This article is part of a series of articles on sustainability in the lifecycle of a product
Sustainable end-of-life of a product
The EU has the ambition of transitioning to a truly sustainable economy and becoming carbon neutral by 2050. Starting with the publication of the European Green Deal in 2019, the EU is adopting environmental, climate and energy legislation with a wide-ranging scope, which will impact European and international companies’ entire chain of activities, both in terms of challenges and opportunities.
In a series of articles, Dr2 Consultants is analyzing the impact of EU policies on four key areas of companies’ operations: the product (pre-)development, the introduction to the market, the end-of-life, and strategy and reporting. Building on the first and second article on the products’ (pre-)development and introduction to the market, this article, which includes a contribution from our partner PHI Factory, focuses on sustainability in the end of life (reuse, recycling, disposal, incineration etc.) of the product.
Extending the product’s life cycle
Closing the product’s loop
The linear economy model and consumption trends in the past decades have contributed to a massive generation of waste in the European Union. Despite the existence of EU laws on waste management and on the environmental performance of products for more than 20 years, these initiatives never constituted a cohesive framework. Hence the effectiveness of reducing waste and limiting resource use through legislation remained limited.
The European Commission found that the best way to sustainably manage the end-of-life of a product is to extend that product’s life, limiting the manufacturing and sale of brand-new products altogether. Therefore, the Commission introduced the objective in the first 2015 Circular Economy Action Plan of “closing the product’s loop”, followed in 2020 by a new Circular Economy Action Plan, addressing the sustainability of a product throughout its entire lifespan. The ambition of the Commission is to encourage companies to shift their business models to overcome the traditional ’take-make-waste’ or ‘take-make-use-dispose’ economy, by guaranteeing that every product put on the market has a way to be shared, reused, repaired or recycled.
Companies can make the choice to ensure that their products and components can be reused at their highest value. Circular business models are one way to ensure this. They contain financial incentives for manufacturers to ensure high quality and durability. For example, Product-as-a-Service models, in which ownership stays with the company instead of transferring it to the consumer. This way, companies have more ongoing engagement with closer customer contact as they do not only sell a product but also the associated services to repair or replace. Companies are incentivized to create the best possible products that are easy to repair and can be given a new life, instead of gaining most by selling as much as they can. They also benefit from informing their consumers on how to take good care of their products during their lifetime. Other examples of circular business models are Pay-per-Use or Buy-Back models, which also rely on consumer contact and encourage the sharing and return of products, to be given a second life.
Fight against planned obsolescence
Despite its ambitions, the European Commission is well aware that some companies can purposely seek to reduce the lifespan of products, in order to incentivize consumers to purchase new ones. Hence, the Commission proposed a revision of the Consumer Rights Directive and the Unfair Commercial Practices Directive (UCPD) aimed at limiting planned and early obsolescence by classifying associated practices as unfair under the UCPD and by obliging companies to inform consumers about features that could limit durability. For instance, electronics manufacturers would be obliged to disclose information on new software which could downgrade the functionality of the product after a certain period of time. Furthermore, companies are prohibited from inducing consumers into replacing the consumables of a good (such as the cartridges of a printer) earlier than necessary for technical reasons. A concrete example of the European Union’s progress on the matter is the legislation on a common EU charger, aimed at preventing e-waste by reducing the necessity to buy different chargers for devices of different brands, as well as decreasing costs for consumers.
This legislation will strongly impact manufacturers of electronics but will actually benefit all companies who also on rely electronic devices to carry out their operations, and who may also suffer from this planned obsolescence. Indeed, the increased transparency will likely refrain manufacturers from downgrading the functionality of their products over time, ensuring a longer lifespan for these various devices, and thus reducing the budget spent by companies on material such as laptops and phones.
The benefits of durable business models
The measures related to promote repair and fight against planned obsolescence will have a fundamental impact on companies whose business models still strongly rely on consumers requiring replacement products. Many companies still need to break from the ‘take-make-waste’ model. Transitioning towards a more circular model and working to extend the life of your products, as promoted by the European Commission, can however bring a competitive advantage by attracting customers more and more conscious of the environmental impact of their purchases, as more durable and repairable products have a much lower carbon footprint.
Take a laptop, for example. When a laptop is made to last about three years, the yearly carbon footprint is 40% higher than when a laptop is made to last 5 years. When the lifetime can be extended by replacing the battery, the yearly carbon footprint is still about 30% smaller taking the carbon footprint of the battery into account (see figure 1).
When organizations globally design their products to last longer or be repaired more easily, it will not only contribute to attracting the more conscious consumer which look to purchase a product with reduced environmental impact. Repair costs will also go down (30-40%) as labor costs make up for the major part (see figure 2). This will result in reparations becoming more economically attractive than replacing the product. Switching to more service-oriented business models will also benefit manufacturers, as, in the longer run, resource scarcity will increase prices, making the consumption of new products even more expensive and the transition towards a circular economy even more urgent.
In a context of increased risks of shortages of critical raw materials, shifting part of the activity towards repairs and longevity of products can also ensure companies’ supply chain continuity by reducing production cadences and limiting need for new resources. Factoring in the on-going energy crisis, extending the lifespan of products could lead to energy savings. Indeed, as a whole, the European Commission estimates that the new Ecodesign for Sustainable Products Regulation, by introducing durability and energy performance requirements for a large range of products, could lead to 132 mtoe of primary energy savings, which corresponds roughly to 150 billion cubic meters of natural gas, almost equivalent to EU’s import of Russian gas.
Improving waste management to promote reuse and recycling
Despite all efforts to extend the life of a product, there will inevitably come a time when it will not be usable anymore, at least not with its first intended purpose. To avoid products ending up in landfills or being incinerated, the EU adopted the five-stage “waste hierarchy”, introduced by the 2008 revision of the Waste Framework Directive (WFD). The waste hierarchy establishes the order of preference for managing and disposing of waste, from most to least sustainable. Companies are encouraged to, preferably, prevent waste altogether, whereas the next best options are to reuse, and recycle the product.
To further promote the sustainable end-of-life of products in line with the Circular Economy Action Plan, the Commission is currently working on the revision of the Waste Framework Directive, to be presented in Q2 2023. This revision aims to improve the implementation of the waste hierarchy by further promoting companies to reuse and recycle, for which rates remain low. The revision will target inefficient waste collection systems by creating new separate collection systems for different waste streams, notably for textile and oils, and will address illegal disposition of waste.
The Waste Framework Directive’s most direct impact is for Member States and local authorities who need to ensure that the right waste collection systems and infrastructures for reuse and recycling are in place. However, improved national or local waste management systems can help companies in ensuring the most sustainable end-of-life for their products, avoiding that end-up in landfills or are incinerated without purpose. This can contribute to easing the transition to a more circular business model and reducing the environmental impact of companies’ products, ultimately benefiting companies’ sustainability ambitions.
New European rules increasingly frame the end-of-life of products to ensure their most sustainable potential, either by extending their lifespan as much as possible, or by ensuring they are recycled or reused. Companies who already shift away from “take-make-use-dispose” business models towards more circular models will be frontrunners, prepared for future EU requirements and resilient to potential resource scarcity. Moreover, in the long-term, those companies will be saving costs and securing a competitive advantage. Alternatively, non-compliance of EU legislation can easily lead to sanctions, or to prohibitions to manufacture, import or sell. To secure the future of your company you need a clear and personalized overview of the EU’s ambitions and their impact on your business.
Curious about how EU environmental legislation applies to your company’s activities? Dr2 Consultants’ European Green Deal Impact Scan and Sustainability Consulting services provide you with a comprehensive overview of how EU legislation will affect your business, identifying the opportunities and challenges and highlighting how your company’s strategic goals could be updated. Want to know more? Don’t hesitate to contact us!