Canalys Forums 2022: sustainable channels

The environmental sustainability landscape for the technology industry is evolving quickly, driven by government legislation, customer demand and growing societal pressures. Canalys has an ongoing research practice focused on environmental, social and governance (ESG) issues and sustainable channels, and is committed to bringing together the channel community with our Sustainable Channels Initiative. ESG issues will form the basis for several discussions at the Canalys Forums 2022.

Expert Hub panels between senior executives from channel partners and vendors will likely focus on managing energy in the light of ESG goals and increasing costs. We’ll also look at the business of growing the circular economy and how this can drive revenue growth and meet KPIs. As part of our Canalys Expert Interview series in the run-up to the Canalys Forums, we talked to our analyst specialist, Rachel Brindley, Senior Director, Channels.

At the Canalys Forums 2021, you hosted Expert Hubs on the circular economy. What did you discover and has anything changed?

The technology industry plays a vital role in driving the circular economy. Some partners have focused on this for many years. But as concerns over climate change, carbon footprints and ewaste have grown, customer requests for sustainable solutions are increasing exponentially. The circular economy poses some challenges for vendors and partners. Taking back old IT equipment, refurbishing and reselling it often conflicts with partner program revenue requirements and sales teams need training (and incentivizing!) to resell refurbished equipment. The process of taking back equipment that customers have on-site is not straightforward, nor is the data erasure to ensure data privacy compliance. Government regulations are driving some change, and this adds to the complexity for vendors and partners spanning more than one country, often requiring a slightly different strategy, but it also represents an opportunity and shouldn’t be seen as a barrier to managing these programs. The component shortage and supply chain challenges of the last 18 months have changed attitudes and perceptions around refurbished kit. There is also a growing interest in technology lifecycle management and a gradual acceptance of “leasing” IT (like the automotive industry), which is either handed back, upgraded or has its lease extended at the end of the contract. There is still much to do, remembering that the circular economy goes right back to developing sustainable mineral extraction, manufacturing, packaging, shipping and then re-use, recycling and asset disposal at end of life. It is exceptionally disruptive to the business model many have been used to and requires driving from the board level down.

How are partners and vendors implementing the circular economy in their organizations?

There are several different ways partners are implementing circular practices in their organizations. A tiny number of partners have been able to develop their own warehouses and can refurbish and recycle used equipment. But the vast majority lack the resources, space and skills to do this. Instead, they have partnered (or are actively looking to) with IT asset disposition (ITAD) companies or distributors, or rely on vendor-provided services. Partners would prefer vendors to certify approved ITAD companies (to enable compliance for customer ESG reporting). The distribution community has been slower to move than ITAD companies. We see this beginning to change as more partners ask their distributors for support. Vendors are also moving to support partners by offering take-back services, with a few offering sales incentives to drive uptake.

How much value will be created for partners and vendors if circular strategies are implemented?

The commercialization of the circular economy is one of the biggest disruptors faced by the technology industry. And Canalys believes this has been one of the biggest inhibitors to development so far. But with sustainability now high on CxOs’ priority lists, alongside the need to demonstrate progress to all stakeholders on sustainability and building sustainable business models, this is changing. For those investing in circular strategies, value is being created by showing a commitment to creating a more sustainable business model. It is increasingly gaining financial investor attention (as shareholders look for investments in sustainable companies). It also highlights to customers and employees that a particular organization is invested in supporting ESG objectives.

What one piece of advice do you have for partners and vendors as they consider how to spark conversations around sustainability in 2023?

The key piece of advice is to evaluate how frequently the question of what your organization is doing about sustainability is discussed. What metrics do you have as an organization? What actions is your organization taking? Then it’s to bring those discussions into conversations with your partners and customers.

It’s also worth reminding everyone that the technology industry can drive sustainable change – using technology to do good!

Why should vendors and the channel attend the Canalys Forums?

The Canalys Forums offer vendors and the channel the most wonderful opportunity to come together to discuss and share their broad and diverse experiences in an independent environment. It’s the perfect opportunity to learn, listen, share and make new connections.

Expert Hub discussions will take place physically and virtually at the Canalys Forums 2022, hosted by Canalys analysts. They are panels for the channel to discuss the channel​ and to help inform the vendors participating on what’s real and what’s not. Up to 16 senior leaders take part, the majority from channel partners, but also up to four executives from vendor sponsors. Attendees can watch, comment and ask questions. Partners and vendors wanting to secure places should register their interest or contact their Canalys account manager now.