How can government incentivise collaborative consumption?

“Put your X-ray glasses on” says John Manoochehri, making two circles with his thumb and first fingers and holding them up to his eyes. “Imagine you can see through buildings. What percentage of all the products in that direction [he points randomly] do you think are being used right now?”

“mmm, One percent?” someone proffers. “Exactly!” he says.

Manoochehri is an advocate of the switch from owning products to using services. Ultimately, he argues, most people don’t want a washing machine or even a car – we want clean clothes and a comfortable journey to work. And we can get these outcomes in a much more resource-efficient way through hiring a service when we need it (e.g. renting a car from Streetcar when we want one) rather than owning a product all the time, he says. That way lots more people can use one product, and the manufacturer has an incentive to make it last.

Sustainable futures
Manoochehri was speaking at the recent Future of sustainable lifestyles and entrepreneurship conference in Cologne, an international get-together of people interested in making sustainable living a reality. I went there to help answer this question, which we’ve been starting to think about lately:

How can businesses help their customers to live more sustainably, and what can government do to make this happen?

This question is pertinent for a number of reasons:

  • Big businesses such as Unilever have recognised that much of the carbon footprint of their products comes from customer use, and that to reduce their impact they will need to get into behaviour change.
  • Innovative companies are beginning to come up with new business models aimed at driving more sustainable consumption (such as the renting and sharing platform Ecomodo)
  • Some businesses have begun  helping their staff to live more sustainably – for example offering subsidised insulation or setting green living challenges
  • But there are policy barriers, and most companies never try because there’s no real incentive for them to do so.

The role of policy
The framework that government sets for businesses can either unleash great potential in the private sector to help drive sustainable living, or constrain it. Landfill tax, for example, created a recycling industry and brought businesses like RecycleBank to the UK. In California, a reformed electricity market means that the company Opower can make money from helping people change their habits and use less energy. Without the underpinning policies, these businesses would not exist.

But sometimes policy can get in the way. For example a group of companies who wanted to offer subsidised insulation to their employees found that it counted as a taxable benefit and so was more expensive. Other perks, such as bike loans, are exempt from this.

Back at the conference, the shift from products to services seemed the most exciting behaviour change model being pursued by businesses. Rachel Botsman of Collaborative Consumption said that bike sharing schemes – like Boris bikes – are the fastest growing mode of transport in the world.

I like this idea because it doesn’t rely on waiting for someone to change their attitudes and then their actions – it just gives them an attractive alternative.

Botsman says that government can do four types of thing to help businesses that promote renting, sharing and swapping:

  1. Get out of the way (remove policy barriers)
  2. Introduce legislation to make change happen
  3. Form public-private partnerships
  4. Help import, amplify and scale new business models

What do you think?

What are some of the most exciting ways that businesses are helping people to reduce their environmental impact?

What barriers do companies face when trying to help their customers or employees go green? How could changes in the policy framework encourage other companies to get into this area?

6 comments

  • Pingback: How can government incentivise collaborative consumption? | the green living blog #collcons « Collaborate Leeds

  • Incentives will have a limited effect. Governments need to regulate to limit the power of the incumbants so that there is a level playing field and nnovation can take place. I read recently of someone who tried to launch an innvovative green product. He was advised to withdraw the product or ‘drown in legal fees’. Believe me, I’ve tried to compete with the big boys, the eco-product I promote has incentives attached, but still the real nappy industry faces market failure.

  • The Power of the Crowd
    You omitted to mention the development of collective ‘green’ purchasing. We at Energise Barnet, for example, are establishing community buying groups for solar PV / thermal, solid wall insulation and other high cost energy saving measures. Community buying groups bring the Big Society agenda, Localism and need to combat climate change together, creating social capital and reducing carbon emissions.

    It’s down to industry to recognise the power of communities and help them deliver. However, most players have not yet ‘got this’. As a result, more than 90% of community energy initiatives are in rural areas, not urban. It should be the other way round!

    We thus need 000s of ‘green’ buying groups established in towns and cities across the UK seeded by energy suppliers/ installers/ managing agents and philanthropic capital, if we are to seriously tackle carbon emissions in urban areas where wind and hydro projects are generally not feasible.

    • Thanks for your comment. Collaborative purchasing is a really interesting idea because it can bring down price while increasing trust and social norms around something like home retrofits. Do you think that government has a role in promoting group green purchasing, by encouraging businesses to work street by street for example? Or is it down to industry?

      • Community initiatives are better placed than businesses to gain residents’ trust, deliver street by street demand and create social capital. Importantly, any surpluses from their activities also goes back into the community, instead of shareholders’ pockets.
        I thus feel energy suppliers and installers etc need to encourage their development by partnering with them and perhaps the Green Investment Bank needs to provide seed funding because venture capitalists won’t as there is no ROI.

  • i’m currently setting up a new website that aims to develop collaborative consumption models. I don’t agree that businesses don’t offer a ROI operating in this area. I strongly believe as time passes our economy will become increasingly focused on collaborative consumption models and there will be ample room for businesses to offer quality services in various niches. Just look at Whipcar in London.

    I think really the only way for society to achieve a more sustainable alternative is for business to start testing these models out. Technology has now provided us the tools to do this, all that it required is a shift in consumer behaviour, which is happening. I think this will be slow but over time the people will see that having a more efficient economy will benefit everyone both individually and together. Especially given how the world economy is looking. We’ve had 20 years of falling costs, and growth. I think we’ve reached the end of this in Europe and the only way to sustain a similar quality of life is to become increasingly efficient.

    Sadly given the I don’t think there will be much support from the current government. Although it is focused on social enterprise and achieving its carbon reductions. We have to consider that this type of economy could be harder generate taxable income from when compared to our current purchase orientated system. As long as government can open up funding for SME’s I think the market will be able to find solutions.

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