How Product-as-a-Service is reshaping IT sustainability

This article first appeared on ‘Sustainability News’ here

With second-hand marketplaces rising and sustainability regulations tightening, businesses are rethinking their approach to technology procurement. Neil Pein, CEO of BNP Paribas Leasing Solutions, explores how Product-as-a-Service (PaaS) offers a long-term solution to e-waste, affordability, and global shortages – bringing in a new era of circular IT strategies. 

Second-hand marketplaces are booming, with cost and sustainability-conscious consumers flocking to websites and apps for electronics, clothes, homeware, and beauty products. Vinted, traditionally known for second-hand fashion, has recently launched its first dedicated electronics category, attracting customers with pre-loved smartphones, wearable tech, and audio devices.  

This shift extends beyond consumers – businesses, too, are rethinking how they manage, procure, and use technology, particularly as part of a wider push towards reducing e-waste and promoting circular economy practices. 

The IT industry has long been a champion for ‘as-a-service’ models, particularly for areas like cloud computing, software, and infrastructure. But now this model is also emerging as an efficient and sustainable alternative to the traditional ownership model. It’s grounded in an understanding of product lifecycles, offering assets to clients through usage or performance-based contracts instead of outright ownership – aligning IT procurement with sustainability goals, while improving cost efficiency.  

(E-)waste not, want not 

E-waste is one of the biggest causes of environmental harm. A record 62 million tonnes of e-waste was produced in 2022 – up 82% from 2010. By 2030, this is projected to rise to 82 million tonnes. Many of these discarded electronic goods end up in landfill, leaking hazardous materials which seep into soil, air, and water, causing serious environmental damages and health risks. 

A wave of sustainability regulations sweeping across Europe means that more and more businesses are turning to PaaS models to stay both compliant and competitive. Many IT businesses have begun setting ambitious targets to incorporate recycled components into new products and reduce their carbon footprints. Apple has tapped into the ‘recycle, reuse, replace’ attitude, pledging to include 100% recycled cobalt in its batteries by 2025.  

To achieve these targets and cut down e-waste, firms must consider how they can set up closed loop systems that allow customers to return used devices and recycle their components. This requires a shift from outright ownership to an IT procurement model where IT devices are acquired on a contract basis. Here, devices are procured, used, and then recovered for refurbishment and reuse – rather than going straight to landfill after their first lifecycle. Device refurbishment is an integral part of the service, ensuring businesses have a plan to measurably reduce emissions and waste that is built into their IT strategy. 

The hidden costs of new technology production 

The environmental costs of manufacturing new technology can often be overlooked – with its true impact slipping through the gaps somewhat unnoticed. For instance, data centres and electronic production are hugely resource-intensive, consuming vast swathes of energy and water. Annually, a 1-megawatt data centre can use the equivalent of the daily water consumption of around 300,000 people for cooling. Semiconductor manufacturing also has a huge water footprint, with the average chip manufacturing facility consuming 10 million gallons of ultrapure water every day.  

PaaS presents a more long-term solution to these challenges given it supports product lifecycle extension and enhanced device utilisation.  

Part of this includes designing new technology with its end-of-life in mind from the get-go – such as using modular components that allow for easier disassembly, repair, and recycling. This allows them to offer more affordable options to customers, while minimising environmental impact.   

For the cost-conscious buyers 

Embracing circular economy practices in the IT sector also makes financial sense. In Europe, the demand for refurbished smartphones is growing, expected to reach more than 431 million units by 2027 – as consumers seek modern technology more cheaply and sustainability. In the business world, PaaS models allow businesses to tailor their IT procurement strategies to match the needs of their workforce, without incurring high upfront costs. Value-add services, such as maintenance and support, help reduce overall IT expenditure while mitigating compliance, security, and sustainability risks.  

Alongside being costly and environmentally intensive, manufacturing new products is also becoming much more complex for businesses as they grapple with complex supply chains and access to raw materials.  

The global semiconductor chip shortage, kicked off in 2020 by the COVID-19 pandemic, caused knock-on supply issues which continued for more than three years. This brought the need for alternative sourcing strategies under the spotlight, particularly where resources are finite and susceptible to disruption. PaaS models offer a viable solution to ensure that the lights can stay on, while reducing the dependence on volatile supply chains.  

Striving for sustainability and cost efficiency has pushed PaaS models in IT to the forefront. As well as circular end-of-life handling for unwanted devices, PaaS solutions also offer more efficient in-life handling, like proactive maintenance services, to extend product longevity and reduce unnecessary waste. Embedding circularity into IT procurement strategies can play an important role in helping businesses to cut their environmental impact – enabling them to not just stay on the right side of compliance, but drive a more sustainable future.