Cell Phones Need to better manage growing cell phone waste In 2007, 63% of net cell phone sales were from replacements and only 3% of the replaced phones were recycled. By 2012, landfill cell phone waste will equal the waste of 21 Boeing 747 airplanes More cell phones, more waste The mobile phone is one of our smallest everyday electronic possessions, but the environmental issues surrounding it are proving to be a sizeable challenge. According to Cowen & Co., of 1021.6 million phones sold in 2007, 640.9 million came from replacement sales. The number of replaced cell phones will grow at a CAGR of approximately 9 percent during 2008–2012. Approximately, four percent of these replaced phones will end up in landfills, posing a serious challenge for the environment. Rapid changes in technology and product designs have discouraged mobile enhancements and repairs, increasing the demand for new mobiles and the disposal of old ones. The problem begins when retired handsets end up in landfill sites or if they are dumped illegally, leading to toxic substances seeping into the soil and groundwater, making the disposal of old cell phones a problem for the world. What is in a cell phone? Cell phones release harmful substances if they are not disposed of properly. Heavy metals such as mercury, lead, cadmium, and brominated flame retardants are used in cell phone parts like the liquid crystal display (LCD), the printed circuit board (PCB), the plastic casing and the battery1. These substances have been linked to cancers, the development of abnormalities, learning disabilities, and behavioral problems, and affect the nervous system and kidneys. They can also have a devastating impact on animals. 2 The problem is growing According to replacement sales predictions, more cell phones will be retired every year. With the absence of a proper recycle and reuse program, more than 7000 tons of toxic cell phone components are estimated to be dumped in landfills by 2012. The resulting contamination will have far reaching consequences for the environment and all living beings. Mobile phone sales are primarily driven by three factors: •New Users: users who did not have cell phones before, or require additional phones •Churn: users who choose to leave their current provider to join another •Upgrade and Replacement: existing users who obtain a new phone The growth in new users has been a major driver for cell phone sales in the past, but due to increasing saturation in the developed telecom markets like Europe, Japan and America, new connections have gradually declined since 2007. Handset Sales, 2004–2012 New Churn users Source: Tuong Huy Nguyen, “Dataquest Insight: Upgrade and Replacement; The Next Frontier for Sustaining Handset Growth”, Gartner, 2008, p.4 The main contributors to cell phone waste are those who upgrade and replace their handset. As seen in a recent study by Gartner, the percentage of subscribers changing their cell phones is higher than the percentage of subscribers not changing their phones. 65 percent of subscribers in Asia, Europe and the Americas replace their cell phones at least once in two years. This means that every two years, approximately 100 million cell phones reach landfills if they are not recycled or reused. 3 What are the consequences of inaction? According to Nokia, of all the discarded phones in 2007–2008: • Thrown in landfills = 4% • Fully recycled = 3% • Sent to emerging markets for reselling = 16% • Passed on to families or friends = 25% • Kept in drawers at homes = 44% • Other = 8% Cell Phone Waste by 2012 9000 From: www.nokia.com/enviornment/we-recycle/why-recycle (Oct.2008) 8000 7000 6000 5000 Harmful environmental impact, TONS 4000 3000 2000 Replaced phones, MM 1000 0 2008 2009 2010 2011 2012 Supplier M an u fa ctu r e r Customer Take-Back Customers can deposit their used phones in a take-back scheme for refurbishment or recycling instead of throwing them away. Recycler 4 How to minimize the environmental footprint of cell phones The growing cell phone waste can be effectively handled by recycling and refurbishing used cell phones. Refurbishing extends the lifetime of used phones and thus delays their entry into landfills. Recycling reduces the need for the raw materials used to make new products. The inclusion of recycling or refurbishing would change the traditional view of the cell phone life cycle. In this new life cycle model, every stakeholder will have to play a role in reducing the environmental footprint of cell phones. Manufacturers can make a difference by using materials that can be safely recycled when the phone is no longer needed. This involves using less hazardous substances (for example, lead-free solder), and minimizing the mixing of materials (for example, metals embedded in plastics), which are difficult to separate during recycling. They can also have systems to process phones returned through repair or retail outlets and work with suppliers to provide recycled materials to manufacture new phones. Retailer Recycling We estimate that mobile waste will grow at a CAGR of approximately 9 percent between 2008 and 2012, filling landfills to the volume of 21 Boeing 747 airplanes. More than 80 percent of the cell phone waste will be hazardous. Refurbishmen t M a te r ia l New Recovery D e s t i n a t io n s Sorting New Owners Telecom companies can play a central role by running/supporting collection programs that facilitate the easy collection of used cell phones. These collected phones can then be sent to recyclers like ReCellular Inc2. These recyclers, based on the condition of the cell phones, can recycle or refurbish the phones. It is the success of these collection programs that will shape our victory in the battle to cut mobile phone waste. Collecting the cell phones Though telecom companies have started various collection programs to collect and recycle discarded cell phones, it doesn’t seem to be enough. Inform Inc. reports that the 2.5 million cell phones recovered by various collection programs in the United States during 1999–2003 account for less than 1 percent of the millions of phones retired and discarded each year, and have had negligible impact on this waste stream. The effectiveness of these programs is determined by the convenience of the methods used to collect used phones, awareness of the existence of these programs and customer incentives offered to encourage people to donate their phones. While some companies and service providers have devised innovative ways to execute collection programs of redundant cell phones (for example, at football games and at schools), low public awareness about collection programs and low incentives to donate phones have limited the success of these programs. This is because the problem cannot be addressed sufficiently by the telecom industry alone. As cell phone waste grows, it becomes important for governments and the telecom industry to work together to provide a comprehensive solution. Governments around the world can take initiatives to implement regulations to promote the recycling and reuse of cell phones. The most notable of existing regulations are the Basel Convention, EU directives on Waste Electrical and Electronic Equipment (WEEE), and EU directives on Reduction of Hazardous Substances (RoHS).These policies are an attempt to reduce the generation of cell phone waste by discouraging the economically motivated dumping of hazardous waste (Basel Convention), preventing the use of harmful chemicals in new cell phones (EU RoHS directive) and mandating the re-use/recycling of cell phones (EU WEEE directive). The WEEE directive mandates an IT and telecom recovery rate of 75 percent and a reuse and recycling rate of 65 percent by 20063. Governments can even implement policies that make manufacturers (financially) responsible for the entire life-cycle of their cell phones, especially when a phone reaches the end of its life. Doing good while saving money The cell phone is recognized as an indispensable tool at the workplace, borne out by corporate cell phone plans for employees. Corporations can play a significant role in minimizing the toxic waste from cell phones by initiating a replacement and recycle program. Corporations can frame policies that encourage employees to return firm cell phones, and can set tangible goals to recycle these returned phones through the appropriate channels. They can also participate in the formation and funding of a collaborative work platform with manufacturers, users, recyclers, and NGOs to develop a sustainable cell phone waste management system like Mobile Muster4. A good start would be to educate employees about the environmental impact of not recycling their cell phones. 5 Conclusion By 2012, the market for cell phones will be driven mainly by replacement sales. This will generate more than 7,000 tons of toxic waste. If this waste is not handled properly, it will make its way into the environment, posing serious health hazards. While many companies have realized this growing problem, and are making individual efforts to handle this waste, they still fall short of a comprehensive solution. Stakeholders need to collaboratively deal with the problem and adopt an all-inclusive life-cycle approach for used cell phones. This approach will reduce the environmental footprint and extend the lifespan of cell phones. Stakeholders will also have to identify and develop revenue streams to finance the recycling programs without affecting their bottom lines. Governments should push for the reuse and recycling of discarded cell phones. At national levels, governments can implement regulations that mandate minimum use of toxic materials and set tangible goals for recycling. However, when working internationally and between countries, these regulations become less potent because of differing approaches and enforcement issues. Governments across the world need to come together to implement common regulations that promote the recycling and reuse of cell phones. However, the onus of making these efforts a success lies with the end users. To this end, the industry should take aggressive steps to educate users about the benefits of recycling cell phones. This should be the starting point for ending cell phone waste. 6 Future knowledge work The next paper in the series will include topics such as: Industry • The top 10 corporate and best practices for solutions that recycle cell phones; understanding the business opportunity and creating a business model helps improve the bottom line by managing waste better • Understanding the different government regulations that promote the production of green cell phones and better management of cell phone waste • Analysis of the efforts taken by third party organizations to recycle, reuse, and rent cell phones, and create non-profit industries out of the problem of cell phone waste • Educating consumers on the environmental impact of cell phones • Providing incentives for recycling Cell Phone Providers and Manufacturers • Analyzing the efforts taken by various service providers and cell phone manufactures to contain and manage waste. • Batteries account for 75 percent of the waste. There are opportunities to: - Standardize cell phone batteries (similar to the steps the industry has agreed on for standardizing cell phone chargers) - Provide the option to sell cell phones without batteries, encouraging the consumer to reuse the battery from the old phone References 1 Mobile Phone Partnership Initiative Project 3.1 (Approved Draft), March 20, 2006 2 According to a report published by ReCellular Inc. in 2008, by resuing/refurbishing 5.5 million cell phones, ReCelluar Inc. raised $4 million dollars for charity causes and conserved 14 million kilograms of greenhouse gas emission, equivalent to taking 10,890 passenger cars off the road. 3 http://www.ec.gc.ca/nopp/docs/rpt/itwaste/en/summary.cfm 4 Mobile Muster, the recycling program of the Australian Mobile Telecommunication Association, is the best example of a successful collaborative effort to reduce cell phone waste. This program is funded by at least 85 percent of the telecom industry including handset manufacturers. In 2008, this program was able to collect 1.4 million cell phones, which formed about 130 tonnes of cell phone waste. Authors Contacts Divy Jain Consultant Deloitte Consulting India Pvt. Ltd Ana Helena Chacón Director Deloitte Costa Rica anchacon@deloitte.com (506) 2521 6790 Saloni Dhar Consultant Deloitte Consulting India Pvt. Ltd Martin Hougaard Consultant Deloitte Consulting LLP Jaqueline Díaz Manager Deloitte Costa Rica jadiaz@deloitte.com (506) 2521 6790 7 Costa Rica Barrio Dent, San Pedro Tel.: (506) 2246 5000 Fax: (506) 2246 5100 For more information, visit www.deloitte.com/cr This publication contains general information only and is based on the experiences and research of Deloitte practitioners. Deloitte is not, by means of this publication, rendering business, financial, investment, or other professional advice or services. 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