyla is lobbying governments around the world, and working with some of them, to improve standards around device traceability in the secondary market, changing laws to allow accredited recyclers access to their markets, for example.
Device manufacturers are also keen on this approach, says Nair, and would prefer governments to put in place proper means of importing second-hand devices, if only so they can entice poorer consumers who wouldn’t want to spend hundreds of dollars on a new model.
FutureDial’s Rayas says he sees his organisation as an “enabler of sustainability”. He also presses the need for strict standards in the secondary market, particularly around data erasure – the General Data Protection Regulation (GDPR) will hopefully do much to address those concerns, he notes – and how devices are handled, so that when they are renewed, refreshed and resold, they are clean, traceable, and there is no risk to the former or new owner.
For Anthesis' Peagam, who as part of his role advises businesses on the appropriate disposal of redundant device estates, a lot of the advice on how to engage with the circular economy boils down to common sense. “If it’s two guys rocking up in a white van offering cash in hand for your phone, it’s probably not legit,” he says.
“In some markets this is a seriously mature sector, with big established players that provide visibility on where devices are going and assurance they’ll avoid landfill. In that regard we would generally be advising people who they should be working with, and we do work on assuring that recyclers and re-use organisations are operating properly,” he explains.
Peagam raises the argument that recycling and processing could be done in the UK or other western countries, where standards are higher, but because the materials market is global (and smartphones are not manufactured in the west), it is important to be sure that we are exporting viable and traceable materials to secondary markets that get to the right places and are of the right quality.
“Our responsibility is to make sure the materials are traceable commodities, not just waste for dumping,” he says.
Hearts and minds
Unfortunately, perhaps the least damaging part of a smartphone’s lifecycle is the couple of years it spends in the hands of its original owner. Whatever happens before or after that is out of sight and out of mind for most users.
But ultimately, every successful ecological initiative relies on public buy-in and cultural adjustment for any real change to occur. In the late 1980s, for example, pressure to remove chlorofluorocarbons (CFCs) from aerosols and refrigerators hit a tipping point when public anger about the hole in the ozone layer grew too loud for governments to ignore. Campaigns against plastic bags followed in the mid-2000s, resulting in the European Union (EU) directive behind the UK government’s 5p bag charge, and plastic straws seem to be the next target.
Anthesis’s Peagam is confident that the same thing will happen with smartphone lifespans and upgrades, and says he sees no barrier to increasing smartphone lifespans and decreasing upgrade rates other than a cultural one.
“What’s wrong with two-year-old equipment? There’s clearly a perception barrier – some large organisations just refresh their kit every three years on an arbitrary basis because it’s what they’ve always done, and I’d challenge if that’s necessary,” he says.
FutureDial’s Rayas is less convinced that getting people to upgrade less is really feasible. “The industry conditions us to pay for phones monthly, and this spurs our desire to upgrade annually,” he says. “As the device lifecycle shortens, more devices come back into the reverse supply chain, so I expect we will see many, many more devices coming through.”
Nevertheless, Peagam is hopeful that a change is going to come, and speculates it is likely that it will be driven by the generation that came of age as the discourse around anthropogenic climate change started to become widely accepted – the so-called millennials. “As millennials get to the point where they are making business decisions, I think you will start to see that change,” he says.
But whether dealing with millennials or not, perhaps the biggest problem the circular economy faces is getting people to understand what their devices are actually worth in both financial and environmental terms.
“The challenge with all of this is getting in quick while there is still residual value. A problem with mobiles is they tend to sit in drawers, so getting them out of drawers and back into the circular economy while there is still potential is important,” says Peagam.
“The older they [devices] are the harder it gets to extract value, and the more likely the device goes into the waste stream,” agrees Hyla’s Nair.
Although fewer devices than ever are going to landfill, Hyla conducted a study last year covering 2016, on the basis of which it believes there are around 56 million devices in the US alone being kept in drawers in the hope they might be needed in an emergency.
Of course, an emergency almost never happens, so the valuable minerals that these devices contain sit in limbo when they could be usefully recycled.
One way Hyla has started to tackle the phone-left-in-drawer issue in the US is to sign contracts with big box retailers and communications service providers so that, for example, if an ISP sends out an engineer to upgrade a broadband connection, the engineer can also ask whether or not the customer has any old devices lying around, and is empowered to give them cash on the spot to take it away.
While initiatives like this make a valuable contribution to bringing more devices back into the circular economy, ultimately it is only widespread awareness of the issues that will create change. So what’s in your drawers?
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