A study by MIT Sloan and BCG found that although 90% of executives find sustainability important, only 60% of companies incorporate it into their business strategy. This stark statistic highlights how difficult it is to motivate business leaders to make changes for the benefit of the environment.
At Component Sense, we champion the UN Sustainable Development Goals and know the advantages of circularity firsthand. Here are 10 reasons electronic manufacturers should reduce waste, lower their carbon footprint, and conserve resources.
1. Increasing brand perception
United Nations COP28 (Conference of the Parties) was the largest event of its kind on record, garnering interest from around the world. Now more than ever, the general public is paying close attention to what goes into the products they consume. 81% of global consumers feel that companies should do their part to improve the environment.
By making sustainability-focused changes to your business now, you are sending positive signals to potential customers. Building brand trust could plant the seed for new business in the future.
2. Supply chain resilience
Looking after natural resources is not just a selfless act to benefit future generations; it can prevent environmental-related business disruptions here and now. In 2021, Taiwan experienced its worst drought in 56 years. TSMC (Taiwan Semiconductor Manufacturing Co Ltd) uses more than 8.9 million gallons of water daily to operate a single fab (fabrication plant). It is estimated that the company spent over $25 million on water trucks to remain in operation that year.
Studies describe a close link between rising global temperatures and severe weather events, including droughts and storms. The drought in Taiwan is just one example of weather-related supply chain disruptions. Since 90% of a company’s impact on the environment comes from the supply chain, pivoting to a circular business model can interrupt this feedback loop.
3. Attracting new investment opportunities
Sustainability does not need to come at the cost of profit. Making environmentally driven business decisions can also impress investors. Traditional investing involves pledging money to opportunities that carry risk with the hope of a positive return. However, this is not the sole motivating factor for everyone.
Other investors you could hope to attract include:
- Impact investors: Investing to solve an environmental or social problem.
- Activist investors: Investing in a company to influence operational changes.
- Sustainable investors: Investing in companies that combat climate change.
4. Reducing operational costs
Prioritising sustainability can reduce costs and affect operating profits by up to 60%. When electronic manufacturers work towards circularity, they often optimise resource usage, reduce electronic waste (e-waste), and minimise supply chain-related pollution. These changes can reduce production costs and minimise waste disposal fees.
5. Attracting top industry talent
Climate quitting is an increasingly popular trend, with employees leaving their roles to work for a different company that is more environmentally responsible. Many climate quitters are willing to take a pay cut to move to greener pastures, as working for an ethical company is a source of pride. To attract top talent who value sustainability, electronic manufacturers demonstrate their commitment. 
“Working within a company devoted to sustainable practices transcends mere occupation. It enables me to integrate my personal values into the work that I do, with the planet's well-being bringing a greater purpose to my life. My work really embodies what it means to champion our beautiful Earth,” said Kris Ward, Component Sense Account Manager.
6. Complying with local regulations
Even before COP28, measures were implemented to encourage electronic manufacturers to reduce their environmental impact. An example of such rules and frameworks is the Sustainable Finance Disclosure Regulation (SFDR). The EU outlined how those participating in the financial market must disclose their sustainability efforts.
The SFDR aims to encourage environmentally driven private investors to help the EU transition to a net zero economy. By prioritising sustainability across your supply chain, you stay compliant and could capitalise from such incentives.
7. Attracting new business partnership opportunities
As well as attracting top industry talent, leading a sustainable supply chain can allure other businesses. By partnering with like-minded companies with a proven corporate social responsibility record, both parties can increase brand perception and often profit.
As end consumers look to impact the environment positively with their wallets, they opt to pay for ethically made electronics. OEMs (original equipment manufacturers) and EMSs (electronics manufacturing services) should stipulate working with chipmakers that only ethically source rare earth elements to accommodate consumer habits.
8. Inspiring change in the industry
As the saying goes, be the change you want to see in the world. A circular electronics industry benefits the globe. If you want to inspire other electronic manufacturers to make environmentally-driven changes, it is essential to talk about your own experiences.
Share your wins, talk about your challenges, and educate others with your ideas. Utilising your company’s blog (just like we are now) can be a great place to start.
9. Driving innovation
As anyone working in the electronics industry for over a few years would know, innovation is essential to stay competitive. A report from ZipDo found businesses that prioritise innovation grow at a 16% higher rate than those that do not.
Sustainability can be a fantastic driver of innovation, as decreasing carbon footprint and reducing reliance on finite resources requires thinking outside the box. This kind of forward-thinking can be valuable to come up with ideas that stand out in a cluttered market.
10. Increased productivity
Employees who are engaged are often far more productive. The challenge lies in understanding the key motivators to maximise staff performance. Of course, money is highly valued by nearly everyone. But the second motivator, especially in young people, could be sustainability.
A study by HRreview found that 42% of workers would take a job that pays less as long as the company had greater corporate responsibility. For electronic manufacturers, greater productivity means a higher output. Ignoring circularity could be a costly mistake if sustainable practices are proven to motivate employees.
Is reducing excess the first step on your sustainability journey?
There are many areas of the supply chain to consider when making changes in the name of sustainability. Taking control of your excess and obsolete (E&O) component stock is an easy place to start.
Thanks to our partnership with global logistics company DSV, Component Sense can consign and redistribute your E&O inventory while keeping stock local. This approach means you can get parts back quickly if needed, and it also reduces pollution from unnecessary shipping. Read more in our blog.