Circular Economy Success

In an era where sustainability is at the forefront of corporate responsibility, Oracle has developed a closed loop, circular supply chain to reuse retired assets from data centers.  A circular supply chain is one that connects the ends of a linear supply chain (make - use - discard) via reuse and recycling.  This effort, managed by Oracle's Reverse Supply Chain Operations team, helps us tackle the environmental ramifications of producing products.   

While recycling is a positive step toward green solutions, the process of converting assets into reusable materials generate greenhouse gas emissions.  For this reason, recycling is not always the best solution.  The ideal sustainable product maximizes usable life and minimizes its carbon footprint when 100% of the product is recycled and nothing is landfilled. To model sustainability development, Oracle can extend the lifespan our equipment, thereby reducing the negative environmental impact.

 The hierarchy of green decision making in hardware applications:

1. Refuse - Refuse materials that do not align with sustainability efforts.
2. Reduce - Reduce the carbon footprint by using products that maximize performance and have been designed with the environment in mind.
3. Reuse - Repurpose whole or partial computing solutions.
4. Recycle - Convert retired assets into reusable material.

 By following these principals, we reduce the volume of materials that go to landfills, ultimately causing pollution, leaching and greenhouse gas emissions.

Oracle's Put On Market (POM) data represents the volume of hardware products that Oracle sells into a jurisdiction, encompassing all hardware sold by Oracle including third-party electronics that comprise each assembly.  On average, Oracle puts 19 million pounds of equipment on the market each year, equivalent to the weight of 206 empty Boeing 737 airplanes. To ensure these products are recovered responsibly, the Oracle Take Back program leads our recovery of products from internal datacenters as well as external customers. Materials collected are reused internally, refurbished for sale externally, and recycled.  Every year, Oracle reuses or recycles over 99% of the products it takes back.

Through equipment traceability, Oracle has greater visibility into collections residing in internal data centers. However, geography, trade regulations and financial requirements are some of the obstacles that reduce our Take Back success.  Success is further hindered when external customers are offered other options for equipment disposal in addition to Oracle's reclamation. We encourage customers to return hardware equipment to Oracle to maximize circularity of our products.

 As Oracle continues to expand our internal datacenter footprint, we expect to increase the volume of product we take back.  Since 2019, we have seen >10% annual growth in product returns. In part, this is due to improved collection methods and the deepening of collaboration efforts with datacenters and engineering teams to ensure solutions returned are fit for reuse.  During this time, Oracle has collected an average of 2.5 million pounds of equipment, annually.  These products would have put on the market approximately 5 years prior, assuming a service life of five years. This offset helps us forecast the volume of returns in years to come. 

 The logistics of hardware returns requires attention to detail. Oracle’s Take Back team has developed a formula for global returns that takes into consideration packaging availability and reuse, secure and cost efficient transport, and scheduling to meet demands of project timelines.  Once received, each shipment is assessed for usability.  The opportunities for used equipment are wide, ranging from component harvesting to refurbishment of spares to remanufacturing whole computing solutions. 

 The largest project involving datacenter returns concluded in 2021.  Over 10,000 retired servers and accompanying rack products were returned to Oracle and directed to Oracle’s Remanufacturing Organization.  The strategy for this project was to reconfigure the servers and racks into new solutions for other datacenter applications.  The project lasted 2.5 years with a cost recovery value exceeding $100M.  Avoiding the replacement of retired assets with brand new equipment yielded a significant financial and environmental benefit. Further, we calculated 70% carbon emissions savings from transporting returns via ground versus the shipment of new materials via air. 

The EPA's Waste Reduction Model helps organizations quantify carbon emissions saving through alternate waste management practices (in our case, reuse and recycling).  All product returns, including our 2.5 year project from 2019-2021 enabled a 33,000 MTCO2e (metric tons of carbon dioxide equivalent) savings.  This is equivalent to greenhouse gases emitted from 2,800 passenger vehicles driven for one year or CO₂ emissions from 1.5 million gallons of gasoline consumed or 1,600 homes' energy use for one year.  In terms of carbon sequestration (the process of removing CO₂ from the atmosphere), the savings is equivalent to the work of 16,000 acres of U.S. forests in one year.

While Oracle’s Take Back and Remanufacturing teams had primary roles in enabling the successes of this project, generating the opportunities for a successful circular economy lies in the responsibilities of many roles throughout a hardware business. 

• Hardware Design Engineers apply Design for Environment principles into specifications to continuously improve all aspects of sustainable products. 
• Sourcing and Procurement teams develop technical and supply chain opportunities to support hardware reuse, especially beneficial today considering shortage-instigating supply chain issues.
• Manufacturing Operations teams develop in-factory processes to accommodate used hardware.  This includes both the assessment and testing of older models of equipment, and management of inventory as they navigate challenging tax implications.
• End Users need to ensure the integrity of retired assets is maintained to enable reuse.
• Compliance teams ensure use and shipment of used equipment is compliant under current regulations. 

There isn't a single organization that solely owns or enables circularity of Oracle's hardware products.  Each one of us can make an impact and together, we can make a difference.