Committing to circularityCircularity describes the quantity of materials managed in a closed loop. means extending the life cycle of products. Products are repairRepair is making a faulty product work again, allowing its use to be extended without the user parting with it, or with a view to reuseReuse designates all operations by which substances, materials or products that are not waste are used again in an identical way to their originally intended purpose. (donation, second-hand sale).ed, shared, rented out and preferably made of sustainable materials. When a product reaches the end of its life, the waste materials are kept within the cycle and recycled as much as possible. That cycle ensures the creation of added value and makes it possible for products to be cheaper to purchase or use. At first sight this is a win-win for producers and consumers but... there is a catch.
Lower price, higher demand
The rebound effect can be explained by the fact that when resources are used more efficiently and a product can be manufactured more ecologically, the cost price drops, and therefore also the sales price. In turn, a lower price stimulates consumers to buy the product and therefore boosts demand. So what is the problem? After all, the higher the demand the more you can sell as a manufacturer. But when you do business with a focus on sustainability, an increase in the consumption of a product or service can actually result in greater environmental impact.
Higher environmental impact through rebound effect
How does it play out in practice? There are three types of rebound effects:
- Increasing consumption due to lower prices: lower prices can make a product or service more popular, to the point of causing more environmental impact. Think of a cheap second-hand smartphone that is used as a backup device, which increases energy use.
- Compensation behaviour: consumers can compensate the positive, circular choice they make in one area in a different area. For instance: I recycle my waste so I can take a holiday by air more often.
- Greater appeal: a technology that not only makes a product or service more circular but makes it so much more attractive that people start buying it more often.
What is the problem exactly?
When the ecological aspect is left out of the equation, it is tempting to think that entrepreneurs aren’t really bothered by the rebound effect. This may seem to be the case, but it is still a good idea to do everything in your power to avoid this phenomenon. The rebound effect may not only cause all your company’s sustainability efforts to be invalidated and fail to translate into a better market position, but it may also mean that as a society, we are missing out on a number of benefits of circularity. Examples include the availability of raw materials, energy savings and a lower environmental footprint.
What can you do to avoid the rebound effect?
- Customer communications
Research shows that customer communications are a key solution. Use your website, social media channels or your label to explain as transparently as possible how your company works on circularity and give your target audience tips on how to use the product in the most sustainable way possible. Explaining that this product or service fits into a broader effort to promote circularity gives customers a sense of responsibility to make better choices, allowing them to make a thoughtful and responsible decision.
- New technologies
In addition, new technologies can also help to suppress the rebound effect and make products more innovative and sustainable.
- Policy makers and legislation
Policy makers can help you curb the rebound effect by developing legislation that discourages overconsumption while fostering responsible consumption.
The FPS Economy has your back
The rebound effect constitutes a challenge for the transition to a circular economyThe circular economy is a restorative and regenerative economy. By maintaining the value of the products, materials and resources in the economy through smart product design, repurposing and/or shared use of products, it reduces the extraction of natural resources by using resources already present in the economy. but if we join forces, we can minimise the effect. Manufacturers, consumers and governments must all take their responsibility if we are to make genuine progress.
The FPS Economy offers practical support to entrepreneurs to make the sustainable choices that are ecologically, economically and socially responsible. On the website of the FPS Economy, you’ll find plenty of tips and information on the efficient use of resources.
