Products as a Service
The Products as a Service (PaaS) model is changing the way we use products. Instead of people buying products and owning them themselves, they pay for the use of the product in the form of a periodic payment or payment per use. The PaaS model means that instead of buying a washing machine, for example, you pay for washing your clothes. This can be convenient because you do not have to pay a large sum of money at once, but make periodic payments. This differs from simply renting products because PaaS includes maintenance and repair services and is not for a limited term (circuly.io & ABN AMRO Bank).
(FOD Volksgezondheid, Veiligheid van de Voedselketen en Leefmilieu 2023)
This model offers advantages for people with limited budgets, allowing them to access high-quality products without buying them outright. This is particularly useful for expensive items such as electronics or home appliances. However, companies offering this often require an income statement, which can exclude people with low incomes or debt. Coolblue is an example of a company that uses rental models, for example for washing machines, which require a financial check before signing the contract. In the long run, the cost can be higher than buying a new product, as the company retains ownership and loses access if it stops paying (Coolblue policy).
In addition, the PaaS model can lead to unfair concentrations of power. This means that one company has control over a particular market. If one company rents out all washing machines, for example, they have the power to set prices and make choices about repairs, among other things. All ownership rights then lie with a few companies while the majority have no say in this. Having ownership not only gives prestige, but also a sense of protection and security. People without ownership are dependent and therefore potentially more vulnerable with a PaaS model (Milieu VVM 2020).
While the PaaS model can facilitate access to products for those with limited budgets, we must also be wary of its potential negative effects, such as exclusion of populations and unfair concentrations of power.
Inclusive Products as a Service model
Bosch’s Papillon project in Belgium, where household appliances are offered for rent to low-income households. Rental is for 10 years and about 9 euros per month including service and maintenance costs. This gives lower-income households the chance to replace their old inefficient appliances with more durable models without having to pay a lot for them all at once. It also allows them to reduce energy costs, as these appliances are often more energy-efficient than the old ones, and leaves them with more money to spend. Thus, sustainability and the circular economy can be promoted at the same time as justice (Bosch: Papillon Project). If a PaaS model does not exclude lower-income groups through financial checks and does not charge amounts for use that are too high, it can be a model that is very advantageous for many people compared to buying these products. Over the entire rental period, the equivalent of the entire price of the machine is paid, but periodic payments make it more readily available to those with less to spend.
Materials as a Service (WRF2023)
The idea of Materials as a Service (MaaS) goes one step further than the Products as a Service model. Here, materials remain the property of the producer, supplier, country of origin or even mine, meaning that raw materials can always be reused and circularity is promoted. Thus, if you borrow a raw material, you have to keep it in good (traceable) condition, which benefits circular economies. It can thus help reduce waste and encourage new ways of product design. This model can help ensure justice, especially for people in resource-rich countries. Many resource-rich countries currently derive little or no benefit from their raw materials (Fofack 2019). In response, Zimbabwe, for example, has banned the export of raw materials such as lithium (Reuters 2023).
With MaaS, countries and communities can retain more control over their natural resources and prevent their value from not benefiting local people. MaaS can also help with issues around availability and price fluctuations of materials for clean energy. European cooperation with African countries can ensure fair and sustainable mining operations, with returns for local communities. For MaaS to be successful, we need agreements on materials tracking and distribution, as well as more efficient use of raw materials. However, MaaS may run into similar problems as PaaS, especially at the geopolitical level, where a concentration of ownership and power may raise concerns. In short, MaaS offers opportunities for a more equitable and sustainable use of raw materials, but only if property rights and conditions are guaranteed in the countries of origin.
Sharing Economy platforms
The rise of sharing platforms, where people can share or rent out their stuff, can have important implications for fairness in the economy. These platforms allow people to use things they could not otherwise afford, which is good for people with less money. But there is also a risk that some people have everything and others depend on what they share. This can limit people’s freedom and influence, which is not fair.
An example of such a platform is Peerby, where people can post products online for others nearby to rent. Individuals with many possessions can make money here, while others depend on renting those items. This can lead to a kind of hierarchy, similar to past feudal societies, where a small group of people owned everything and the rest depended on it (FasterCapital 2024).
It is important to prevent this from happening and ensure that everyone has equal opportunities to share and use things. That way, we can create a fair society where everyone has access to what they need without depending on others. A sharing platform like Peerby has the advantage over PaaS models that ownership is already spread across multiple consumers instead of one company, and the platform is more decentralised in nature. However, owners on these platforms still have more power than those who rent (Nnajiofor 2017). It is therefore important to think about ways to share control of sharing platforms more fairly and ensure that everyone can enjoy the benefits of the sharing economy.
Repair Cafés and local repair shops
Repairing products is central to the circular economy because it ensures that fewer products need to be bought and less waste is created. Repair Cafés and local repair shops offer these repair services to extend the life of products and reduce waste. These initiatives create valuable jobs and engage communities in the circular economy and decrease a consumer culture. Repair Cafés are free to visit and usually only ask for donations and fee for the used parts (repaircafe.org). The intention here is that the customer helps with the repair to learn from it as well. However, not everything can be made at a Repair Café, especially when the repairs take more time or are more complex. In this case, there are repair shops.But not everyone can use these services equally easily, because, for example, the high VAT on repairs can discourage people from choosing to repair rather than buy something new (NOS 2024). This widens the gap between people with different incomes and leaves lower-income groups out of the circular transition.Addressing this inequality and ensuring that everyone can benefit from sustainable solutions requires ensuring greater equality in access to repair services.This means working on policies and initiatives that make repair affordable and accessible to all, protecting not only the environment but also social justice.
Legal dimension
Justice & CE legislation – CSRD, NFRD, CBAM
1. CSRD (Corporate Sustainability Reporting Directive): The CSRD is a proposed revision of the existing Non-Financial Reporting Directive (NFRD) in the European Union. The aim of the CSRD is to improve corporate transparency and accountability by expanding the scope of non-financial reporting requirements for EU companies. This improves the quality, comparability and reliability of sustainability-related information disclosed by companies, which in turn enables better-informed decision-making by investors, stakeholders and policymakers.
2. NFRD (Non-Financial Reporting Directive): This directive requires certain large companies and groups in the EU to disclose non-financial information, such as environmental, social and governance (ESG) factors, in their annual reports. The aim of the NFRD is to promote sustainability and transparency within companies by ensuring that companies disclose relevant information about their impact on society, the environment and human rights. The proposed CSRD aims to strengthen and expand the existing NFRD requirements.
3. CBAM (Carbon Border Adjustment Mechanism): This is a proposed European Union policy mechanism aimed at addressing carbon leakage and ensuring a level playing field for industries in the EU, while promoting global climate action. The CBAM would impose carbon-related import tariffs on certain goods imported into the EU from countries with less stringent climate regulations. The aim is to prevent ‘carbon leakage’, with industries shifting production to countries with looser environmental rules to avoid carbon costs, while also encouraging non-EU countries to adopt more ambitious climate measures.
