Explainer: Sharing economy & product-as-a-service — what it is, why it matters, and how to evaluate options

Why It Matters

The average power drill is used for a total of 13 minutes across its entire lifetime, yet every year consumers purchase more than 35 million new drills globally (Ellen MacArthur Foundation, 2024). This pattern of low utilization and high material throughput extends across consumer electronics, vehicles, textiles, and industrial equipment. The sharing economy and product-as-a-service (PaaS) models address this inefficiency by decoupling value from ownership: users pay for access, outcomes, or usage rather than purchasing and storing assets that sit idle for 90 percent or more of their useful life.

The global sharing economy was valued at $570 billion in 2024 and is projected to exceed $1.2 trillion by 2028, growing at a compound annual rate of 20 percent (PwC, 2025). Meanwhile, the product-as-a-service segment specifically grew 28 percent year over year in 2025, driven by enterprise equipment leasing, mobility subscriptions, and fashion rental platforms (Accenture, 2025). For sustainability professionals, these models offer a measurable route to reducing Scope 3 emissions, extending product lifespans, and improving material circularity. However, not every sharing or subscription model delivers genuine environmental benefits. Understanding the mechanics, evaluating the trade-offs, and identifying credible metrics are essential for separating impactful programs from greenwashed convenience plays.

Key Concepts

Sharing economy refers to peer-to-peer or platform-mediated access to underutilized assets. Users share ownership or access rights through digital marketplaces. Examples range from ride-sharing (Uber, Lyft) and accommodation sharing (Airbnb) to tool libraries and co-working spaces. The defining feature is that existing assets are used more intensively rather than new assets being produced.

Product-as-a-service (PaaS) shifts the business model from selling products to selling the outcomes or functions that products deliver. The manufacturer or service provider retains ownership, handles maintenance, and takes responsibility for end-of-life recovery. Philips Lighting (now Signify) pioneered this with "Light as a Service," where customers pay per lux delivered rather than purchasing luminaires. Rolls-Royce's "Power by the Hour" model charges airlines per engine flight hour, incentivizing the manufacturer to maximize reliability and extend component life.

Asset utilization rate measures how much of a product's available capacity is actually used. Private cars in Europe average 5 percent utilization (sitting parked 95 percent of the time), while car-sharing fleets typically achieve 25 to 40 percent utilization (OECD, 2024). Higher utilization means fewer total units are needed to serve the same number of users, reducing raw material extraction, manufacturing emissions, and end-of-life waste.

Total cost of access (TCA) replaces total cost of ownership as the decision metric for PaaS models. TCA includes subscription or rental fees, insurance, maintenance, delivery/pickup logistics, and any usage charges. For the buyer, TCA should be compared against purchase price plus storage, maintenance, depreciation, and disposal costs over the product's useful life.

Circular business model taxonomy. The Ellen MacArthur Foundation (2024) categorizes circular models into five archetypes: share, lease, resell, refurbish, and recycle. Sharing and PaaS span the first two categories and are distinguished from secondhand marketplaces (resell) and remanufacturing (refurbish) by the retention of asset ownership by the provider and the active management of utilization.

What's Working and What Isn't

What's working. Enterprise PaaS has reached commercial maturity in several sectors. Hilti's fleet management program, which provides construction tools on subscription with guaranteed uptime and on-site repair, now serves over 300,000 customers in 120 countries and has diverted an estimated 25,000 tonnes of tool waste from landfill since 2020 (Hilti, 2025). Signify's Light as a Service contracts have reduced energy consumption by 50 to 70 percent for clients such as Schiphol Airport, while Signify retains ownership and recovers 98 percent of luminaire materials at end of contract (Signify, 2024).

In mobility, car-sharing has demonstrated measurable impact at scale. A 2025 study by the International Transport Forum found that each shared vehicle in European cities replaces 6 to 10 privately owned cars and reduces per-user transport emissions by 35 to 50 percent when combined with public transit and cycling (ITF, 2025). Platforms such as SHARE NOW (operated by Stellantis and Mercedes-Benz) and Zipcar (Avis Budget Group) collectively serve over 8 million members across Europe and North America.

Fashion rental is also gaining traction. Rent the Runway reported 2.3 million active subscribers in 2025, with lifecycle assessments showing that renting a garment that displaces a new purchase reduces per-wear carbon emissions by 24 percent (Rent the Runway, 2025). HURR, a UK-based peer-to-peer fashion rental platform, saw transaction volume grow 65 percent in 2025 as luxury brands like Selfridges partnered to integrate rental into retail channels.

What isn't working. Consumer-facing sharing platforms for low-value items (household tools, kitchen appliances) have struggled with unit economics. Fat Llama, a peer-to-peer rental marketplace for consumer goods in the UK, paused operations in 2024 after failing to achieve positive contribution margins on items rented for under £20 per transaction. Logistics and insurance costs for small, low-value goods often exceed the rental fee, making the model unviable without subsidy or aggregation.

Rebound effects remain a concern. McKinsey (2025) estimates that 15 to 25 percent of the material savings from sharing platforms are offset by induced demand, where lower per-use costs encourage additional consumption. For example, cheaper access to vehicles through ride-hailing has in some cities increased total vehicle-kilometers traveled rather than reducing them (ITF, 2025). Without deliberate design, such as limiting fleet size, integrating with public transit, or applying congestion pricing, sharing models can amplify rather than reduce resource consumption.

PaaS models in electronics have also faced headwinds. Grover, a Berlin-based electronics subscription platform, raised €1 billion in funding but reported subscriber churn rates above 30 percent annually in 2024. Consumers who treat subscriptions as try-before-you-buy rather than long-term access undermine the circular logic of the model, since returned devices require refurbishment, repackaging, and re-matching costs that erode margins.

Key Players

Established Leaders

• Signify (formerly Philips Lighting) — Pioneer of Light as a Service, operating circular lighting contracts across 70+ countries with 98% material recovery rates.
• Hilti — Fleet management model for construction tools serving 300,000+ customers globally with tool-life-extension and waste-diversion programs.
• Rolls-Royce — Power by the Hour engine leasing for aviation, incentivizing reliability and component longevity through outcome-based pricing.
• SHARE NOW (Stellantis/Mercedes-Benz) — Largest free-floating car-sharing operator in Europe with over 3 million members.
• Zipcar (Avis Budget Group) — Leading car-sharing platform in North America and the UK with 5+ million members.

Emerging Startups

• Grover — Electronics subscription platform offering smartphones, laptops, and gaming consoles on monthly rental in Europe.
• HURR — UK peer-to-peer fashion rental marketplace partnered with luxury retailers including Selfridges and Harrods.
• Lizee — French SaaS platform enabling brands (Decathlon, Petit Bateau) to launch rental and subscription programs using white-label technology.
• Rheaply — Asset exchange platform helping enterprises and universities redistribute surplus equipment internally before purchasing new.

Key Investors/Funders

• Ellen MacArthur Foundation — Catalytic funder and knowledge partner accelerating circular business model adoption across consumer goods.
• Circularity Capital — Edinburgh-based growth equity fund focused on circular economy businesses, with investments in sharing and PaaS startups.
• European Investment Bank — Provides debt financing for circular economy scaling, including PaaS infrastructure and reverse logistics networks.

Examples

Decathlon and Lizee: sporting goods rental. In 2024, Decathlon expanded its rental program across 350 stores in France, Belgium, and the UK using Lizee's white-label rental technology. Customers rent camping tents, kayaks, ski equipment, and children's bicycles for durations ranging from a weekend to a full season. Decathlon reports that rented items achieve 3.5 times the utilization of equivalent purchased items and that the program has extended average product lifespan by 2.4 years. The company targets 10 percent of revenue from circular services by 2028 (Decathlon, 2025).

Caterpillar's remanufacturing and PaaS hybrid. Caterpillar's Cat Reman program combines product-as-a-service contracts with industrial remanufacturing. Mining companies lease heavy equipment with guaranteed uptime SLAs, and Caterpillar recovers and remanufactures components at end of service cycle. In 2025, Cat Reman processed over 7,800 product references and recovered 100 million kilograms of material, using 61 percent less energy than manufacturing new components (Caterpillar, 2025). The model demonstrates how PaaS can drive circular outcomes in capital-intensive B2B sectors.

Amsterdam's sharing infrastructure. The City of Amsterdam has integrated sharing economy principles into municipal planning. Its 2024 Circular Strategy Update mandates that new residential developments above 100 units include shared mobility hubs (cargo bikes, car-sharing spots, e-scooter docks) and shared amenity spaces (tool libraries, laundry facilities). Early results from three pilot neighborhoods show a 22 percent reduction in private car ownership and a 14 percent decrease in household goods purchases compared with control neighborhoods (City of Amsterdam, 2025).

Sector-Specific KPI Table

Action Checklist

• Audit asset utilization across operations. Identify categories where owned equipment sits idle more than 70 percent of the time; these are prime candidates for PaaS or shared-access procurement.
• Calculate total cost of access vs. ownership. Build a 5-year TCO comparison that includes purchase, storage, maintenance, depreciation, and disposal costs against PaaS subscription fees and service-level terms.
• Screen for rebound effects. Evaluate whether the sharing or PaaS model genuinely reduces total units in circulation or simply lowers per-use cost and encourages additional consumption. Request fleet-size data and user-trip analytics from providers.
• Prioritize providers with closed-loop material flows. Favor PaaS contracts where the provider demonstrates verified material recovery rates above 80 percent and publishes lifecycle assessment data.
• Integrate sharing into procurement policy. Update organizational procurement guidelines to require a rent-or-share-first assessment before authorizing new asset purchases above a defined threshold.
• Track circular KPIs in sustainability reporting. Report asset utilization rates, product lifespan extensions, and material recovery metrics alongside standard Scope 3 categories in CSRD or ISSB-aligned disclosures.
• Engage employees and users. Communicate the environmental and financial benefits of access models to overcome cultural attachment to ownership; pilot programs with high-visibility categories such as IT equipment or fleet vehicles.

FAQ

How does product-as-a-service differ from traditional leasing? Traditional leasing transfers usage rights but rarely includes maintenance, recovery, or circular design incentives. PaaS contracts are outcome-based: the provider retains ownership, optimizes the product for durability and repairability, and takes responsibility for end-of-life material recovery. This alignment of incentives is the key difference. In a traditional lease, the lessor benefits from shorter product life (triggering a new lease), whereas in PaaS, the provider benefits from longer product life and higher utilization because margins improve with each additional use cycle.

Do sharing economy models always reduce environmental impact? No. Environmental benefits depend on three conditions: the shared asset must genuinely displace production of new units, the logistics of sharing (delivery, cleaning, maintenance) must not exceed the savings from avoided production, and users must not reinvest savings into other high-impact consumption. The ITF (2025) found that car-sharing reduces emissions per user when integrated with public transit but can increase total vehicle-kilometers in cities where it substitutes for walking or cycling. Lifecycle assessment is essential for any credible environmental claim.

What sectors are most mature for PaaS adoption? Industrial equipment (Hilti, Caterpillar), commercial lighting (Signify), aviation engines (Rolls-Royce), and corporate fleet mobility (SHARE NOW, Zipcar) are the most mature. These sectors share high asset values, predictable usage patterns, and established maintenance infrastructure. Consumer goods and fashion are earlier in the adoption curve, with higher churn rates and more complex logistics. Electronics subscriptions (Grover) are growing rapidly but face unit economics challenges at lower price points.

How should organizations measure the circularity impact of sharing/PaaS programs? Focus on four core metrics: asset utilization rate (percentage of available capacity actually used), product lifespan extension (additional years of service compared with single-owner baseline), material recovery rate at end of contract (percentage of materials captured for reuse or recycling), and net displacement ratio (number of new products avoided per shared or leased unit). These metrics can be reported under the EU CSRD circular economy disclosure requirements and align with the Ellen MacArthur Foundation's Circulytics framework (Ellen MacArthur Foundation, 2024).

Is PaaS viable for small and medium enterprises? Yes, and increasingly so. Platforms like Rheaply enable SMEs to share surplus assets internally or with peer organizations, reducing capital expenditure without requiring a full PaaS contract with an OEM. White-label platforms such as Lizee allow mid-size retailers to launch rental programs with minimal upfront investment. The key constraint for SMEs is logistics: shared assets need efficient reverse logistics, which can be outsourced to specialized providers or aggregated through industry cooperatives.

Sources

• PwC. (2025). The Sharing Economy: Global Market Sizing and Growth Projections 2024-2028. PricewaterhouseCoopers.
• Accenture. (2025). Product-as-a-Service: Market Growth, Business Models, and Sustainability Impact. Accenture Strategy.
• Ellen MacArthur Foundation. (2024). Circular Business Models: Sharing, Leasing, and Product-as-a-Service Frameworks. EMF.
• OECD. (2024). The Sharing and Platform Economy: Environmental Implications and Policy Responses. OECD Publishing.
• International Transport Forum. (2025). Shared Mobility Simulations for European Cities: Impact on Car Ownership and Emissions. ITF/OECD.
• McKinsey & Company. (2025). Circular Economy and Rebound Effects: Quantifying Net Material Savings from Sharing Models. McKinsey Sustainability.
• Signify. (2024). Light as a Service: Circular Lighting Impact Report 2024. Signify.
• Hilti. (2025). Fleet Management Sustainability Report: Tool Lifespan Extension and Waste Diversion Metrics. Hilti Group.
• Rent the Runway. (2025). Environmental Impact Report: Lifecycle Assessment of Fashion Rental. Rent the Runway.
• Caterpillar. (2025). Cat Reman Sustainability Summary: Material Recovery and Energy Savings. Caterpillar Inc.
• City of Amsterdam. (2025). Circular Strategy Update 2024: Sharing Infrastructure Pilot Neighborhood Results. Municipality of Amsterdam.
• Decathlon. (2025). Circular Services Expansion: Rental Program Performance and Utilization Data. Decathlon Group.