Environmental issues call into question our consumption habits and the economic models that have been built around them. In a world where industries and the production of goods represent the most resource-consuming sector and the largest emitter of greenhouse gases, is it possible to imagine economic growth that is not linked to the degradation of our environment?
An environmental context calling for the decoupling of value creation from resource consumption
The average carbon footprint of the French is 12 tons of CO2 equivalent (tCO2eq) per year, of which nearly a quarter comes from the purchase of non-food goods. Indeed, INSEE estimates that for the average French person in 2016, his or her purchases of electronics, clothing, cars and appliances emitted more than 2.5 tCO2eq, or 125% of his or her carbon budget that would allow him or her to meet the Paris COP21 targets. This consumption - and the exploitation of the associated resources - represents an environmental as well as an economic challenge with approximately 240 billion euros, or 15% of household consumption.
From the purchase of goods to the consumption of services: a transition to be accelerated
Theorized by the Club of Rome in the 1960s, the economy of functionality, or economy of use, is an alternative to the current economic model based on the production, sale and consumption of goods. This alternative consists in replacing the possession of a good - for example a scooter - by the use of a service - mobility. We therefore return to a more sober model of consumption: we do not consume a scooter but the service that allows it to move from point A to point B.
Christian du Tertre, economist and president of the European Institute for the Economy of Functionality and Cooperation, sums up the objective of the economy of functionality as follows: "to create the greatest possible use value while consuming the least amount of material and energy resources". As a consequence, actors acting as service providers keep the property rights of the goods and are encouraged to optimize the uses and extend the associated life cycles. Such a model therefore leads to the end of programmed obsolescence practices and to a creation of value decoupled from the consumption of resources.
Two key concepts are at the heart of the economy of functionality approach:
- user-centered approach;
- cooperation between actors, often anchored on a territory.
ADEME summarizes the way this type of approach is deployed as follows:
"The companies and the actors of the territories cooperate to produce an offer bringing positive effects to the beneficiary thanks to the service relationship. The sale of a performance of use is targeted instead of the simple sale of a good or a service".
Unfortunately, the economy of functionality is still largely unknown to the general public and therefore to the majority of consumers. Questioned by Circul'R and Appinio, 69% of the French people do not know the concept nor the associated term, revealing the need to raise awareness about these possibilities.
A utopian model? On the contrary! Examples well anchored in our societies can be found in many fields of activity, such as Michelin which sells kilometers traveled rather than tires; Xerox and Phillips which respectively offer printing services and luminosity within offices rather than printers and light bulbs; or the numerous shared mobility services already used by more than 40% of the French.
While these innovative business models have proven their effectiveness, they are struggling to achieve a significant penetration rate in certain sectors. This can be explained by entrenched consumer habits in sectors such as household appliances and clothing, or by resistance to change on the part of economic players with dominant positions in their markets.
Multiple potential benefits
Beyond the environmental benefits, this new model also opens up new opportunities for the economic and territorial actors concerned. By innovating in this direction and transforming their business models, the pioneering companies are reaping multiple benefits:
- Forerunner advantage and differentiation in their market
- Growth through innovation in mature sectors
- Increasing the value of products through financing mechanisms, reconditioning, technical upgrades
- Increased customer value through added functionality, longevity of services
- Strengthening customer relationships and acquiring customer data through interactions associated with additional services
- Preservation of product value over multiple use cycles
- Compliance and a precursor advantage in the face of regulatory changes related to extended producer responsibilities (EPR)
As for public institutions, whether they are directly involved with companies or not, they have the opportunity to position themselves as orchestrators of new virtuous models offering several societal benefits:
- Improvement of public services and better adaptability to the needs and uses of citizens in many areas: housing, mobility, food, health, etc.
- Preservation of local resources through pooling and sharing
- Development of economic activities related to reverse logistics, repair, maintenance, reconditioning, or recycling
- Strengthening the local anchorage of economic actors by developing cooperation between actors in the territory
- Job creation associated with new services that may be more labor intensive than in traditional industrial production models
References to go further
References for taking action:
Circul'R x Appinio Survey - Economy of functionality research.appinio.com/#/en/survey/public/ZvzQ5UGSc
Resources of the ORÉE association dedicated to the economy of functionality (oree.org)
ADEME, Infographic explaining the economy of functionality http://multimedia.ademe.fr/catalogues/economie-fonctionnalite/
European Institute for the Economics of Functionality and Cooperation (IEEFC) http://crepe.ieefc.eu/
ADEME & YOU Magazine n°106 special feature economy https://www.economiecirculaire.org/articles/h/ademe-vous-n-106-special-economie-de-fonctionnalite.html
Functional Economy and Sustainable Development (FE&SD) Club https://www.club-economie-fonctionnalite.fr/
G. Gaglio, J. Lauriol, C. du Tertre (dir.), L'économie de la fonctionnalité : une voie nouvelle vers un développement durable ? Octarès Editions, Toulouse, 2011, 167p. https://journals.openedition.org/sds/2105
ADEME, ATEMIS, Patrice VUIDEL, Brigitte PASQUELIN. 2017. Towards an economy of functionality with high environmental and social value in 2050. Servicing and territorial dynamics at the heart of the new model. Synthesis. 23 pages. https://occitanie.ademe.fr/sites/default/files/rapport-economie-fonctionnalite-haute-valeur-environnementale.pdf
Study conducted by Greenflex and the National Institute of Circular Economy (INEC) "How to promote and finance the economy of functionality in the consumer sector?" http://bit.ly/2QcT5CJ
O.K Mont, Clarifying the concept of product-service system, Journal of Cleaner Production, Volume 10, Issue 3, 2002, Pages 237-245