The Flawed Circular Economy Narrative

Executive Summary

The circular economy is often presented as the answer to the environmental challenges posed by linear production and consumption models. However, when Original Equipment Manufacturers (OEMs) claim to champion circularity, their practices frequently tell a different story. Using Cisco’s circular economy initiatives as a case study, this whitepaper critically examines the gaps in OEM strategies, including forced upgrade cycles, selective sustainability metrics, and insufficient lifecycle accountability. It also explores pricing strategies and flawed practices, such as offloading waste to charities, that undermine genuine circular economy principles. We conclude with recommendations for aligning OEM strategies with the true ethos of circularity: reducing waste, extending product lifecycles, and balancing extraction with resource recovery.

Introduction

OEMs in the Information and Communications Technology (ICT) sector face growing scrutiny over their environmental impact. Circular economy initiatives, including those from industry leaders like Cisco, promise progress. However, these strategies often fail to address the root causes of waste and overconsumption, perpetuating a model that is more marketing tool than meaningful change.

This whitepaper explores the systemic issues within OEM-led circular economy approaches and offers actionable solutions for a more authentic and impactful strategy.

Key Challenges in OEM Circular Economy Strategies 

1. Producer-Driven Waste Generation

OEMs profit from driving consumption cycles, often through planned obsolescence and frequent hardware refreshes. While they claim to embrace modularity and repairability, many actions contradict this narrative:

• Forced Obsolescence: Legacy devices are routinely incompatible with newer systems, leading to premature disposal.
• Balancing Waste in the Supply Chain: A true circular economy requires that OEMs reclaim and repurpose materials at scale. Yet many companies fail to integrate enough recovered materials back into their supply chain, leaving a substantial gap between what is extracted and what is reused.

  2. Case in Point:Cisco Devices and Stackability

Cisco’s networking hardware exemplifies this disconnect. Stackability, a critical feature for scalability, is often restricted between generations of devices. This limitation:

• Forces customers to replace entire systems rather than upgrading incrementally.
• Contributes to unnecessary e-waste and increased costs for users.
• Misses opportunities to align with circular economy principles by failing to ensure backward compatibility.

 3. Selective Sustainability Metrics

OEMs frequently highlight isolated achievements, such as packaging improvements or minor increases in recycled materials. However, these metrics often mask the larger picture:

• Neglect of Material Balance: While focusing on packaging, companies overlook the lifecycle impacts of high-impact materials like copper, silver, and palladium, which remain under-addressed in sustainability plans.
• Offloading Waste to Charities: Donating outdated or unsellable products to charities is often presented as a sustainable practice. In reality, charities lack the resources to manage or recycle these items effectively, shifting the burden of disposal rather than addressing it. True circularity demands that OEMs take full responsibility for their waste.

4. Limited Lifecycle Accountability

A critical flaw in many OEM strategies is their limited responsibility for products after sale:

• E-Waste Management: Less than 20% of global e-waste is effectively recycled, and OEMs often fail to ensure that their devices are handled sustainably at end-of-life.
• Missed Circular Opportunities: Instead of prioritizing refurbishment and repair, many products are retired due to pricing strategies or compatibility limitations, not physical failure.

5. Pricing Strategies That Undermine Circularity

OEMs’ pricing models often incentivize customers to replace rather than maintain products:

• High Cost of Maintenance: Support costs are frequently higher than the cost of replacing hardware, forcing businesses to choose the cheaper, less sustainable option.
• Asset Replacement Costs: The price of new devices is often strategically positioned just below the cost of extending the life of existing systems, subtly pushing users toward replacement.

These strategies actively discourage repair and reuse, perpetuating a linear consumption model under the guise of circularity.

 6. Interoperability and Forced Upgrade Cycles

Interoperability between generations of hardware is often limited, enforcing unnecessary upgrades:

• Software Incompatibility: Legacy hardware often loses functionality due to unsupported software updates.
• Planned Stacking Limitations: As seen in Cisco’s devices, generational incompatibilities force businesses to retire functioning hardware prematurely, undermining modularity and repairability.

7. Governance Without Integration

OEM governance models often focus on scoring circularity after designs are finalized, rather than embedding sustainability from the outset. While committees and evaluation tools are steps forward, they fail to challenge core business priorities that drive overproduction and waste.

Recommendations for Authentic Circularity

1. Reclaim and Repurpose Resources
   OEMs must balance extraction with recovery by:

• Scaling up the integration of recovered materials into new products.
• Committing to transparent reporting on the percentage of waste reintroduced into the supply chain.

  2. Rethink Pricing Strategies

• Align Costs with Sustainability: Make maintenance and support costs competitive with replacement to incentivize repair and reuse.
• Offer Flexible Ownership Models: Explore leasing or product-as-a-service options that prioritize product longevity over sales volume.

 3. Design for True Interoperability

• Ensure backward compatibility between older and newer devices to extend hardware lifespans.
• Invest in firmware updates and upgrade kits that enhance legacy systems without requiring full replacement.

 4. Take Full Responsibility for Waste

• Eliminate offloading waste to charities as a default solution; instead, prioritize refurbishment, recycling, and transparent disposal practices.
• Partner with certified recyclers and refurbishers to close the loop on e-waste.

 5. Integrate Circularity Across Functions

• Embed circular principles into every stage of the product lifecycle, from design to marketing and sales.
• Align executive incentives with measurable sustainability outcomes.

Conclusion

OEMs in the ICT sector have the potential to lead the transition to a circular economy, but their current strategies often fall short. Issues such as pricing models that discourage repair, reliance on forced upgrades, and selective sustainability metrics highlight a gap between rhetoric and reality. For OEMs like Cisco, true circularity requires systemic change: reclaiming materials, rethinking pricing, and designing products for extended use.

The future of the circular economy depends on holding OEMs accountable for their actions, not just their narratives. It’s time to shift from incremental improvements to genuine transformation, ensuring that circularity is more than just a marketing tool.