It is often said that you should lease, rent, commercially share or pool things instead of owning them and that this is more circular. It’s called Product-Service-Systems (PSS) and the idea is that this should keep products in use and thereby lower their environmental footprint. Consumers are told to buy a function or access instead of a product. Products are this way turned into services.
A lot of research money, both corporate and public, is put into realizing these ideas in practice. The problem, as I have written about before, is that research already indicates that it is not as simple. As Tukker (2004) writes, the idea that PSS will automatically result in an environmental-economic win-win situation is a myth. In the following, I list some reasons why leasing, renting and pooling might not be more environmentally friendly than owning.
The first issue is transport. When you switch products, for example when participating in a fashion library, you need transport to pick up the new rented items and this transport and its environmental impact may off-set any benefit. Zamani et al (2017) included customer transport into their life-cycle analysis and showed that for clothing libraries transport has a higher climate impact than for example washing. The authors conclude that few customers and keeping the clothing for a long time was the most environmentally friendly. However, this is rarely the idea with such libraries or renting services.
One reason why for example renting is supposed to reduce environmental impact is because access to the product is complicated, which should reduce its use (Tukker, 2004). Renting, leasing and pooling models are most likely to have a positive environmental impact if they reduce consumption (Tunn et al. 2019). Thus because you have to take the detour and arrive within the fashion library’s opening hours you will use the service less and rent fewer new clothes. If companies knew this, however, they might be less inclined to try a PSS model. Moreover, there are many ways, apart from PSS models, to discourage from consumption.
An issue with the above argument, that renting should decrease consumption, is the rebound effect. This means that any leased, shared or rented item has to replace something you would otherwise buy to have a positive environmental impact. In the case of fashion, there is a significant risk that customers both buy what they want and then on top rent clothes or subscribe to a fashion library. Maybe you buy the basic and classic items as you have always done but then also start to rent the fun and trendy items that you never would have bought. In such cases, the rented items increase fashion consumption instead of replacing existing consumption. This is simply an increased environmental impact, there are no savings here.
There is also a risk that you treat the rented or shared items less carefully since they are not yours. Michelini et al. (2017) and Tukker (2004) argue that use-oriented business models can hinder the products from circulating longer due to careless use by the users. In such cases, less responsible user behavior increases environmental impact. The e-scooters on town are a prime example of such reckless treatment of rented products. If users paid the full price and owned the scooter, they might treat it more carefully.
The products best suited for leasing and rental are durable ones, usually sold at high prices, which also makes leasing or renting more appealing to customers who might lack the funds to buy the product (Lacy & Rutqvist, 2015). The issue here is that second hand markets have traditionally been a solution for such situations. Many of us already buy durable, rarely used and pricey items second hand and then, when we don’t need them, pass them on to someone else through second hand markets.
Susanna Alexius och Staffan Furusten addressed this issue well in a recent article in Organisation & Samhälle . Just as second hand markets, sharing or pooling is nothing new. What’s new in the sharing/circular economy debate is that this sharing and pooling should be commercialized. While traditionally you maybe shared clothes, cars, summer houses or tools with friends and acquaintances, what’s new is that you should share your belongings with strangers and that a commercial actor should earn a share every time you do so. And even this is not entirely new, holiday rentals have worked this way for a long time.
In the circular economy and PSS debate, the idea is that the producer should keep ownership of products and sell them to the customer as a service. This provides the producer with incentives to produce long lived, durable and repairable products (although this is yet be proven in practice). The risk here, as Alexius and Furusten note, is that companies will own even more and their customers less. Traditionally, owning has been a form of capital. And isn’t the sharing economy precisely evidence that owning is capital when you can easily rent your house and earn a profit. Thus ownership is in fact not all bad and – in the case of sharing, renting or pooling – someone will own the product that is to be shared.
As I see it, the risk here is that we are simply commercializing something that would take place anyway – the sharing of products we rarely or hardly use. And, at the end of the day, if you cannot recycle the product into new products, is it really circular anyway? In my opinion we should put more focus on turning waste into new products and less attention to the ownership issue.
Last spring, I reviewed a student thesis dealing with the issues of renting and leasing specifically clothing. Frida Oscarson studied the case of technical garments and interviewed representatives within the industry. To learn about what the industry thinks, you can read her findings here.
Lacy, P & Rutqvist, J., (2015) Waste to wealth: the circular economy advantage. New York: Palgrave Macmillan.
Michelini, G., Moraes, R., Cunha, R., Costa, J. & Ometto A., (2017) From linear to circular economy: PSS conducting the transition, Procedia CIRP, vol. 64, pp. 2-6
Tukker, A., (2004) Eight types of product–service system: eight ways to sustainability? Experiences from SusProNet. Business Strategy and the Environment, vol. 13 (4), pp. 246-260.
Tunn, V. S. C., Bocken, N. M. P., van den Hende, E. A. & Schoormans, J. P. L., (2019) Business models for sustainable consumption in the circular economy: An expert study. Journal of Cleaner Production, vol. 212, pp. 324-333.
Zamani, B., Sandin, G. and Peters, G., (2017) Life cycle assessment of clothing libraries: can collaborative consumption reduce the environmental impact of fast fashion?. Journal of Cleaner Production, vol. 162, pp. 1368-1375.