The Eco Rating for smartphones is coming to Latin America

The smartphone Eco Rating is an initiative driven by the five largest European carriers (Deutsche Telekom, Orange, Telefónica, Telia Company and Vodafone). Smartphones are rated on the environmental impact of their production, transportation, use and disposal, helping consumers make unbiased decisions when choosing a phone and motivating smartphone vendors to focus on sustainability.

Smartphones are scored from one to 100 depending on how they perform in five categories: durability, repairability, recyclability, resource efficiency and climate efficiency. The scores will be displayed at operators’ points of sale.

The Eco Rating comes to Latin America

Based on Vodafone Group’s H1 FY22 financial report, published 16 November 2021, the Eco Rating labeling scheme is expected to launch soon in Argentina, Chile, Colombia, Ecuador, Mexico, Peru and Uruguay. Operator Vivo (a Telefónica subsidiary) has been rolling out this initiative in Brazil, where it was launched at the beginning of November. But it is unclear if the doors are open for other operators to join, which would make a big difference.

A potential game-changer for the Latin American market

Rolling out a harmonized rating system worldwide will force smartphone vendors to adopt eco-friendly practices and processes for the entire lifespan of their products, from production to disposal, regardless of where they are sold. This will also encourage their suppliers to sign up too. It could also contribute to setting new standards in many other industries globally, as manufacturing lines and components tend to be shared by several product categories, not to mention transportation and device disposal.

Operators in most Latin American markets accounted for more than 40% of shipments in Q3 2021. If the Eco Rating initiative is fully rolled out, it could be a game-changer, as very few smartphone vendors could afford to reject working with operators in the Latin American region. Therefore, the practice of shipping out-of-date models or smartphones with specific variations, such as downgraded processors and screens, to Latin America could come to an end, though it could also escalate shipping times and ASPs.

Potential problems

As with any initiative of this nature, there are several things that could go wrong:

• A lack of independence: it is vital that the scoring entity is totally independent to avoid ratings being swayed by any particular economic interest.
• A lack of resources: a dedicated team must lead the Eco Rating scheme to avoid it becoming yet another ESG initiative that withers and dies shortly after launch.
• A lack of participation: it is vital to include as many regional and local operators as possible to achieve a global impact and avoid smaller operators falling outside the scheme.
• Competing eco ratings and labeling: there may be other forms of rating, which could be redundant or contradictory to the existing one. They could be established by different governments, other channels or even smartphone vendors that disagree with the Eco Rating system.
• Telefónica leaving Latin America: Telefónica, the telco leading the initiative in Latin America, is slowly pulling out of the region, save Brazil, to avoid being so exposed to the area’s volatility. It is looking to restructure its debt by selling its fragmented HispAm operation. If no other operators join the Eco Rating scheme, it would fall apart as soon as Telefónica goes.

In a nutshell, the Eco Rating for smartphones is a remarkable initiative to educate consumers and push smartphone vendors and their suppliers to move to environmentally-friendly practices. The fact that it is a mandatory and global initiative will avoiding unequal standards and country-level labeling, which can favor local vendors. Despite there still being potential risks for the scheme, operators’ efforts in rolling it out and the ongoing marketing investment will make consumers and organizations more conscious of the environmental impact of their technology products, and in return provide positive motivation for technology companies in Latin America to work on more localized ESG schemes.