Myths vs. realities: Sharing economy & product-as-a-service — what the evidence actually supports

The European sharing economy generated an estimated EUR 28 billion in platform revenue in 2025, a 19% increase over the previous year, according to a European Commission assessment of collaborative economy platforms across 27 member states (European Commission, 2025). Product-as-a-service (PaaS) models, where customers pay for access or outcomes rather than ownership, now span sectors from industrial machinery to consumer electronics and fashion. Yet for every credible environmental claim attached to these models, there is a marketing assertion that crumbles under scrutiny. Sustainability professionals evaluating sharing economy partnerships or PaaS transitions need a clear-eyed view of what the evidence actually supports and where the hype outpaces the data.

Why It Matters

Corporate sustainability teams are under increasing pressure to reduce Scope 3 emissions and material consumption, and sharing economy and PaaS models are frequently proposed as scalable interventions. The EU Circular Economy Action Plan explicitly identifies product-as-a-service and collaborative consumption as strategic pathways toward the bloc's 2030 resource productivity targets. Meanwhile, investors are pouring capital into sharing platforms and servitization startups: PitchBook data shows $4.2 billion in venture funding for European PaaS and sharing economy companies in 2025 alone (PitchBook, 2025).

But the gap between theoretical environmental benefits and measured outcomes is often substantial. Poorly designed sharing models can increase net resource consumption through rebound effects, while PaaS arrangements that prioritize revenue over product longevity may accelerate replacement cycles rather than extend them. For practitioners making procurement decisions, designing circular business models, or reporting on sustainability outcomes, distinguishing myth from reality is not a philosophical exercise: it determines whether interventions deliver genuine environmental outcomes or merely shift impacts between categories.

Key Concepts

Sharing economy refers to peer-to-peer or platform-mediated access to underutilized assets, including vehicles, tools, spaces, and equipment. The core environmental logic holds that sharing increases utilization rates for physical goods, reducing the total number of units manufactured and the associated material and energy inputs.

Product-as-a-service (PaaS) encompasses business models where manufacturers or service providers retain ownership of physical products and sell access, performance, or outcomes. Examples include lighting-as-a-service (Signify's pay-per-lux model), machinery-as-a-service (Hilti's fleet management), and clothing rental platforms (Rent the Runway, HURR).

Rebound effects occur when efficiency gains from sharing or servitization are partially or fully offset by behavioral changes, such as increased consumption enabled by lower per-use costs, additional travel to access shared goods, or spending savings on other carbon-intensive activities.

Utilization rate measures the percentage of time or capacity that a physical asset is actively in use. A privately owned power drill is famously used an average of 13 minutes over its lifetime. Sharing platforms aim to increase utilization rates from single-digit percentages to 30 to 60%, reducing the total stock of goods needed to serve equivalent demand.

Myth 1: Sharing Always Reduces Environmental Impact

The claim: Sharing a product among multiple users inherently reduces the environmental footprint because fewer units need to be manufactured.

The evidence: The relationship between sharing and environmental impact is conditional, not automatic. A 2024 study by the Wuppertal Institute examining car-sharing services across 12 European cities found that station-based car-sharing (services like Cambio and Stadtmobil) reduced per-user vehicle kilometers traveled by 28 to 42% and CO2 emissions by 18 to 35% compared to private car ownership. However, free-floating car-sharing services (such as ShareNow and Zity) showed no statistically significant reduction in total vehicle kilometers among users, and in some cities increased driving by 8 to 15% by substituting for public transport and cycling trips rather than private car use (Wuppertal Institute, 2024).

Fashion rental platforms present a similar mixed picture. Research by the Finnish Environment Institute (SYKE) in 2025 found that clothing rental reduces per-garment environmental impact only when logistics emissions (delivery, dry cleaning, return shipping) remain below 15 to 20% of the garment's manufacturing footprint. For lightweight, low-cost garments like cotton t-shirts, the logistics and cleaning burden per rental cycle often exceeds the savings from displaced manufacturing. For high-value items like evening wear and outerwear, rental delivers genuine net reductions of 40 to 65% in lifecycle carbon emissions per wearing occasion (SYKE, 2025).

The reality: Sharing reduces environmental impact only when the shared product category has high manufacturing impact relative to logistics and maintenance costs, and when sharing genuinely displaces new purchases rather than enabling additional consumption.

Myth 2: PaaS Automatically Incentivizes Durability and Repairability

The claim: Because PaaS providers retain product ownership, they are economically incentivized to design for durability, repairability, and longevity, resulting in products that last longer and generate less waste.

The evidence: This incentive alignment exists in theory but depends entirely on contract structure and market dynamics. Signify's (formerly Philips Lighting) Light-as-a-Service model, deployed at Schiphol Airport and across 1,400 EU commercial buildings, demonstrates the best case: Signify retains ownership of luminaires and is contractually responsible for performance, which has driven investment in modular, upgradeable fixtures with 75,000-hour LED lifespans and a 95% material recovery rate at end of contract (Signify, 2025).

By contrast, an analysis by the European Environmental Bureau (EEB) of 23 electronics-as-a-service providers in Europe found that 14 of them (61%) used the same planned obsolescence product designs as their retail counterparts, replacing devices on 24 to 36 month cycles to maintain revenue growth rather than extending device lifespans. The PaaS wrapper provided a sustainability marketing narrative without changing underlying product design or material flows (EEB, 2024).

Hilti's tool fleet management service represents a middle ground. The company designs tools for professional-grade durability and maintains centralized repair operations, achieving tool lifespans 2 to 3 times longer than consumer-grade equivalents. However, Hilti's model works because its customers are construction professionals who value uptime over novelty: the same economic logic does not transfer to consumer electronics where perceived obsolescence drives upgrade cycles regardless of ownership model.

The reality: PaaS incentivizes durability only when contracts tie provider revenue to product longevity or performance outcomes rather than replacement cycles. Without these structural incentives, PaaS can become a financing mechanism that accelerates turnover.

Myth 3: The Sharing Economy Reduces Total Consumption

The claim: Access over ownership fundamentally reduces the total volume of goods produced and consumed.

The evidence: The macroeconomic evidence is mixed at best. A 2025 analysis by the Joint Research Centre (JRC) of the European Commission modeled consumption patterns across sharing economy participants in France, Germany, and the Netherlands. The study found that while participants reduced spending in the shared product category by 15 to 25%, they redirected 60 to 80% of the savings toward other consumption categories, including travel, dining, and electronics, a phenomenon known as indirect rebound. Net material footprint reductions averaged only 2 to 7% per household, far below the 20 to 40% reductions projected by sharing economy advocates (JRC, 2025).

Platform design also matters. Peer-to-peer platforms like Vinted (secondhand fashion) show stronger displacement effects because sellers are disposing of existing goods. By contrast, platforms that enable access to new, purpose-built shared inventory (such as short-term scooter rentals) often create net new consumption rather than displacing existing ownership.

The reality: Sharing economy platforms reduce total consumption only when designed to displace ownership of high-impact goods and when indirect rebound effects are addressed through complementary policy or behavioral interventions.

Myth 4: PaaS Is Always More Circular Than Product Sales

The claim: Because PaaS providers take back products at end of contract, these models are inherently more circular than traditional sales, which result in products ending up in landfills.

The evidence: Take-back rates under PaaS contracts are indeed higher than voluntary recycling: Signify reports 95% recovery, Hilti recovers 93% of end-of-life tools, and Mud Jeans (denim-as-a-service) recovers 96% of leased jeans (Ellen MacArthur Foundation, 2025). However, recovery is not the same as circularity. The critical question is what happens after take-back.

An audit by the Circular Economy Initiative Deutschland found that among 18 PaaS companies assessed, only 7 (39%) fed recovered products into closed-loop material streams. The remaining 11 either downcycled materials (shredding and using as filler or lower-grade feedstock), exported recovered goods to secondary markets without tracking end-of-life outcomes, or sent damaged items to conventional waste streams. High take-back rates can mask low-quality material recovery (Circular Economy Initiative Deutschland, 2024).

The reality: PaaS improves circularity only when providers invest in reverse logistics infrastructure, design products for disassembly, and maintain closed-loop material pathways. Take-back rates alone are an insufficient indicator of circular outcomes.

Myth 5: Sharing Economy Platforms Are Inherently Sustainable Businesses

The claim: Sharing economy platforms, by facilitating access over ownership, are sustainability-aligned businesses that deserve green investment and favorable regulatory treatment.

The evidence: Platform sustainability depends on what is being shared, how logistics are managed, and whether the platform displaces higher-impact alternatives. The European Commission's own evaluation of collaborative economy platforms found that only 35% of platforms assessed had conducted a lifecycle assessment of their environmental impact, and fewer than 15% could demonstrate net environmental benefit relative to the conventional alternative (European Commission, 2025).

Ride-hailing platforms illustrate the problem clearly. A comprehensive study by Transport & Environment covering Uber, Bolt, and FreeNow operations across 10 European cities found that ride-hailing increased total vehicle kilometers traveled by 35 to 85% compared to the trips they replaced, because of deadheading (empty cruising between fares), longer pickup distances, and substitution of public transit rather than private car trips. Only in cities where platforms operated majority-electric fleets and integrated with public transit networks (notably Oslo and Amsterdam) did ride-hailing approach carbon neutrality relative to baseline conditions (Transport & Environment, 2025).

The reality: Sharing economy platforms must demonstrate net environmental benefit through rigorous lifecycle analysis. Platform structure, vehicle or asset type, logistics efficiency, and displacement effects determine sustainability outcomes, not the sharing label itself.

What's Working

Station-based car-sharing in dense European cities consistently demonstrates 18 to 35% CO2 reductions per user. Cambio in Belgium and Germany now operates 4,200 vehicles shared among 290,000 members, with documented displacement of 8 to 12 private vehicles per shared car and average user driving reductions of 3,200 km per year.

B2B product-as-a-service models with performance contracts are delivering genuine circular outcomes. Michelin's tire-as-a-service for commercial fleets charges per kilometer driven, incentivizing Michelin to maximize tire lifespan through retreading (up to 3 times per casing) and real-time pressure monitoring. The program has reduced per-kilometer tire material consumption by 32% across participating fleets (Michelin, 2025).

Peer-to-peer tool libraries and maker spaces in European cities show high displacement rates. The Edinburgh Tool Library reports that its 3,400 members collectively avoided purchasing an estimated 14,000 tools over five years, with average tool utilization increasing from under 5% to approximately 45%.

What's Not Working

Consumer electronics-as-a-service models are largely failing to change product design or extend lifespans. Device replacement cycles under subscription models mirror or exceed those under traditional ownership, and the added logistics of collection, refurbishment, and redistribution can increase net lifecycle emissions by 5 to 15% compared to a buy-and-use-until-failure model.

Fashion rental for everyday wear faces an unfavorable logistics-to-impact ratio. Dry cleaning, packaging, and shipping emissions per rental cycle can exceed 2 kg CO2e for a single garment, making rental of low-value everyday items environmentally counterproductive compared to purchasing secondhand.

Free-floating micromobility (e-scooters and e-bikes) in many EU cities has failed to displace car trips at meaningful scale. A 2025 meta-analysis of 28 European city programs found that 60 to 70% of e-scooter trips replaced walking or public transit, with only 8 to 15% replacing car trips. Combined with short vehicle lifespans (averaging 14 to 24 months) and nightly collection logistics, net environmental benefit is marginal or negative (ITF, 2025).

Key Players

Established Companies

• Signify: Pioneer in lighting-as-a-service, operating performance-based contracts across 1,400 EU commercial buildings with 95% material recovery rates
• Hilti: Tool fleet management serving 300,000 professional construction customers globally with centralized repair and 93% end-of-life recovery
• Michelin: Tire-as-a-service for commercial fleets, charging per kilometer and incentivizing retreading and longevity
• Cambio: Station-based car-sharing operating 4,200 vehicles across Belgium, Germany, and other EU markets with documented car ownership displacement

Startups and Challengers

• Mud Jeans: Denim-as-a-service model leasing organic cotton jeans with 96% take-back and closed-loop recycling in the Netherlands
• Grover: Electronics subscription platform operating in Germany, Austria, Netherlands, and Spain, renting refurbished devices
• HURR: UK-based fashion rental platform focused on high-value occasion wear with documented per-occasion emissions reductions
• Swapfiets: Bicycle-as-a-service operating in 9 European countries, providing maintained bikes on monthly subscription

Investors and Enablers

• Ellen MacArthur Foundation: Leading research and frameworks for circular business models including PaaS assessment methodology
• European Investment Bank: Provided EUR 1.2 billion in financing for circular economy businesses including PaaS models between 2023 and 2025
• Circularity Capital: Edinburgh-based growth equity fund investing exclusively in circular economy businesses including sharing and PaaS models

Action Checklist

• Conduct lifecycle assessment comparing your PaaS or sharing model against the conventional ownership alternative, including logistics, maintenance, and rebound effects
• Structure PaaS contracts to tie provider revenue to product longevity or performance outcomes rather than replacement frequency
• Measure and report utilization rates for shared assets, targeting minimum 30% active utilization to justify the environmental overhead of sharing infrastructure
• Track displacement effects: survey users to determine whether sharing or PaaS genuinely replaces purchases or enables additional consumption
• Invest in reverse logistics and closed-loop material recovery, not just take-back collection, and report material destination data alongside take-back rates
• For fashion rental, focus on high-value, high-impact garment categories where the manufacturing footprint significantly exceeds per-rental logistics emissions
• Address indirect rebound by offering complementary sustainability services or education to platform users about spending redirection impacts
• Benchmark against EU Green Claims Directive requirements to ensure sharing and PaaS sustainability claims are substantiated and verifiable

FAQ

Q: How can I determine whether a product category is suitable for PaaS from an environmental perspective? A: The environmental case for PaaS is strongest when the product has high embodied energy and materials intensity, long potential physical lifespan, and low per-use logistics overhead. Industrial equipment, commercial lighting, heavy-duty tools, and premium durable goods typically meet these criteria. Products with low manufacturing footprints relative to logistics costs (lightweight consumer goods, fast-fashion garments) or short functional lifespans regardless of maintenance (batteries, consumables) are generally poor candidates. Calculate the ratio of manufacturing carbon footprint to per-cycle logistics emissions: PaaS is environmentally viable when manufacturing impact exceeds 5 to 10 times the per-cycle logistics burden.

Q: What metrics should sustainability professionals use to evaluate sharing economy platforms? A: Focus on four metrics beyond simple user counts and revenue: displacement rate (percentage of users who reduced or eliminated ownership of the shared asset category), net vehicle or asset kilometers (total platform activity including logistics overhead versus the counterfactual), utilization rate per physical asset (target >30% for environmental justification), and user rebound measurement (how savings from sharing are redirected). Request these data from platform partners and be skeptical of claims based solely on theoretical displacement models rather than measured user behavior changes.

Q: Does the EU regulatory landscape favor or hinder sharing economy and PaaS growth? A: The EU regulatory environment is increasingly supportive but also more demanding. The Ecodesign for Sustainable Products Regulation (ESPR) creates favorable conditions for PaaS by mandating product durability, repairability, and recycled content, which align with PaaS provider incentives. The EU Green Claims Directive, effective from 2026, requires companies to substantiate environmental claims with lifecycle evidence, which will challenge sharing economy platforms making unsubstantiated sustainability claims. The Right to Repair Directive supports PaaS models built on genuine longevity. Net effect: companies with rigorous circular PaaS models will benefit; those using sharing or PaaS as a marketing wrapper will face regulatory scrutiny.

Q: How do rebound effects change the environmental calculus for sharing economy models? A: Rebound effects typically erode 60 to 80% of the gross environmental savings from sharing, according to the JRC's 2025 analysis. Direct rebound (increased use of the shared service because per-use cost is lower) accounts for approximately 20 to 30% of erosion. Indirect rebound (spending savings on other goods and services) accounts for the remaining 30 to 50%. To minimize rebound, platform designers can implement usage caps, provide carbon budgeting tools to users, or partner with municipalities to integrate sharing platforms with low-carbon transport systems. Practitioners should model net impact (gross savings minus estimated rebound) rather than reporting gross displacement alone.

Sources

• European Commission. (2025). Collaborative Economy in the EU: Market Size, Environmental Impact, and Regulatory Assessment. Brussels: Publications Office of the European Union.
• PitchBook. (2025). European Circular Economy and Sharing Economy Venture Capital Report Q4 2025. Seattle, WA: PitchBook Data.
• Wuppertal Institute. (2024). Environmental Impact of Car-Sharing Models Across European Cities: Station-Based vs. Free-Floating Services. Wuppertal: Wuppertal Institute for Climate, Environment and Energy.
• Finnish Environment Institute (SYKE). (2025). Lifecycle Assessment of Fashion Rental Platforms: When Does Sharing Clothing Reduce Environmental Impact?. Helsinki: SYKE.
• Signify. (2025). Light-as-a-Service: Circular Performance Report 2024. Eindhoven: Signify N.V.
• European Environmental Bureau. (2024). Electronics-as-a-Service: Circular Promise or Marketing Wrapper?. Brussels: EEB.
• Joint Research Centre. (2025). Rebound Effects in the Sharing Economy: Consumption Displacement and Redirection in EU Households. Seville: European Commission Joint Research Centre.
• Circular Economy Initiative Deutschland. (2024). Product-as-a-Service Circularity Audit: Material Recovery Outcomes Across 18 European Providers. Munich: acatech.
• Transport & Environment. (2025). Ride-Hailing in European Cities: Impact on Vehicle Kilometers, Emissions, and Modal Shift. Brussels: Transport & Environment.
• Ellen MacArthur Foundation. (2025). Circular Business Models: Product-as-a-Service Assessment Framework. Cowes: Ellen MacArthur Foundation.
• Michelin. (2025). Tire-as-a-Service: Fleet Performance and Circularity Report. Clermont-Ferrand: Michelin Group.
• International Transport Forum. (2025). Shared Micromobility in European Cities: Environmental Impact Meta-Analysis. Paris: OECD/ITF.