The sustainability impact of the collaborative economy
The humans across the globe continue to consume goods and services in an unsustainable fashion. This is adding to the burden of our already overstressed planet. And the growth in population is adding to the troubles. Our overstressed planet has over 7 billion people consuming resources on a daily basis. And the more the population grows, there are more people who consume resources, hence the production and wastage of resources also increase. However, the emergence of the sharing economy is being touted as an important step, which might help in reducing the burden. Sharing economy supporters believe that it will transform the current business models and lead it towards more sustainable practices.
But at present, the sharing of goods doesn’t contribute much to making the society more sustainable. The reason for this is that the concept is too new and there are very few platforms and most of them have a modest number of transactions per day. Even with the number of users growing rapidly every day, the sustainability impact of the sharing economy is not high. However, the domain is expanding and when it reaches a considerable size, it will provide a significant contribution towards making society more sustainable.
Changed mentality
Traditionally, people buy goods which they might use a few times during its entire life cycle. For example, if we need to hang a few photographs on the walls, we buy a drill. The might be used just a few times a year and for the rest of the time, it sits on a shelf until its discarded. So we need a change in mentality because what we need is a hole for the nail to fix the photograph!
But, in the sharing economy, the same drill would be shared among six other people. This reduces the need to produce five more drills, which in turn means the resources needed to produce those 5 drills can be saved and also less wastage, thus leading to a positive environmental effect.
While sharing is not a new concept, sharing goods and services for financial benefit is new. The world of sharing economy is a burgeoning one, one which most people remain unaware of yet. So, to have a real positive effect on the environment, we’ll need people to adopt the sharing economy on a massive scale. Additionally, we need them to stick to the sharing economy as well, so we need to ensure that they have positive experiences on these sharing platforms. When people’s experiences on the new sharing platforms are positive, it will lead to them sharing more. And the more positive experiences that people have on sharing platforms, it will lead to a change in their mentality. This will get them to start focussing more on using and less on purchasing and ownership.
With the focus changed to use rather than own, the demand for more products decreases, and as a result, production decreases too. A decrease in production means the raw materials and the energy required to produce the goods are saved. Thereby, reducing the negative impact on the environment. There are several markets that are part of the collaborative economy, let’s look into the impact they have on the environment.
Transportation
The transportation sector is one of the largest contributors to greenhouse gas emissions across the world. Currently, the transportation sector accounts for almost 50% of oil consumption globally. Furthermore, it is estimated that 22% of energy-related greenhouse gas emission in the world is due to the transport sector. And it doesn’t show any signs of stopping, on the contrary, the emissions are increasing at an alarming rate. Transportation on the sharing economy could be a solution to reducing emissions and reverse the negative impact on the environment.
Ridesharing will not only lead to a decrease in emissions, but it will also reduce the traffic problem. Moreover, with more and more people adopt sharing, ownership of cars could also reduce. According to a study, approximately 4–13 personal cars could be replaced by one shared car. As the utilization of shared cars increase, new car sales to share car fleets could also potentially increase.
Additionally, this could potentially decrease the CO2e-emissions by about 40–140 kg per member per household per every year. Another advantage is that more shared cars on the road will reduce the need for more parking infrastructure. Moreover, vehicle sharing might also lead to better fuel efficiency. With decreased production and maintenance of vehicles and fuel, the negative impact on the environment is reduced.
Accommodation
Staying at an AirBnB property or something similar rather than a hotel could reduce emissions of CO2e emissions. Hotel facilities such as bars, swimming pools, restaurants and 24-hour operations consume more energy. Private properties such as those listed on AirBnB generate lower emissions when compared to hotels. Moreover, the water and energy usage and waste generation at such properties would be much lesser than in hotels.
According to a study commissioned by Airbnb, at least 88% of their users use lesser energy when compared to hotel guests. In the long run, the demand for new hotels could be significantly reduced because of accommodation sharing. This, in turn, would decrease the need to build more hotels. Not only will this reduce CO2e-emissions pollution due to the construction production of building materials, but it’ll also save on resources. In addition to saving finite resources, fewer new construction means less waste generation from leftover materials etc.
Renting of smaller capital goods
We usually tend to buy most of the smaller capital goods like drills, clothes, shoes etc. But most of these objects don’t get used a lot. For example, a study estimates that an average household uses a power drill for only around 12 minutes over its entire lifecycle. The demand for drills is driven up as every person buys a drill. This leads to an increase in production of drills, which further leads to more pollution.
But with the emergence of the sharing economy, there are several platforms which allow you to rent smaller capital goods. You can use these for a short while rather than buy one of your own.
Sharing your clothes is no more a social stigma, as businesses like Rent the Runway, Tumnus and Resecond have proved.
Resecond allows people from Copenhagen and Aarhus, Denmark, to bring in old clothes and pick another from the available stock. Rent the Runway ensures that everyone has access to designer clothes. People can literally rent designer wear for a much cheaper rate than buying one. With clothes sharing, instead of using clothes for a short period and discarding them, they’re recycled several times. Not only would this reduce the purchase of new clothes, but it could save around 144, 324 or 684 kg of CO2e-emissions.
Sharing platforms like Netflix and Spotify have turned the internet media and entertainment world upside down by moving their audience away from owning anything. Earlier, the audience had to buy physical copies of their favourite movies or television shows or even music. But with the rise of streaming services, there’s been a massive drop in subscribers of DVD and other physical copies. Take, for example, Netflix’s DVD subscription services, which while still alive and marginally profitable, has seen a steep decline from nearly 14 million DVD subscribers in 2011 to a mere 3 million in 2018.
The number of people subscribing to the company’s streaming services has however gone up to 125 million in 2018. With more and more people subscribing to online streaming services, the demand for the little plasticky DVDs will reduce. And this reduction in demand will ensure a decrease in their production, thus leading to less environmental stress from less environment-destructing plastic clogging the world.
How sustainable is it really?
With all the innovations in the sharing economy, can it help reduce the overall impact on the environment? And how long will it take?
The exact impact of the sharing economy on the environment is difficult to determine and can only be speculated on. However, by focussing on renting or sharing rather than owning, the sharing economy aims to reduce the demand for goods and increase efficient use of these goods. This, in turn, will lead to a decrease in production and save resources. So, the sharing economy does have the potential to reduce the overall environmental impact and it could also contribute to reducing the effects of global warming. But it could take years as it will require sharing businesses to achieve massive growth.
However, the impact of these sharing initiatives today could be very different in the future. With more and more innovations and applications using renewable energy, it is possible that CO2e emissions could be eliminated altogether. Imagine, if everyone in the world started driving zero-emission vehicles, which use renewable energy. Transportation would no longer contribute to CO2e emissions and the local air quality would be much better. Similarly, we can start using resources more efficiently and contribute to environmental benefits.
Most of the services offered by the sharing economy cost much lesser than their alternatives. More sharing and less buying will make way for a sustainable lifestyle with less waste without compromising on positive consumer experience. But all this calls for change, for the sharing economy to have a positive impact on the environment, people need to change. They need to start changing the way they consume things and most importantly, they need to learn to share.
