3 min read 21 Nov 22
Technology is constantly evolving with new model phones, tablets and laptops released on a yearly basis. But our dependence on gadgets comes with consequences, most notably in the form of e-waste.
E-waste encompasses a variety of devices using batteries or electricity to function, including household appliances such as fridges, as well as tablets, smartphones and wearable technology.
But what happens to these devices when they are discarded? According to the latest United Nations Global E-Waste Monitor, regions such as Europe, East Asia and North America are primary exporters of used e-waste to Africa, Southeast Asia, Central America and South America – where there are “low recycling rates and a high presence of informal workers in the domestic sector3”.
In 2019, just 17% of the 53.6 million metric tonnes of global e-waste generated was reported as collected and recycled, meaning high value materials such as gold, silver, platinum or copper were essentially dumped or burned instead of being treated formally and recovered4.
And then there are the other toxic materials found in our everyday gadgets to take into account when discarding old tech, as well as the impact on workers enshrouded in toxic smoke as they burn parts to dispose of them.
The Waste Electrical and Electronic Equipment Forum predicts that, of the estimated 16 billion mobile phones possessed worldwide, around 5.3 billion of them could become waste in 20225. If practices are not adapted to better deal with the disposal of our everyday appliances and devices, the amount of e-waste generated could reach 110 million metric tonnes6 within the next 30 years.
So, what potential opportunities are available for investors seeking to mitigate the amount of e-waste generated, while providing a potential option for populations to access increasingly necessary technology at an affordable cost as well as generating sustainable cashflows for investors?
We believe one route towards mitigating the escalating issue of e-waste, while offering customers a more flexible and affordable way to access devices over a designated period rather than an upfront sum, is to invest in companies offering subscription-based technology services, particularly where demand is high.
M&G has financed tech rental firm, Grover, through an innovative Asset-Backed Security (ABS) deal. It is the sole investor across the debt tranches of the bi-laterally negotiated pan-European ABS facility with Grover providing the first-loss equity capital.
“In our view, circular economy models like Grover can improve access to technology while having the dual benefit of reducing resource consumption and mitigating e-waste,” explains Zachary Webb, Head of Investments – EMEA, at Catalyst.
M&G has created a robust structure, in-line with the standards of public market ABS issuance, which delivers for the different risk-return profiles of our various funds and respective institutional clients.
Grover is seeking to accelerate a societal shift away from tech ownership towards a rental model designed to keep products in use for longer, and precious materials out of landfill. If the asset is returned to Grover, it is graded before being refurbished and recirculated to the end of its usable life.
Subscribers get access to a wide range of over 5,000 tech products, including smartphones, laptops, virtual reality gear, wearables and smart home appliances on a flexible monthly rental basis.
The business has seen rising demand from customers in Europe through its operations in Germany, Spain, Netherlands, and Austria.
Grover estimates that in population terms, the total addressable market in their current markets is 185 million people aged between 20 and 49 years old. With 184,000 active customers as of December 2021, this implies that there is significant scope for increased penetration in the existing jurisdictions.
Grover’s founder and CEO, Michael Cassau, sees technology as a basic human right, and makes it the company’s mission to advance digital fluency in the world by allowing people to benefit from the technology they need. Grover allows people to access technology without getting into debt, by offering devices through its subscription model, which ultimately cuts down on e-waste in the process.
In the current economic environment, this basic need for technology – now integrated across many aspects of our daily lives – is out of reach for many as they struggle with an ongoing cost of living crisis.
Cassau said: “With persistent inflation, this is a demand that many cannot afford, and it’s essential we make sure access to tech is equitable. In the last months, we’ve been seeing the tech rental movement gaining further momentum as consumers turn to more flexible and sustainable solutions amid increasing costs of living.”
The value and income from a fund’s assets will go down as well as up. This will cause the value of your investment to fall as well as rise and you may get back less than you originally invested. The views expressed in this document should not be taken as a recommendation, advice or forecast.