Bill Stephenson
CEO of leasing company states that leasing of products, alongside remanufacturing, can build a circular economy.
Bill Stephenson, CEO and Chairman of the Executive Board of DLL (De Lage Landen), a “global provider of leasing, business and consumer finance solutions”, wrote about how the leasing industry can work together with manufacturers and remanufacturers to build a circular economy for products and transform “the traditional manufacturing model of selling assets”.
Noting that the leasing business is about “helping our customers thrive in tough, competitive marketplaces”, Stephenson says that this means “having to understand their immediate business needs from every angle”, but also requires a “look at the bigger picture” in terms of “commercially attractive sustainable businesses”.
With 80 percent of waste from consumer good ending up in “incinerators, landfill and wastewater”, there is an increasing “squeeze on the planet’s finite resources”, with important materials “running out”, and Stephenson notes that companies need to “think innovatively about ways to develop goods that can be recycled and reused in as many closed loops as possible”.
With the circular economy “gaining ground”, Stephenson says that leasing companies already see “rental and circular methods becoming more attractive to our customers”, and believes that leasing companies can “help drive positive change even further”. By providing a service as opposed to a product, manufacturers then “retain responsibility for the material flow”, as they would be “committed to taking the goods back at the end of the life cycle”.
He believes that this would encourage them to “develop the most durable products, designed for disassembly”, and that customers would benefit by knowing that materials were “recycled, remanufactured or reused”, with this so-called “sharing economy” capable, according to Forbes, of generating $3.5 billion (€2.7 billion) per year at an annual growth rate of 25 percent.
Stephenson notes that leasing companies would need to “deliver service-based solutions” as a market model, which would then “enable manufacturers to build new, successful circular economy revenue models”, and he notes that the company’s own research has found “there are practical advantages for manufacturers and dealers in selling remanufactured or refurbished goods” because they achieve “higher margins for these assets over new products”, as well as giving customers a better deal.
He concludes that the “prize of a healthy closed loop system is in sight. The case for it is clear. The key to this future though also lies with the ability of manufacturers to change their relationship with their customers, based on a new leasing service model. In this way, innovative financial solutions could be a key driver of sustainable business transformation”.