Making The ICT Supply Chain Sustainable Is Essential For Everyone

David Joosten is President and CEO of Vodafone US Inc., leading Vodafone Business commercial operations throughout North America.

To an outsider, supply chains probably seem simple enough. Make something in one location, then ship it to a new destination, where someone receives it. Right? That’s rarely the case.

Supply chains are almost always deeply complex, interwoven and reliant on many different people and organizations along the way that extend beyond borders. One example of a unique supply chain, one that’s close to home for me, is the ICT supply chain.

The ICT supply chain is actually quite complicated and deeply intricate, involving hardware providers, software providers and managed services. And it’s also not very green—yet. But we’ll get to that. What’s important to consider is the fallout of a supply chain that isn’t sustainable. While that's an issue for the climate and ESG initiatives, it means industries that rely on it are affected, too.

So, what makes this supply chain so complicated in the first place?

Hidden Beneath Efficiencies Lies Endless Complexity

The ICT supply chain is multilayered. Raw materials are involved and sourced globally, which form sensors, chips and processors—most of which are manufactured by highly specialized suppliers. There are also assemblers and distributors, adding to what’s quickly becoming an intricate chain. ICT products also rely on components sourced from different countries, and suddenly the supply chain is victim to geopolitical tensions and economic factors like exchange rate fluctuations.

Of course, that’s far from everything. The rapid evolution of ICT demands that manufacturers and vendors in the supply chain adapt swiftly to emerging technologies and accelerate product lifecycles. At the same time, older components become outdated quite quickly and building new ICT infrastructure can take many years to complete.

There is also cybersecurity to think about. The supply chain can be targeted by cyberattacks, which could introduce vulnerabilities in software or hardware. And what many might not know is that counterfeit components constantly try to weave their way into the supply chain. When they do, they compromise reliability and security.

There’s also regulatory and compliance challenges—brought about by acts like the Digital Operational Resilience Act (DORA)—as well as the sheer diversity of ecosystem stakeholders, all offering different levels of customization and scalability. And of course, it wouldn’t be a real supply chain with a bit of demand volatility thrown in.

A Complex Network With An Environmental Impact

A full breakdown of who’s who in ICT would require a whitepaper of its own, so let’s focus on one particular element of it that’s really important—how sustainable it is. Or rather, how unsustainable it is.

This is a contentious issue. The industry faces considerable environmental, social and ethical challenges, and while there are efforts to improve this, there is a lot of work to do.

The obvious starting point is the environmental impact itself. Raw material extraction (like cobalt) is energy-intensive and leads to environmental degradation. On the topic, manufacturing ICT products and components—especially semiconductors—consumes much power and water. Data centers also consume vast quantities of energy.

E-waste—discarded or broken devices—is a serious problem as well. ICT devices have short lifecycles, which leads to much electronic waste. According to the UN, 53.6 million tons of e-waste were generated in 2019, and only 17.4% of that was properly recycled. That’s $57 billion in gold and other components irresponsibly discarded. Ultimately, while significant progress is being made, the ICT supply chain has work to do before it can be considered sustainable.

How Do We Make The ICT Supply Chain More Sustainable?

What actually needs to happen for the ICT supply chain to become sustainable? Key to this happening is the adoption of a circular economy. It all boils down to the commitments those in the space should—and are willing to—make.

Vendors should start by setting clear sustainability goals and roadmaps, informed by science-based targets. Tie these goals to climate transition plans, where emissions reduction efforts are linked to specific long- and short-term milestones. Renewable energy sources unsurprisingly factor in here. Vendors should consider transitioning to renewables, including power purchase agreements (PPAs) and on-site renewables. ISO 50001-certified energy management systems to track and optimize energy use are useful here too.

There are also a lot of things vendors could—and should—do to be more energy-efficient. Simple starting points include acquiring efficient servers, cooling systems and network infrastructure like 5G. Software is key here, too—invest in energy optimization software that adapts energy consumption to traffic patterns. Managed services is the most obvious route to take here, as there are no upfront costs to the company.

Vendors should focus on circularity too by prioritizing the reduction of e-waste and extending product lifecycles. Transparency is key—providing clear information on environmental impact empowers consumers to make greener choices. Additionally, vendors must embrace robust recycling initiatives, trade-in programs and ethical sourcing practices to minimize waste and dependency on conflict minerals, fostering a circular economy that benefits both the planet and their businesses.

Finally, collaboration and innovation are key to decarbonization efforts. Vendors should partner with ICT and telco providers to align their decarbonization strategies and share best practices so they can influence supply chain emissions. Vendors should leverage solutions like smart energy systems, AI and IoT, which can optimize resource usage and reduce energy consumption.

Answering The Call For A Sustainable Supply Chain

Our way of life is effectively powered by the ICT supply chain. When parts of it aren’t efficient or sustainable, that missed mark trickles down and impacts organizations and people along the way. A supply chain that powers so much of what we do simply has to become circular and sustainable.

The good news is that it’s not as difficult to achieve this as it might sound. Collaboration, teamwork and a willingness to seek out the right technologies and efficiencies are essential and can be straightforward. Now, it’s just a matter of coming together to make it happen.

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