There are many different circular strategies that companies can use to narrow, slow, and close material loops. Let's look at three circular strategies that relate to mobile phones. The first example is GIAB in Sweden. They specialize in slowing material loops by extending product lifetimes through repair. Their business model is based on collaboration with other actors, like insurance companies, logistic companies, and e-commerce platforms that enables them to collect damaged phones and repair or remanufacture them for an extended lifetime. This is a model they called the phone circle. Let's hear more about it. The phone circle is a service for the Swedish insurance companies. It starts with that a client call the insurance company and say, "Hey my phone is broken", and the insurance companies say okay, you have to send it to GIAB and in that exactly time, we get it and notice it in our IT system that's 'Okay, we have a customer here, it's going to send the phone to us. We go through all the phones, look like it is the right phone, it is damaged like the client said, and then we do a short technical look on the phone and then we send it to different companies that can re-manufacture or repair the phone. So, we have two scenarios that as a client, you can get your own phone back if it's just a small damage, but if it's very broken you get a repaired phone or re-manufactured phone actually, within five working days, also a very important thing is that when we ask the client, over 90% of the clients are very happy with this service and they want a repaired phone back, they don't want money because the money they get it's not enough to buy a new phone, so they are very happy that they get a repaired one and it looks like new, and last year I think we repaired around 50-60 thousand smartphones. But GIAB's business model also depends on insurance companies seeing the value in using the phone circle service. So, what's in it for an insurance company? When a client call their insurance company and say, "Hey my phone is broken", today they say, okay, you have to send it to the GIAB, there's 30% that never send it to us. So it's savings for 30% of their claims. So, it's a big business for them but it's also a sustainability work, very important They get data on carbon dioxide emission, the savings and also the waste savings, using our services. So, they get a sustainability report every month that we can say, this is how much you re-used by using us and this is how much that went to recycling and that is data that they can use in their own sustainability report that large companies in Sweden they must do this sustainability report every year. So, we help them with that, it's also about their responsibility, they show their clients that we work with sustainability and we take responsibility for all these products that they actually own. The GIAB model focuses on repair and re-manufacture in the first instance, and if this is not possible the phone is sent for recycling. Recycling mobile phones is part of the business model of our next example Umicore in Belgium. They recycle mobile phones primarily for precious metals that can be sold on to be used again in new products. We receive phones from customers and we are able to recycle both the battery and the handsets, that's quite unique because we're the only company that is able to do that on an industrial scale. There are two flows, one for the handset one for the battery and the handset goes into a big smelter where we put it in together with all the other materials after we have taken a sample, and then we know what we have to recycle out of it. So, when we have determined the sample, we put it in the smelter and then it goes out in different steps, we extract for instance first the copper and then the other impurities and then we make sure that we get the precious metals out one by one, and we use the plastics from the handset as a kind of fuel for our process, so it doesn't get lost and also recapture the process gases to make sure that they don't go outside, they don't come into the environment and on the other hand we get everything out they are transferred into, sulfuric acid so this is for us also an end product that we sell to the market. So, Umicore is able to recover precious metals and use the energy recovery from other materials to power its process. But materials like critical materials still remain a challenge to recover and we're not able to recycle everything from a mobile phone yet. So, with materials like gold in our phone, which we all know is valuable, why are we all mining phones and instead letting a company do it for us? There's a value in there of 1 to €1.5 in one mobile phone, so that's not very much but you need for instance 30,000 mobile phones to get 1 Kg of gold out. So, that means that if you keep your mobile phones in drawers and make sure that they don't get collected there's a lot of material that gets lost and that doesn't get back into the cycle. So we need a lot of phones to get significant amounts of materials but recycling companies can have a hard time getting the phones back. One possible strategy to counter this is for companies to retain ownership of the phone by offering it to the customers in a leasing model or product service model, at the end of which the phone is returned to the producer. The company Fairphone in the Netherlands is running pilots on such a model with some of its business customers. Let's hear more about this project and business model. Until now when we talk about business models, until now we've had a pretty regular or traditional way of earning our revenue which was just by selling devices. In the last six months we started looking at how can we generate our revenue with a different business model that supports circularity as well and supports our very circular product design already. What we've been researching on the legal operational and financial barriers to move to a service model, so instead of putting a product in the market where ownership is transferred from us to the customer because they pay for it, we move into a service where ownership is kept on our side and we just provide the service which is having access to the phone which then later could even be combined with you know, calls and Internet if we would have like a partnership with an operator. What you see there is that it's actually a pretty good business model as in you can earn what you need to earn, and it gives you much more control on what happens with those devices. So, for now we are targeting it and we are starting a pilot to businesses, so not to consumers to start with. We also have to think that ownership comes with certain responsibilities, so if you own stuff, you need to know what it's made of, what do you have to do with it when its end of life, how it's repaired. Unfortunately, a lot of people and companies don't need or don't want to have that responsibility, so what I say is like then they also don't need to own the stuff. If you buy today a TV or a laptop, okay, you've became the proud owner of thousands and thousands of chemicals of very complex parts that are put together that are very difficult to separate and recycle. Do you want to have that responsibility? I don't think so actually, I think that responsibility should be put back to the manufacturer or joint ventures of different actors of the supply chain instead of just the consumer. It sounds promising. So, why don't we see more leasing of phones? I think we've been for a very long time used to own the stuff that we use. This is a mindset that needs to change and it's changing already. I don't own a car most of my friends don't own a car, but we do have a car anytime we need it, we just rent it or we just get it from around the corner with our card. This is changing though for certain product categories will take longer I think for things that are like a smartphone, that are so personal and so related to privacy, personal data, etc. this will take even longer. So, our pilot on Fairphone as a service now is really geared at companies, because we think that there are very specific advantages for them, in terms for instance or what to do at the end of life of products. When we have the lessons learned from these pilots and we can start thinking about how to go into the consumer segment with the same proposition. Another thing but I think it's more like our role as brands is convenience, it has to be convenient for the consumer and that's sometimes pretty hard I have to say, because we need to design all the systems websites, every touch point of your brand in a way that is super streamlined and for a small manufacturer like us that's not always the easiest. So there's still some challenges, but some phone producers are starting to look seriously at the leasing business model. There are even some phone service providers who offer the chance for customers to lease a new model after a year or two and capture the value of the return phone on a secondhand market. But there's an advantage to the model in which it's the producer that retains ownership, and that is they are the ones who know the most about the materials and components in the product and are able to change the design of the product to work better in a circular model. But service models for phones does not result in environmental improvements automatically, the sustainability of this business model depends on whether material loops are slowed and closed and this requires assessment of environmental impacts to ensure that there are really benefits. To do this we need ways to assess those benefits as well as new ideas and innovation and this is just what we're going to look at in module three of this course.
