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Simple steps to increase the uptake of sustainable service-based business models

April 15, 2016

Simple steps to increase the uptake of sustainable service-based business models

‘Product-service systems’ are innovative business models designed to satisfy societal needs in an environmentally sustainable manner. This study explores how government policies could increase the uptake of these systems, outlining five key recommendations to achieve this, including schemes to raise awareness and involve local authorities.

There are concerns that the business models currently relied upon to satisfy basic human needs are environmentally unsustainable, with a growing number of voices calling for new models that recognise the value of ecological systems and natural capital for human welfare. Of the new business models proposed to satisfy societal needs in a sustainable manner, product-service systems (PSSs) have received particular attention.

PSSs describe when a business offers a mix of products and services, in contrast to the traditional product-driven models, and are designed to meet customer needs with reduced environmental impact. Examples include Michelin’s fleet-management solution, in which tyres are sold per kilometre driven to reduce fuel use and emissions, or Rolls Royce’s ‘Power by the Hour’ service for aircraft engines, whereby maintenance and repair services are charged per hour of flight.

Although the benefits of PSSs have been well recognised, adoption remains limited due to corporate, cultural and regulatory barriers. This paper studied how ‘demand–pull’ government policies — which influence demand for innovations, through economic incentives for example — may stimulate uptake of PSSs.

Read more at Science for Environment Policy: European Commission DG Environment News Alert Service, edited by SCU, The University of the West of England, Bristol.

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