Sustainability Atlas
Circular Economy·12 min read··...

Playbook: Adopting Circular Design & Product-as-a-Service in 90 Days

the hidden trade-offs and how to manage them. Focus on leasing models for electronics: take-back and refurb economics.

The global electronics industry generates over 50 million metric tons of e-waste annually, with less than 20% formally recycled. Meanwhile, the refurbished electronics market has surged to $54 billion in 2025, projected to reach $357 billion by 2034. This trajectory reveals both the scale of the problem and the commercial opportunity: companies that master circular design and Product-as-a-Service (PaaS) models capture recurring revenue while dramatically reducing their environmental footprint.

This playbook provides a practical 90-day roadmap for adopting circular design principles and transitioning to PaaS models, with a focus on electronics leasing, take-back programs, and refurbishment economics.

Why It Matters

The linear "take-make-waste" model is becoming untenable. Extended producer responsibility (EPR) regulations are expanding across the EU, with the EU Right to Repair Directive mandating spare parts availability and repair information from 2026. Companies that proactively embrace circularity gain competitive advantages: Philips now generates 20% of revenue from circular products and services, while HP's refurbished products achieve margins equal to or higher than new products.

For UK-based engineers and product teams, the business case is compelling: circular design can reduce product costs by 30-40% in developing markets through refurbished materials, while extending product lifecycles can cut annual emissions by up to 20%. The Ellen MacArthur Foundation estimates that a circular economy approach could add 5% to global GDP while creating millions of jobs.

Key Concepts

Circular Design

Circular design builds products for multiple lifecycles from the outset. The Ellen MacArthur Foundation's framework centres on three principles: eliminate waste and pollution, circulate products and materials at their highest value, and regenerate nature. Unlike traditional design that optimises for first-use performance and cost, circular design optimises for durability, repairability, modularity, and material recovery.

The circular design process follows four stages: Understand (research context and system impacts), Define (frame the opportunity), Make (prototype and test), and Release (launch and iterate). Critically, approximately 80% of environmental impacts are determined at the design stage—waste and pollution are consequences of design choices.

Product-as-a-Service (PaaS)

PaaS transforms the business model from selling products to selling outcomes. Instead of purchasing equipment outright, customers access products through subscriptions or pay-per-use arrangements. The manufacturer retains ownership, enabling control over the entire product lifecycle: maintenance, upgrades, refurbishment, and end-of-life recovery.

Common PaaS models in electronics include Hardware-as-a-Service (devices on subscription with ongoing support), consumer electronics subscriptions (monthly access to technology), pay-per-use (payment based on actual usage, like per-page printing), and rental services (temporary access without ownership commitment).

Take-Back and Refurbishment Economics

Take-back programs recover products from customers for refurbishment, remanufacturing, or recycling. The economics depend on product design, collection logistics, and refurbishment complexity. Key metrics include:

Recovery Rate: Percentage of sold products returned for processing. Leading programmes achieve 50-80% recovery.

Refurbishment Margin: Cost of refurbishment versus resale value. Well-designed products achieve refurbishment costs of 30-50% of new manufacturing, with resale at 60-80% of original price.

Material Recovery Value: Worth of recovered materials (precious metals, plastics, rare earths). Electronics contain gold, silver, copper, and lithium with significant recycling value—Samsung now sources over 90% of cobalt for Galaxy S25 batteries from recycled streams.

Lifecycle Extensions: Number of use cycles a product supports. Fairphone achieves 5.5-year average product lifespan versus the industry average of 2.7 years.

What's Working

Philips Light-as-a-Service

Philips pioneered selling light as an outcome rather than fixtures. Business and municipal customers pay only for illumination while Philips retains ownership, manages upgrades, and handles recycling. This model eliminates technology risk for clients hesitant about capital investment in rapidly-evolving LED technology. The approach has been extended to healthcare equipment, where Philips leases MRI and CT scanners to hospitals, achieves 50-90% material reuse, and has refurbished 940 tons of medical imaging equipment annually.

HP Instant Ink and Device-as-a-Service

HP's Instant Ink programme connects printers via IoT to auto-order replacement cartridges when running low, with prepaid return envelopes for used cartridge recycling. Results show 67% less material consumption per printed page versus conventional models, with over 2 million subscribers across six countries. HP's broader Device-as-a-Service offering bundles hardware with services under lease models, simplifying device retirement while extending device life.

Grover Consumer Electronics Subscriptions

Berlin-based Grover allows consumers to rent smartphones, laptops, cameras, and gaming consoles monthly across Germany, Austria, Spain, Netherlands, and the USA. Through partnerships like Samsung Galaxy smartphone rentals (12-24 months with upgrade options), Grover demonstrates that access-over-ownership models resonate with younger demographics while extending product lifespans through multiple rental cycles.

Fairphone Modular Design

Fairphone designs smartphones for user repair with modular components replaceable using a single Phillips screwdriver. Products contain 70% fair or recycled materials, include 5-7 year warranties, and receive 7-8 years of software updates. At $89 million in 2024 revenue, Fairphone proves that sustainability can differentiate in commoditised markets—Ethical Consumer rated it the "most ethical smartphone in the world" at 98/100.

What Isn't Working

Regulatory Classification Barriers

EU regulations classify all returned electronics as "waste," creating cross-border movement restrictions that complicate centralised refurbishment operations. HP and other manufacturers report that legislative barriers prevent efficient reverse logistics, forcing country-by-country refurbishment infrastructure rather than optimised regional facilities.

Reverse Logistics Complexity

Supply chains optimised for forward flow struggle with product take-back. Collection networks, inspection protocols, and refurbishment capacity require significant investment. Many organisations underestimate the operational complexity: tracking individual products through multiple lifecycles, managing variable return quality, and maintaining sufficient inventory to meet service commitments.

Customer Mindset Resistance

Generational divides affect PaaS adoption. While younger consumers embrace access-over-ownership models, older demographics often resist leasing for products they expect to own. B2B adoption tends to proceed faster than B2C, with enterprises prioritising operational expense (opex) models over capital expenditure (capex).

Design-for-Circularity Gaps

Many products remain designed for linear models despite circular economy commitments. Research identifies notable deficiencies in performance indicators for circular infrastructure and technology. Products requiring specialist tools for disassembly, components bonded with adhesives rather than fasteners, and materials lacking recycling pathways undermine refurbishment economics.

Short-Term Revenue Impact

Transitioning from product sales to subscriptions creates short-term revenue recognition challenges. Lower upfront payments reduce immediate revenue, potentially creating investor relations complications despite superior long-term customer lifetime value. Finance teams must model the transition carefully and communicate the strategic rationale.

Key Players

Established Leaders

  • IKEA — Furniture-as-a-service pilots and buy-back programs.
  • Philips — Light-as-a-service and circular healthcare equipment programs.
  • Caterpillar — Remanufacturing program returning 140M+ pounds of material annually.
  • Interface — Carpet tile leasing and take-back programs since 1990s.

Emerging Startups

  • Grover — Tech subscription platform for electronics (phones, laptops). Raised $330M.
  • Fairphone — Modular smartphone designed for repair and longevity.
  • Rent the Runway — Fashion-as-a-service reducing clothing waste.
  • Fat Llama — Peer-to-peer rental marketplace for equipment.

Key Investors & Funders

  • Fashion for Good — Consortium backing circular fashion innovation.
  • Circularity Capital — European PE fund focused on circular economy.
  • Closed Loop Partners — US investor backing product-as-a-service models.

Real-World Examples

Philips Healthcare Equipment Lifecycle

Philips committed in 2018 to take back and repurpose all large medical systems customers return, achieving this target and extending it to all professional medical equipment by 2025. The programme co-designs with 60+ hospitals to create state-of-the-art circular products, reducing costs 30-40% in developing markets through refurbished and recycled materials.

Back Market Refurbished Marketplace

Back Market, which raised $510 million in funding, operates across 15+ countries connecting certified refurbishers with consumers seeking quality-assured refurbished electronics at 30-50% savings versus new devices. The platform demonstrates that third-party ecosystems can complement OEM take-back programmes by aggregating refurbishment capacity and building consumer trust through standardised grading.

Apple Certified Refurbished Programme

Apple's official refurbished programme offers devices at discounted prices with same warranty as new products. The company's control over design, components, and software enables efficient refurbishment, though critics note that repair restrictions (serialised parts, limited independent repair support) limit third-party refurbishment potential.

90-Day Implementation Roadmap

Weeks 1-4: Assessment and Foundation

Week 1-2: Current State Analysis Conduct product lifecycle assessment across your portfolio. Map material flows, identify design barriers to circularity, and calculate current end-of-life recovery rates. Benchmark against sector leaders using metrics like recovery rate, refurbishment costs, and material recovery value.

Week 3-4: Business Model Design Evaluate PaaS model options for your context: subscription, pay-per-use, rental, or hybrid approaches. Model unit economics including customer acquisition cost in service models, refurbishment cost per unit, required return rates for profitability, and revenue recognition implications. Engage finance and legal teams early on accounting treatment and contract frameworks.

Weeks 5-8: Design and Operations Development

Week 5-6: Circular Design Integration Apply Ellen MacArthur Foundation principles to product development. Prioritise modular architecture enabling component replacement, fastener-based assembly over adhesives, standardised components across product families, and material passports documenting composition. Create design guidelines specific to your products—DS Smith trained 700+ packaging designers on their Circular Design Principles.

Week 7-8: Reverse Logistics Planning Design take-back infrastructure including collection channels (retail partners, postal returns, pickup services), inspection and grading protocols, refurbishment facility requirements, and parts inventory management. Start with pilot geography before scaling. Consider partnerships with established reverse logistics providers.

Weeks 9-12: Launch and Optimisation

Week 9-10: Pilot Launch Launch PaaS offering with limited product range and geography. Target early adopter segments most receptive to access models. Instrument thoroughly to capture learning: customer acquisition channels, usage patterns, return triggers, and refurbishment cycle times.

Week 11-12: Iteration and Scale Planning Analyse pilot results against projections. Identify operational bottlenecks, customer friction points, and economic model refinements. Develop 12-month scaling roadmap addressing capacity expansion, geographic rollout, and product range extension. Document lessons learned and update circular design guidelines based on refurbishment experience.

Action Checklist

  1. Conduct lifecycle assessment of current product portfolio, identifying recovery rates, material composition, and design barriers to circularity using tools like the Ellen MacArthur Foundation's Circular Design Guide.

  2. Calculate refurbishment economics for your products, modelling the full cost of take-back, inspection, refurbishment, and remarketing against achievable resale values.

  3. Evaluate PaaS business models suitable for your market, considering subscription pricing, usage-based models, and hybrid approaches. Model customer lifetime value versus current transaction economics.

  4. Engage cross-functional stakeholders including design engineering, supply chain, finance, legal, and sales. Circular economy transition requires organisational alignment beyond sustainability teams.

  5. Redesign products for circularity by implementing modular architecture, standardised fasteners, and material passports. Target easy-win products first to build capability and demonstrate value.

  6. Build reverse logistics capability through partnerships or internal investment. Start with pilot collection programmes before committing to scaled infrastructure.

  7. Launch pilot PaaS offering with limited scope—single product, single geography, specific customer segment—to validate economics and operational processes before scaling.

  8. Establish circular metrics dashboard tracking recovery rate, refurbishment cost ratio, lifecycle extensions, and circular revenue percentage. Benchmark against Philips' 25% circular revenue target.

  9. Train design teams on circular design principles using resources from the Ellen MacArthur Foundation and sector-specific guidelines from leaders like DS Smith or IKEA.

  10. Develop customer communication strategy articulating the value proposition of access over ownership, including total cost of access, hassle-free upgrades, and environmental benefits.

FAQ

Q: How do take-back programmes affect our revenue in the short term? A: Transitioning from product sales to service models typically creates short-term revenue recognition challenges because subscription revenue is recognised over time rather than at point of sale. However, customer lifetime value typically exceeds one-time purchase value, and recurring revenue models carry premium valuations. HP reports that refurbished product margins equal or exceed new product margins. Model the transition carefully, communicate the strategic rationale to stakeholders, and consider phased rollout to manage revenue transition smoothly.

Q: What's the minimum product design change needed to enable refurbishment? A: Start with modular architecture and fastener-based assembly. Products using screws rather than adhesives for key components enable cost-effective disassembly. Fairphone demonstrates the principle: all components replaceable with a single Phillips screwdriver. Beyond physical design, plan for software support longevity—Fairphone provides 7-8 years of updates, dramatically extending viable product life. Finally, create material passports documenting composition to enable efficient material recovery at true end of life.

Q: Should we build refurbishment capability internally or partner? A: Both approaches can work. HP transitioned from third-party refurbishment to internal HP Renew Solutions to control quality and capture full margin, reporting profitability equal to new products. Conversely, Back Market's marketplace model aggregates certified refurbishers without requiring manufacturers to build capacity. Consider your scale, product complexity, and strategic priority. High-value products with complex refurbishment may justify internal capability; simpler products might suit certified partner networks. Pilot both approaches before committing to scaled investment.

Sources

The transition to circular design and Product-as-a-Service models represents both environmental imperative and commercial opportunity. Organisations that master take-back economics, design for multiple lifecycles, and build compelling service propositions will capture growing market share as regulations tighten and consumer preferences shift. The 90-day framework provides a practical starting point—but sustainable competitive advantage requires ongoing commitment to circular principles across the entire organisation.

Topics

circularityrecyclingadditionalityScope 3transition plan

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