Which services enhance ecological, social and
economic sustainability of households?
What is an eco-efficient service
The ideas for the eco-efficient service thinking come from many sources. One of its roots is the socalled factor discussion that urges to decrease the intake of materials into economy radically: by a factor of four (von Weizsäcker, Lovins and Lovins 1997) or by a factor of ten (Schmidt-Bleek 1998). The urged dematerialization and/or deduction in energy usage has been proposed to be achieved by fulfilling the needs of customers with the help of services instead of products (e.g. car-sharing service instead of a private car). Services that replace products to a greater or lesser degree, and thus reduce the material and energy needed to perform an economic activity (e.g. moving, living, cooking), are often called eco-efficient services, or shortly, eco-services3.
There can be seen different types of eco-efficient services. They extend from conventional forms of renting, leasing and sharing to selling ‘solutions’ (e.g. integrated pest management) (Hockerts 1999). A number of typologies have been developed in order to classify the broad range of services that can be seen to involve an eco-efficiency component. Hockerts (1999), for instance, divides such services into three groups on the basis of: their connection to the existing product, the level institutional arrangements and intensity of customer interaction. In general, the classifications vary slightly based on the author’s line of reasoning. The following is an integrative classification based on studies of Hockerts (1999), and Heiskanen and Jalas (2000). (1) Product-based services are services that are related to the use of a product. The product may be sold to the customer or not. In the former alternative the service component relates to repair, maintenance, upgrading or take-back of the product. The model can be seen as an example of extended responsibility of the producer even after
2 Sometimes called ‘goods-services spectrum’. Adapted from G.L. Shostack, ‘Breaking Free from Product Marketing’, Journal of Marketing, April 1977.
3 All services that replace products are not always necessarily more environmentally sound than a product fulfilling the same need.
the point of sale. The concept is relatively close to conventional manufacturing business - for instance the common of practice giving a guarantee extends the responsibility of the seller or producer of the product. The latter alternative, renting or leasing a product to the user, goes a step further: the ownership remains with the producer. We then speak of rental, leasing, etc. services (“fleet management approach”). These kind of services are sometimes also called use-oriented services, because only the use of product is being sold (e.g. in a car sharing concept the use of car is the offer).
(2) Result-oriented services are services within which the focus is on fulfilling’s customers’ needs, and which are or seek to be independent of a certain product (therefore sometimes called need-oriented services). This type of services can be seen as including various forms of contracting, for instance least-cost planning in the energy sector, facility management, or waste minimization services. Resultoriented service may be offered by the manufacturer, e.g. energy provider. It may be profitable for the provider to promote energy-saving equipment. A decrease in demand through gains in efficiency allows the energy company as well as the Business Energy Suppliers to increase its market share without having to build new power plants. However, these kinds of services are frequently provided by another company, e.g. energy saving company. Discovering instances of result-oriented services often calls for redefinition of the need of consumer, e.g. instead of “electricity”, the need of consumer is lighting. Compared to sale of products or product-based services, the service concepts of this category are likely to require increased interaction with the customer and involve more complicated institutional arrangements.
(3) Non-material services are yet another category that should be discussed in the connection of services that can lead to lessening environmental burden in the society. These traditional services, such as medical or personal care, legal services, banking etc., do not as such directly replace products. Their potential ecological contribution realises through another kind of mechanism. From a macroeconomic perspective, the shift to services and thus growth of service intensity of the economic production contributes to ecology through the decline of traditional smokestack and extractive industries in relation to less materials-intensive and more knowledge- and labour-intensive service industry. These services, however, are not necessarily eco-efficient. Their eco-efficiency must be assessed per each individual service and its context (cf. Salzman 2000).
Why would the above outlined services contribute to eco-efficiency, i.e. to reduction in materials and energy consumption? There are a number of reasons why efficiency benefits may accrue. Firstly, if the ownership of the product remains with the manufacturer, there is an incentive for producing more durable goods. This is because the income is created by the sales of the use of the product, not the one-time sale of it. Secondly, a lower stock of products is needed if consumers use the same product in sequence. The lower the stock of products, the less material is needed to produce them. In other words, more intensive use increases the probability of higher service yield before the product becomes obsolete due to outdated technological characteristics or e.g. fashion 4. Thirdly, related to result-based services where the operator takes responsibility of product use, the service may facilitate more professional product use. To mention one more instance of contribution, the service model may contribute to choice of a product more relevant to the task. For example, in a car-sharing system, the user may choose a car that fits for transportation task at hand: a small car for one person and a family car for multiple persons. This reduces instances of overkill, i.e. choosing products that are too big or with too many accessories, just in order to be prepared for all possible contingencies 5 (Heiskanen and Jalas 2000).