The Rise of the Circular Economy in IT: A Guide for CIOs

As environmental concerns intensify, organizations are increasingly adopting circular economy practices within their IT management strategies. Whereas the benefits – both environmental and economic – are becoming clearer, Chief Information Officers (CIOs) face unique challenges in implementing these initiatives. This article explores the key considerations for CIOs looking to embrace a circular IT model, drawing on insights from Forrester and IDC.

What is the Circular Economy in IT?

The circular economy, as defined by Forrester, is a model where materials, products and services are designed for longevity, reengineerability, and recyclability, and are kept in circulation for as long as possible. Unlike the traditional linear economy – “seize, develop, dispose” – a circular approach focuses on minimizing waste and maximizing resource utilization. In IT, this translates to designing devices with fewer materials, and ensuring end-of-life products are captured and repurposed.

The Current State of Circular IT Adoption

Despite growing awareness, widespread adoption of circular economy principles in IT remains limited. Forrester’s 2025 Priorities Survey revealed that only 31% of organizations actively engage in circular economy initiatives, despite many contributing to aspects of the model like improved waste management or carbon footprint reduction. This suggests a gap between intention and implementation.

Key Metrics for a Circular IT Strategy

Developing a successful circular IT strategy requires a deep understanding of sustainability metrics across the entire lifecycle of devices and systems. According to Abhijit Sunil, a senior analyst at Forrester, these metrics center around :

• Embodied Carbon: The total energy and resources used in manufacturing, distribution, and disposal of a device.
• Operational Emissions: The total resources a device consumes during its lifespan.

Understanding these metrics allows CIOs to make informed decisions about device refresh cycles and overall IT infrastructure management.

Strategies for Implementing Circularity in IT

Several strategies can assist CIOs move towards a more circular IT model:

• Closed-Loop Partnerships with OEMs: Collaborating with equipment manufacturers like Cisco, Lenovo, HP, or Dell to ensure responsible return and recycling of IT assets at the end of their life. These partnerships can also provide data security during the decommissioning process.
• Asset Lifecycle Management: Shifting the focus from simply selling or disposing of old equipment to managing it as a valuable asset throughout its entire lifecycle.
• Refurbished and Renewed Equipment: Considering the purchase of refurbished or renewed devices, which can offer significant cost savings (around 20%) while meeting performance requirements.
• Network-as-a-Service (NaaS): Utilizing NaaS providers like Megaport to virtualize network infrastructure, reducing the need for physical hardware and improving efficiency.
• AI-Powered Efficiency: Investing in Artificial Intelligence to optimize network management software, leading to greater energy efficiency.

The Economic Benefits of a Circular Approach

While sustainability is a key driver, the circular economy also makes sound business sense. CIOs can explore opportunities to supplement budgets by selling used equipment or purchasing refurbished alternatives. Shifting to an Operating Expenditure (OPEX) model through partnerships with vendors can provide greater flexibility and scalability.

Challenges and Considerations

Implementing a circular IT strategy isn’t without its challenges. CIOs must address:

• Security Risks: Protecting sensitive data on retired devices.
• Capitalization Rules: Navigating accounting regulations related to hardware leasing versus ownership.
• Lack of Unified Structure: Ensuring circular economy initiatives are coordinated and consistent across the organization.

Looking Ahead

The circular economy is poised to become increasingly vital in IT, driven by both environmental concerns and economic incentives. As regulations evolve and sustainability metrics become more prominent in supplier evaluations, CIOs who proactively embrace circular practices will be well-positioned to drive innovation, reduce costs, and contribute to a more sustainable future.