DIGITALEUROPE | 1

ThecontributionoftheDigitalIndustrytorepair,remanufacturingandrefurbishmentinaCircularEconomy

April2017

www.digitaleurope.org

DIGITALEUROPE 2 2 2

2

INDEX

Page

Introduction 3

Circular Economy Practices in ICT 4

Longevity, Durability and Reliability 5

Reuse 6

Reuse vs Preparation for Reuse 7 Guarantees and Hierarchy of Remedies 8

Repair 9

Remanufacturing and Refurbishment 10

Principles for legislating Circular Economy 14

DIGITALEUROPE 2 2 3

3

Introduction

TheEuropeanCommissiondefinesacirculareconomyasasetofactivitiesinwhich“thevalueofproducts,materialsandresourcesismaintainedintheeconomyforaslongaspossibleandthegenerationofwasteminimised”1.TheEuropeanParliamentResearchServicestatesthatacirculareconomyis(partly)“basedonsharing,leasing,reuse,repair,refurbishment”2,towhichoneshouldaddremanufacturing.DIGITALEUROPEwould liketooutlinehow itsmembersarecontributing already today to the circular economy through their repair, refurbishment andremanufacturing activities.3 With a focus on the inner loops of the Circular Economy, ourcontributiontorecyclingisnotpartofthispaper.DIGITALEUROPEmembersalreadytreatrepair,refurbishmentandremanufacturingactivitiesaspart of their business practice. They are hereby helping to reduce environmental impacts,createjobsandgrowthanddeliverrealbenefitstotheconsumers.DIGITALEUROPEcompaniesperform millions of repairs annually. Refurbishment and remanufacturing is a longstandingpracticeinB2Bandhighvaluesegmentsofourindustry.

In order to provide cost efficient repair andremanufacturing services, Members ofDIGITALEUROPE have established centralfacilities inside and outside of the EU. WithinEurope, these are based, among others, in:Czech Republic, Finland, France, Germany,Hungary, Ireland, Italy, The Netherlands,Poland,Romania,Sweden,UKandmanymoreEUMemberStates.4Somecompanieschooseamore decentralised model for after salesservice inB2Cingeographiescorrespondingtotheir market presence, often resulting in acoverageofvirtuallyallofEurope.

Thisinfrastructure,nexttothewastecollectionandtreatmentfacilities,isthecirculareconomybackbone of the ICT industry in Europe. It contributes to reuse and increased lifetime of ITdevicesontheEuropeanmarket.

1CommunicationfromtheCommissiontotheEuropeanParliament,theCouncil,theEESCandtheCommitteeoftheRegions“Closingtheloop–anEUactionplanfortheCircularEconomy”,COM(2015)614final,2December2015.2EuropeanParliamentaryResearchService,Briefing“Closingtheloop-Newcirculareconomypackage”,January2016.3Theaftersalesmarketdiffersfromsectortosector.Justasdefinitionsofrepair,refurbishmentandremanufacturingdifferbetweensectors,sodoDIGITALEUROPEcompanieshavevaryingdefinitionsoftheseterms.Inpractice,thebordersbetweenthetermsarefluid.Attemptsatdefinitionsareincludedthroughoutthepaper,nevertheless.4EuropeanRemanufacturingNetwork,RemanufacturingMarketStudy,November2015.AreportfortheEuropeanCommissionunderHorizon2020,https://www.remanufacturing.eu/wp-content/uploads/2016/01/study.pdf;Bitkom,“ICTRemanufacturingintheB2Bmarket–QuestionsandAnswers”,n.d.,https://www.bitkom.org/noindex/Publikationen/2015/Sonstiges/Questions-and-Answers-ICT-Remanufacturing-in-the-European-B2B-market/20150817-BitkomRemanufacturingQA-and-best-practices.pdf.

DIGITALEUROPE 2 2 4

4

CircularEconomyPracticesinICT

The aftersales market of ICT equipment is vast and acollection of proven and established circular economybusiness models. A DIGITALEUROPE survey from 2014 hasshownthatgloballyroughly118,000tonsofITequipmentandspare-parts is shipped cross-border annually for OEM repairand remanufacturing; roughly 28,000 tons in Europe. Anestimated 70% or more of this volume is repair of non-professional (B2C) products and 40% are ‘out of warranty’repairs, resulting inmillions of repairs per year that dependoncross-bordermovementsinEuropealone.5

Different practices co-exist in the market for maximising the value inherent in circulareconomybusinessmodels.Theextenttowhichthesepracticesarefolloweddependsontherespective businessmodel. This paperwill touch upon somebut not all of these practices.Manufacturerstypicallypursueoneormoreofthefollowing:

• Durability&Reliability •Guarantees• Maintenance •WarrantyPlans• Upgrading •Resale• Swap&Repair •Leasing• Remanufacturing&Refurbishment •Trade-in• Hardware&SoftwareUpdates •Reuse

5DIGITALEUROPE,“TransboundaryMovementsofWastevsUsedGoods”,30January2014,http://www.digitaleurope.org/DesktopModules/Bring2mind/DMX/Download.aspx?Command=Core_Download&EntryId=670&language=en-US&PortalId=0&TabId=353

118,000 tons

global shipments for repair and

remanufacturing p.a.

DIGITALEUROPE 2 2 5

5

Longevity,Durability&Reliability

Durability and reliability are qualities that consumers expect, but they also have directpositiveimpactsontheenvironment.Extendingproductlifedecreasesthematerialfootprintassociated with the equipment. One strategy to achieve this end is eliminating commonpoints of failure. Environmentally speaking, a product that is kept whole and is repaired,refurbishedandreusedissuperiortomanufacturinganewonefromrawmaterials.Aproductshouldbedesignedinawaythat itcanwithstandtherigorsofeverydayuseandeven abuse.Manufacturers therefore design tominimize the need for repair, through theselectionofhighqualitymaterialsandcomponents,aswellasadurable, reliable structuraldesign.Manufacturersalsosubjecttheirdevicestorigoroustestsbeforetheyareplacedonthemarket.Abalanceissoughtbetweenthequalityofthematerials,durabilityandcosts.Products are designed to be used. Functions, aesthetics, structural characteristics aremaximized accordingly and trade-offs need to be solved for. Usually, a component needsrepair,ifatall,atmostonceduringthelifetimeofaproduct.Whenmanufacturersdesignfordurability, they aim for a repair event to never occur during the lifetime of the product.Sometimesthismightmeanthatdurabilityisachievedattheexpenseoftherepairbeingabitmore difficult. In the event a repair is necessary, manufacturers provide for convenient,reliable and cost-efficient service solutions. This approach ensures that consumption andmaterial inefficienciesare furtherreducedas fewermaintenanceactivities, repairsandpre-maturefailuresoccurinthemarket.Insomebusinessmodels,thistrendisfurthersolidifiedbythebusinessrationaleinherentinleasingmodelsorofferingproductfunctionsratherthanproducts(e.g.sellingcopiesratherthanprinters).Examplesoflongevity,durabilityandreliabilitypractices:

Waterproofing Industry is designing for anticipated use and increasingly

offers water proof devices when of interest. Whether it israin, the accidental drop into the sink, a sweatyworkout orotherwetactivities–smartphonesorwearablesarelesslikelytofailorbeinneedofrepairafterwards.

Integrateddesign Integrated designs of consumer devices usually bringincreased structural integrity, reduced exposure to dust orhumidity, less failure points in the device and generallyincreasedrigidity.All these factorsmaketheneed for repairor replacement less likely – a direct contribution to longerlifetimes.

Softwareupdates Softwaresupportensurestheuseofoldergenerationdeviceswithout compromising security or data protection. Softwareupdates by manufacturers allow customers to make use offunctions that were not available on their product at themomentofpurchase.Thisdecreases theneed forupgradingto new hardware (e.g. cloud services makes upgrading toobtain more storage obsolete). ‘Software led longevity’through software support increases the resale valuesignificantly.

DIGITALEUROPE 2 2 6

6

Reuse

Environmentally speaking, re-introducing used equipment into the market is a vitalcontribution to the circular economy: “just keeping a smartphone in use for an additionalyearcutsitsCO2impactby31percent”.6

It is also a significantmarket opportunity. Deloitte Globalpredicted(conservatively)for2016,thatapproximately120million used smartphones were sold or traded in byconsumers,callingitthe“$17billionmarketyoumayneverhave heard of”.7 The used smartphone market is a fast-growing market, outperforming the overall smartphonemarketfourtofivetimes.IDCexpectstheglobalmarketforusedsmartphonestogrowto$30bnby2020.8

The market for used IT equipment is even larger. As Green Alliance puts it: “A circulareconomy for consumer electronics is already here. […] the value of Apple devices sold oneBay intheUS in2013wasnearly$2billion. […]WRAPestimated in2013thatthevalueoftwoto threeyearold laptops in theUKwas£720millionandtwoto threeyearold tabletswereworth£90millionafteranycollectionandrepaircostsweretakenintoaccount”.9TheDeloitte Mobile Consumer Survey 2016 for 12 European countries found 19% of theparticipants had passed on their previous phone to a family member or friend whenpurchasing a new one. Another 10% sold or traded the old phone through differentchannels.10ForDIGITALEUROPEmembers,thisdoesnotcomeasasurprise.WeknowthatICTequipmentishandeddownseveraltimesbeforeitbecomeswaste.Inthatsense,digitalB2Cdeviceshavemanylives.Theyfindanewownerthrough:

§ OnlinemarketplaceslikeeBayandAmazon§ Handingthedeviceovertofamilyorfriends§ Donationtocharity§ Trade-intocompanieslikeBrightstar,MazumaandRedeemaswellasOriginal

EquipmentManufacturers(OEM)ItisimportanttounderlinethatICTisverydiverse.ReuseinB2BlooksdifferenttothatinB2Ccontexts. For instance, network equipment and servers are treated very differently fromconsumergoods(seealso:remanufacturing)–seeexampleinthefollowingtable.HPEFinancialServices:AssetRecoveryServiceandLeaseProgram

Operatesabusinesswithreuserateswhichareapproximatelyasfollows: Resold Recycled AssetRecoveryService

Servers 77% 23%

End-of-leases Servers 88% 12%AssetRecoveryService

Storage 31% 69%

End-of-leases Storage 33% 67%Thedifferencebetweentheresoldpercentagesarerelatedtodatasecurityissues,mechanical failuremodesofhard-drivebasedstorage technology,and the longer, initial useful lifeof storageproductswhichmake secondlifeuseslessattractive.

6GreenAlliance,“Acirculareconomyforsmartdevices.OpportunitiesintheUS,UKandIndia”,January2015,http://www.green-alliance.org.uk/resources/A%20circular%20economy%20for%20smart%20devices.pdf.7Deloitte,“Technology,Media&TelecommunicationsPredictions2016”,2016,https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Technology-Media-Telecommunications/gx-tmt-prediction-2016-full-report.pdf.8InternationalDataCorporation,PressRelease:“WorldwideMarketforUsedSmartphonesForecasttoGrowto222.6MillionUnitsin2020,AccordingtoIDC”,21November2016,https://www.idc.com/getdoc.jsp?containerId=prUS41929916;InternationalDataCorporation,DocumentataGlance:“WorldwideUsedSmartphoneForecast2016-2020”,October2016,http://www.idc.com/getdoc.jsp?containerId=US41737016.9GreenAlliance,“Acirculareconomyforsmartdevices”,2016.10DeloitteGlobalMobileConsumerSurveyconductedinvarriousEuropeancountries(Belgium,Finland,France,Germany,Ireland,Italy,Luxembourg,Netherlands,Norway,Poland,SwedenandUK).Formoredetails,seeDeloitte,“GlobalMobileConsumerSurvey2016–TrendsfromaroundtheWorld”,May-July2016,www.deloitte.com/gmcs.

$17bn global used smartphone

market in 2016

DIGITALEUROPE 2 2 7

7

ReusevsPreparationforReuse

Differencebetweenreuseandpreparationforreuse

Preparation for Reuse is a legal definition from the WasteFramework Directive (Art. 3.16) for a process of “checking,cleaningorrepairingrecoveryoperations,bywhichproductsorcomponentsofproductsthathavebecomewastearepreparedsothattheycanbere-usedwithoutanyotherpre-processing”.Preparing for reuseactivities therefore involveequipment thathas been discarded, hence has passed the doorstep of acollection point. Products that have been donated, sold to athirdpartyorare repaired/refurbished inacommercial settingarenotwasteandnotinscopeofthisprocess.WEEEretrievedfrom collection schemes are an example of waste products inscope.

The visualization below illustrates the legal differentiation: The Product status (in green),ratherthanthewastestatus(inblue),appliestothefirstthreeexamplesallthroughouttheprocess:

§ Example1:Productsthatarebeingrepairedorrefurbishedandresold§ Example2:productsthataresoldforreusewithoutfurthertreatment§ Example3:productsthatareshippedforrepair/remanufacturing/refurbishment

andbacktothecustomerOnlyinthelastexampledoesthewastestatuscomeintoplay.Whenaproductisdiscardedbyaconsumer,itisdefinedtobewaste;hence,WEEEArt.15alsoapplies.Afterapreparationfor reuse activity, the waste obtains product status again. Legally speaking, the followingactivities of the ICT industry are therefore not waste activities: shipping, treating,refurbishing,repairing,leasingorsellingusedproducts(seealsoWEEEDirectiveAnnexVI).

DIGITALEUROPE 2 2 8

8

Guaranteesandhierarchyofremedies

Based on the requirements from the Consumer Sales and Guarantees Directive, MemberStateshaveadopted legal guarantee regimesofminimum2years,whichcoversanydefectthatispresumedtohaveexistedatthetimeofthedeliveryoftheproductandthatbecomesapparentwithintheguaranteeperiod.Ontopofthelegalguarantee,consumersmayalsobeofferedacommercialguarantee.Thatisthecaseformostconsumerelectronicsandelectricalproducts: from time to time, manufacturers may offer longer commercial guaranteesalongsidelegalguaranteesinanattempttogaincommercialadvantage.

When seeking a remedy for a defective product, the consumer is entitled, under theConsumer Sales and Guarantees Directive, to a repair or replacement. Should it bedisproportionateorimpossibleforthetradertoprovidesuchremedies,theconsumeristhenentitledtoareductionofthepriceorarefund.

DIGITALEUROPE 2 2 9

9

Repair

ThecurrentcirculareconomydebatefocusesonDoItYourself(DIY)repairs,onlinetutorials,repaircafesandthesmallrepairshoparoundthecorner.DIGITALEUROPEwouldliketoshowwith this paper that there is a second strategy of enabling repair of devices that carriesconsiderableweightfromacirculareconomyperspective: inordertocatertothemassB2Cmarketand the specializedB2Bmarket,DIGITALEUROPEcompaniesare takinga large-scaleapproach.Thisbusinessmodelensuresreproduciblequalityacrosstheservicesprovided.Definitionof“repair”11

Aprocess inB2CorB2Bof fixing a specifieddefect (or seriesoffaults) of a product. Repair ensures thequality and functionalityand renders the product/component available for reuse. Repairtakesplacebothwithinoroutofwarranty.Correcting software faults or bugs are usually not considered‘repair’astheyarepartoftheservicetypicallyoffered.

Inorder toprovidecost-efficient repair services, companies inour sectorshaveestablishednetworksof servicepointsand implementedavarietyof logistics solutionsof convenience,includingonlinemail-insolutions.Repair conducted on a large scale has several advantages: it maximizes quality, safety,effectivenessandproductivityandallowsmanufacturerstolearnaboutdefectsofaproductthroughexperiencesfromthefield.Itextendsthelifeofaproduct.Italsoallowscompaniestooffersuperiorrepairservicesatcompetitiveprices.TherepairnetworksofDIGITALEUROPEcompanies contribute significantly to the circular economy: the environmental impacts ofproducingnewproductsaredisplaced,resourceefficiencyisincreasedthroughreuse,energyuseisreducedandprematurewasteisavoided.OneimportantelementofdeliveringoncustomerneedsforrepairandformakingthecirculareconomyarealityaretheexistingnetworksofauthorizedrepairoperatorsinEurope.Theseare subcontracted or independent professionals that are certified from the company toprovide repair services on their products. Companies ensure the quality of their servicethrough periodic site audits, routine reviews of delivery and quality metrics, external orinternalauditingofstandardsandprocessesused.Theyreceivehighlyspecializedtrainingstoensure they have the technical skills required to repair high tech devices. They are alsotrained on all relevant safety aspects. Within a clearly defined contractual obligation thatensuresqualityandsafetyofthecustomer,theyreceivefurthersupportasneeded.Whenacustomerisinneedofarepair,productscanbeeitherdroppedoffatanauthorizedpartneror retail store;or sent in for repair at a centralized location. The centralized repairoperations benefit fromanorganization,whichwas set up towork at scale. It is thereforeable to provide quality service at competitive prices. Centralized, mid- or large-size repairoperations of DIGITALEUROPE member companies are based, among others, in Finland,France, Germany, Hungary, Poland, Romania, Italy, Czech Republic and the UK. Theseoperationsprovidelocaljobsandareoftenperformedbysubcontractingcompanies.Insomecases,theseareregionalrepresentationsoftheOEMsfromoutsideoftheEUthathavebeensetuptoprovideregionalservices.

11NotethatdefinitionswillbedevelopedintheCEN/CENELECstandardizationworkunderM/543onmaterialefficiency.

DIGITALEUROPE 2 2 10

10

Remanufacturingandrefurbishment

Remanufacturingand refurbishmentasaB2Bbusiness isawell-establishedwayof creatingvalue; such activitieswithin the ICT industry startedover 30 years ago. Remanufacturing islargely a B2B activity, in which ICT companies remanufacture products, e.g. servers,computingequipment,printers,networkingandcommunicationproducts.RefurbishmentofB2Cdeviceslikesmartphonesorlaptopsisanimportantsupplysourceofreusesales.Thesearewell-establishedactivitieswithalong-standingtraditionandanimportantcontributiontothecirculareconomy.Descriptionofrefurbishment

A process thatmay be used in B2B or B2C and that renders theproduct available for reuse through part removal and upgrades/replacements, and testing. Thewarranty that is issuedcovers theentireproduct.FormostDIGITALEUROPEcompanies,therefurbishedproductmaynot be brought to the latest OEM specification or some smallerdefects(suchasalowerbatterycapacity)arenotaddressedaslongasthesedonothavemajorimpactontheuseoftheproduct.Somecompaniescalltheirremanufacturingpractice‘refurbishment’andwould therefore bring the product back to at least productionquality.

Descriptionofremanufacturing

A process primarily in B2B of returning a used, non-functional,discardedortraded-inproduct“toatleastitsoriginalperformancewith a warranty that is equivalent or better than of the newlymanufactured product”.12 The process requires detailed andcomprehensive disassembly and reassembly steps. From acustomerperspective,theproductwillbeina“likenew”conditionboth cosmetically and functionally13 and fulfil all productspecifications. It may incorporate upgrades to reflectimprovementsthathaveoccurredsincetheproductwasoriginallymade.14 Componentsused for remanufacturinghaveOEMqualityandmaybeeitherneworpartharvested.

While remanufacturing/refurbishment is a global business, it has a substantial footprint inEurope. According to the Horizon2020 project ERN15, the remanufacturing/refurbishment

businessintheEUaloneaccountsforanannualturnoverofnearly€30bn, of which €3.1bn are attributed to EEE. More than 2,500firmswithroughly28,000employeesare involved increatingthisvalue for EEE. However, Bitkom’s Product Reuse EuropeanWorkingGroup16cametotheconclusionthatthenumberforICTissignificantlyhigher,ataturnoverof$6,9bnintheEU.

Companies have invested in remanufacturing/refurbishment facilities across Europe.Dedicated facilities andoperationprocessesensureoptimalprocesses,helpmanage supplyand demand and create local jobs. Remanufacturing/refurbishment facilities ofDIGITALEUROPE members and their subcontractors are located, among others, in Poland,Germany,Sweden,CzechRepublic,France,aswellastheUK,Ireland,ItalyandmanymoreEUMemberStates.17ThereisalsoaboomingthirdpartyrefurbishmentbusinesswithcompanieslikeRe-Tek(UK)orTeleplan(theNetherlands).Thelatteralonehandlesmorethan19million

12BSIStandardBS8887-2:2009.13Bitkom,“ICTRemanufacturingintheB2Bmarket–QuestionsandAnswers”,n.d.14EuropeanCommission,“TheBlueGuideontheimplementationofEUproductsrules2016”,Chapter2.1.,26July2016,http://ec.europa.eu/DocsRoom/documents/18027,pp.16-17,states"Productswhichhavebeenrepairedorexchanged(forexamplefollowingadefect),withoutchangingtheoriginalperformance,purposeortype,arenottobeconsideredasnewproductsaccordingtoUnionharmonisationlegislation.Thus,suchproductsdonotneedtoundergoconformityassessmentagain,whetherornottheoriginalproductwasplacedonthemarketbeforeorafterthelegislationenteredintoforce."15EuropeanRemanufacturingNetwork,RemanufacturingMarketStudy,November2015.16Bitkom,“ICTRemanufacturingintheB2Bmarket–QuestionsandAnswers”,n.d.17IbidandEuropeanRemanufacturingNetwork,RemanufacturingMarketStudy,November2015.

$6.9bn turnover of ICT

remanufacturing business in Europe

DIGITALEUROPE 2 2 11

11

devicesperyearandhas5,000employees.18Repair, remanufacturingand refurbishmentoperationsareoftentimes centralizedwithinoroutside the EU to benefit from economies of scale and access to qualified technicians andhigh-techequipment.Bothcentralandde-centralservicemodelsdependontheshipmentofspare parts and used equipment. Millions of products are shipped every year for failureanalysis,in-warrantyandout-of-warrantyrepairs,forremanufacturingorrefurbishing.Remanufacturing is a circular economy best practice as itsbenefits are both commercial and environmental:19 itprolongsthelifeandvalueofaproductandreducestheneedfor newmaterials. It providesoptions to avoidor postponerecyclingandmakesthebestuseofresourcesthathavegoneinto the production of a product. CO2 savings related toremanufacturing have increased 10-fold (across sectors)between2003and2009.20Itprovidesanewcommerciallifefor used equipment, ensures collection of older ICTequipment, delivers the same or better warranty as newproducts,andultimatelysupportsthecreationoflocaljobs.

18Teleplan–lifecyclecareforelectronics,“Teleplanfastfacts”,n.d.,https://www.teleplan.com/explore-teleplan/teleplan-fast-facts/.19Ibid.

20CentreforRemanufacturingandReuse,“RemanufacturingintheUK–asnapshotoftheUKremanufacturingindustry”,2010.

NokiaGlobalAssetRecovery&RemarketingServices

Since 1991, Nokia has been remanufacturing telecommunicationsequipment as an “eco-sustainable” alternative tomanufacturing newequipment.Nokiahasrefineditsbusinesstoprovideavarietyofusedequipment offers. This includes a full and expanding line of Nokiaremanufactured products across all business groups,multi-vendor re-use,buyback / trade-inoffers andClientAssetManagementprogramforclients’surplusinventory,insupportofcontinueduseofitsmatureandend-of-lifeproducts.

10 fold

increase of CO2 savings related to

remanufacturing between 2003 and 2009

DIGITALEUROPE 2 2 12

12

RICOH RICOHisfollowingtheCometCircleTMstrategycreatedin1994anddevelopedinEuropesince2008(seebelow)withtheremanufacturingof used cartridges. In 2012, RICOH launched its GreenLineTM.Whereas manufacturing of new products does not take place inEurope, the remanufacturing businesswas able to create new jobs:forexample,the3Ractivities(ReduceReuseRecycle)atRICOHtodayemploy about 400 people in the Green factory located in France.Remanufactured MultiFunction Printers are offered by RICOHcertifiedasnewwiththesamewarrantiesasnewproducts,butwithalowerenvironmentalimpact.

AssetrecoveryatOcé–aCanoncompany

Océ is active in digital imaging, industrial printing and businessservices. Océ started remanufacturing machines in the early 1980s,and started reusing parts ofmachines in others. In 1995, a separateAssetRecoveryoperationwasfounded.PrintedCircuitBoards,Motorsandcompletemodulesarereusedorremanufactured.Partsareeitherharvested from returned end-of-life machines or from the servicechannel. Used as input materials for new units, they form afundamentalpartofaclosedloopsupplychainmanagement.The environmental benefits range from increasing product lifetime,reducing need for virginmaterials and avoidingwaste. Economically,this strategy decreases costs and ensures that supplying spare partsafter the stop of production is possible. It also constitutes a positivefeedback loop on the quality characteristics of the parts, improvingreparabilityanddurabilityovertime.

DIGITALEUROPE 2 2 13

13

Lexmark Lexmark cartridges are designed and optimized for a cycle ofdisassembly and reuse through the Lexmark Cartridge CollectionProgram(LCCP).LCCPcurrentlyreceivesbackmorethan35percentofcartridgesshippedworldwideandLexmarkisworkingtoincreasethenumberofreturns.Azero landfillandincinerationpolicy isfollowedtoensurethatall theemptycartridgesreturnedfromcustomersarereusedor recycled to their greatest environmental benefit. Lexmarkfocuseson thewaste streamhierarchyandplacespriorityon reuse.Cartridges receivedby theLCCPare inspected for reconditioning. In2015,approximately36percentof thecartridgematerialsbyweightreturnedtoLexmarkwerereusedandLexmarkhasestablishedagoaltoincreasethisto50%by2018.Cartridgesthatdon'tqualifytobeareconditionedcartridge,canstillcomplete the circular economy loop via component reuse ormaterials reuse. Lexmark has developed a process to recycle theplastics from returned cartridges for reuse in new cartridges.TheLexmarktonercartridgeproductlinecontainsonaverageanindustry-leading 18% by weight of post-consumer recycled (PCR) plasticcontent, partially provided through LCCP. PCR plastic has beenimplemented across more than 90 percent of the toner cartridgesthatLexmarksells.By2018,Lexmark'sgoalistoachieveanaverageof25%PCRplasticcontentacrosstheentirecartridgeproductline.

DIGITALEUROPE 2 2 14

14

PrinciplesforlegislatingCircularEconomyandtheICTindustryOnce a product has been purchased, its lifetime can be extended through reuse, repair,refurbishment and remanufacturing - hence avoiding premature wastage. This part of ourbusinessislabour-intensiveandthereforecontributestotheEU'sjobsandsocialagenda.

Significant elements of the circular economy are already a reality in the ICT sector. Reuse,repair,remanufacturingandrefurbishmentareflourishingpractices.DIGITALEUROPEmembercompanies are contributing directly to delivering both the economic and environmentalbenefits of the circular economy. The consumers also benefit from safe, durable, reusableproductsthatareprotectedbywarranties.In order to enable DIGITALEUROPE member companies to expand this business andcontribute further to the circular economy, the following principles should guidestandardizationandlegislationoftheaftersalesmarket:

A) Reuse, repair, refurbishment and remanufacturing should not be

addressedunderwastelegislation.B) Recognise the potential of the reuse, repair, refurbishment and

remanufacturing business of the ICT industry to the Circular Economyratherthanhamperitscontributions

a. Ensuresafetyandqualityof therepairexperienceofconsumersby recognising the trusted status of authorised repair networksandrefurbishment/remanufacturingfacilities

b. ProtecttheIPrightsassociatedwiththeinnovativenatureofoursectoreven intheaftersales,maintenanceandrepairmarket, inparticular with regard to license agreements and access toproprietaryinformation.

C) When legislating ecodesign, set feasible goals, vetted by stakeholders,ratherthanprescribingdesignmeasureswhichhavenotbeenthoroughlystudied,andcouldimpedeproductinnovationoraffectproductreliabilityand functionality. Such an approach empowers the industry to continueinnovating. It also allowsmanufacturers to assess carefully the potentialtrade-offsbetweendurability,reparability,easeofdisassemblyandotherdesignfeatures.

D) Safeguard the “repaired as produced principle” for spare parts21. AsrecognizedinEURoHS,theavailabilityofsparepartsforelectronicsiskeyforallowing the repair, reuseandupgradesofequipmentalreadyplacedon the market.Without this principle, equipment would either becomeprematurelyobsolete,oratbest,increasethecostofrepairandupgrades.

E) Avoid negative side effects on circular economy through revisingconsumerpolicy.

a. Do not revise EU law so that consumer (rather than then thetrader) is allowed to choose the remedy. Thiswould result in asignificant increase of electronic devices unnecessarily beingrefunded or replaced rather than repaired – at a cost and localjobimpact.

b. Guarantees for the period of 2 years should not be revisited.Current rules offer sufficient level of consumer protection.Forcing longer commercial guarantees through legislationmightstifle both competition and consumer choice, whilst increasingthepricespaidbyallconsumers.

F) Facilitatetheflowsoftheinnermostloopsofthecirculareconomy.a. Do not treat products shipped for repair/refurbishment/

remanufacturing as waste and do not place them under theblanketof suspicionof illegalwasteshipment.Thesameappliesfor consumables, components and used parts of EEE that are

21SeeEuropeanCommission,“TheBlueGuideontheimplementationofEUproductsrules2016”,26July2016,pp.17-21.

DIGITALEUROPE 2 2 15

15

beingshippedwiththeintentionofreuse.b. Reduce administrative burden from waste shipment regulation

for shipments of products destined for failure analysis, repair,remanufacturing.22

Followingourrecommendationswouldensurethatthecostsforrepair,remanufacturingandrefurbishmentwouldbereduced.Shipmentprocesseswouldbespedup.Millionsofproductswouldbedivertedfromaprematuredeathandreceiveanewlife.The transition to a more circular economy, where the value of products, materials andresourcesismaintainedintheeconomyforaslongaspossible,andthegenerationofwasteminimised, is an essential contribution to the EU's efforts to develop a sustainable, lowcarbon,resourceefficientandcompetitiveeconomy.

22SeeCorrespondentGuidelinesNo.1onShipmentsofWasteElectricalandElectronicEquipment(WEEE)andofusedElectricalandElectronicEquipment(EEE)suspectedtobeWEEE.

14ruedelaScience,1040Brussels

Tel:+3226095310|info@digitaleurope.org|www.digitaleurope.org

Copyrig

ht©

DIGITALEURO

PE201

7

AboutDIGITALEUROPE

Formoreinformationpleasecontact:SylvieFeindt,DIGITALEUROPE’sSustainabilityPolicyDirector+3226095319orSylvie.feindt@digitaleurope.org

ABOUTDIGITALEUROPEDIGITALEUROPErepresentsthedigitaltechnologyindustryinEurope.Ourmembersincludesomeoftheworld'slargestIT,telecomsandconsumerelectronicscompaniesandnationalassociationsfromeverypartofEurope.DIGITALEUROPEwantsEuropeanbusinessesandcitizenstobenefitfullyfromdigitaltechnologiesandforEuropetogrow,attractandsustaintheworld'sbestdigitaltechnologycompanies.DIGITALEUROPEensuresindustryparticipationinthedevelopmentandimplementationofEUpolicies.DIGITALEUROPE’smembersinclude61corporatemembersand37nationaltradeassociationsfromacrossEurope.Ourwebsiteprovidesfurtherinformationonourrecentnewsandactivities:http://www.digitaleurope.org

DIGITALEUROPEMEMBERSHIPCorporateMembers

Airbus,AmazonWebServices,AMD,Apple,BlackBerry,Bose,Brother,CATechnologies,Canon,Cisco,Dell,Dropbox,Epson,Ericsson,Fujitsu,Google,HewlettPackardEnterprise,Hitachi,HPInc.,Huawei,IBM,Intel,iQor,JVCKenwoodGroup,KonicaMinolta,Kyocera,Lenovo,Lexmark,LGElectronics,Loewe,Microsoft,MitsubishiElectricEurope,MotorolaSolutions,NEC,Nokia,NvidiaLtd.,Océ,Oki,Oracle,PanasonicEurope,Philips,Pioneer,Qualcomm,RicohEuropePLC,Samsung,SAP,SAS,SchneiderElectric,SharpElectronics,Siemens,Sony,SwatchGroup,Technicolor,TexasInstruments,Toshiba,TPVision,VMware,WesternDigital,Xerox,ZebraTechnologies.

NationalTradeAssociations

Austria:IOÖBelarus:INFOPARKBelgium:AGORIABulgaria:BAITCyprus:CITEADenmark:DIDigital,IT-BRANCHENEstonia:ITLFinland:TIFFrance:AFNUM,ForceNumérique,TechinFrance

Germany:BITKOM,ZVEIGreece:SEPEHungary:IVSZIreland:TECHNOLOGYIRELANDItaly:ANITECLithuania:INFOBALTNetherlands:NederlandICT,FIARPoland:KIGEIT,PIIT,ZIPSEEPortugal:AGEFERomania:ANIS,APDETIC

Slovakia:ITASSlovenia:GZSSpain:AMETICSweden:ForeningenTeknikföretageniSverige,IT&TelekomföretagenSwitzerland:SWICOTurkey:DigitalTurkeyPlatform,ECIDUkraine:ITUKRAINEUnitedKingdom:techUK