Last week I had the privilege of facilitating a discussion on product-as-a-service at the Canadian Circular Economy Summit. The summit was many things all in one.
It was inspiring. It illuminated fantastic circular initiatives by passionate and committed individuals. From efforts to collaboratively grow regenerative and circular food systems[3] to the creation of mushroom and waste derived apple leather by MycoFutures[4] and Flaura[5].
It was grounding. There was important recognition that we are so far from where we need to be.
“2024 was the hottest year on record and the first year in which annual average temperatures were higher than 1.5C above pre-industrial levels”[1]
The Expert Panel on the Circular Economy in Canada estimated that only “6.1 per cent of materials entering the Canadian economy come from recycled sources”[2].
Most importantly for me, it reinforced that outcome-oriented problem solving can indeed enable us to build sustainable socially just solutions, economies, and societies.
The panel I was fortunate to facilitate focused on digging deep into product-as-a-service (PaaS). PaaS is a business model in which companies offer a physical product combined with a service which allows customers to access and use the product without owning it. Think of all the computers a workplace may purchase. Instead of purchasing those computers, a company can purchase the service, pay a monthly fee, and secure a variety of valuable services ranging from IT support, data privacy and security, to fleet management and lifecycle planning that can help reduce the overall costs of computing.
On the panel were Frances Edmonds, Head of Sustainable Impact from HP Canada, Eli Browne, Head of Sustainability at CHEP Canada and Rush Nathan, Sustainability Manager at Hilti North America. Our discussion explored how PaaS currently provides significant environmental and economic value. For example, Eli highlighted that CHEP inherently generates environmental savings for its customers when compared to single-use alternatives—the pooled program saved North American customers more than 447,000 tons of CO2e, 289,000 tons of waste and 230,138 trees in 12 months. Rush shared that over 50% of Hilti’s tool sales are now procured by customers through their fleet program globally (PaaS). And Frances discussed how HP has a goal of reaching 75% circularity by 2030. HP is currently at 40%[6] and knows that selling product as a service is the only way to reach this ambitious goal. Given this PaaS is influencing its business strategy.
What came shining through for me was how these large multi-national organizations are using goal-oriented problem solving and PaaS to advance circularity. They understand the significant barriers to change that exist and are working to build systems and structures to address these challenges. Interventions include investments in reverse logistics to enable maintenance, refurbishing, reuse, recycling and /or end of life management. They incorporate reworking of internal sales incentives given that PaaS provides return over the long term but product sales generate immediate revenue. They also encompass innovating to increase value for customers when the manufacturer retains ownership. This value, ranges from security and flexibility that can enable organizations to better adjust their asset volume depending on business needs, to a reduction in the need for upfront capital investments on assets helps incentivize PaaS.
This ingenuity is really what was inspiring for me at the conference. When we establish goals and work to achieve them, we can make meaningful progress. It does not all happen at once, but it can happen. In the case of PaaS, the session explored several barriers that continue to exist including organizations and governments with procurement systems that continue to prioritize economic goals at the expense of the environment and society, archaic metrics of cost and value as well as accounting systems that enable asset depreciation to zero when there continues to be significant material value associated with a product.
Given that we can implement when we have a north star and are committed, the questions I think we need to wrestle with become;
How might we truly establish sustainability and social justice goals that incent the problem solving needed to build a sustainable, socially just future?
How might we shift our mindsets from one where people and planet are secondary to economic growth to one where the economy is in service of life?
How might we genuinely recognize the colonial and violent industrial growth paradigms that have enabled our current state?
How might we establish values-based leadership and collective ownership over building a truly sustainable, socially just future that incorporates Indigenous and non-capitalist ways of knowing and being?
From a strategic perspective, we can only start from where we are. So, let us get to it. Let us build on the good models we have and let us invest in shifting our north star.
[1] https://www.bbc.com/news/articles/c30dn5dn53jo
[2] https://cca-reports.ca/wp-content/uploads/2022/01/Turning-Point_digital.pdf
[3] https://www.ivey.uwo.ca/sustainability/for-researchers/the-agri-food-system/
[4] https://www.myco-futures.com/
[5] https://flauraplantbased.com/
[6] https://sustainability.ext.hp.com/en/support/solutions/articles/35000064465-please-explain-how-hp-is-driving-towards-circular-economy