Industry Positioned to Lead the Sustainability Movement as Circular Economy, As-a-Service Models Gain Relevance
September 27, 2023
The concept of the circular economy is gaining ground among global businesses, as both governments and enterprises start making what is expected to be trillions of dollars of capital investment in the transition to a clean-energy economy. The equipment leasing and finance industry was following circular economy practices long before this term became part of the green economy lexicon.
This is one of several aspects that positions the industry to lead in the growing climate equipment finance market, as The Alta Group advisors Patricia Voorhees and Ian Robertson point out in the final installment of their three-part series on climate equipment finance, published in Equipment Finance Advisor.
In contrast to the linear economy—where products get created, used and then discarded—the circular economy focuses on the reuse of assets over a much longer life cycle. Voorhees and Robertson write that asset management, as a fundamental tenet of equipment leasing, has driven a heightened awareness of the importance of extending the life cycles of equipment and identifying secondary markets to keep equipment in use longer.
“With the growing appetite for sustainability investment, we have observed a paradigm shift in practices and policies by vendors and manufacturers alike,” the authors write. “This is driven not only by market dynamics, but also by customer demands.”
The article also discusses the evolution of as-a-service business models. While this is not a new concept to the equipment leasing industry, Voorhees and Robertson offer examples of how innovation in this business model could open new revenue streams, while also helping businesses to achieve their sustainability goals.
“This type of thinking relies increasingly on capturing and exploiting data, and having a much closer understanding of the customer’s business and their equipment needs,” the authors state. “This is a great opportunity for our industry to position itself as the domain experts in equipment management from both an economic and sustainability perspective.”
The article details specific avenues for industry professionals to learn about the immense opportunity presented by climate equipment finance. Read the entire article here.
Voorhees will share more on the topic of climate equipment finance at the 62nd Annual Equipment Leasing and Finance Association convention in Phoenix Oct. 22-24. She and other industry experts will discuss “Sustainable Innovation: Driving Climate Finance in Today’s Market” in one of four breakout sessions scheduled for Oct. 23. The session is supported by the ELFA Climate Finance Working Group, which Voorhees chairs. Learn more here.
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