Lease It! Temporary Ownership May Spur Corporate Responsibility

Whatever happened to that old television you set out on the curb? Most broken electronics and worn-out appliances end up in landfills. But in Europe, where recycling reigns and manufacturers bear a great responsibility for the products they make (a concept known as Extended Producer Responsibility), many appliances avoid the garbage dump. Could it happen here? Some recycling experts think so, and one way may be through leasing. Farsighted manufacturers are beginning to focus on leasing as a way to promote reuse and recycling. Leasing eases the pressure on landfills and lessens demand for raw materials. Currently, most such leases involve corporate-to-corporate transactions, but according to Future Trends, and Patricia Dillon, an electronics recycling expert at Tufts University, leasing options for consumers beyond just automobiles may be available in the very near future.

Achieving substantive results can be slow. In 1991, German manufacturers were forced to take back and recycle product packaging through the country’s “Green Dot” laws, named after the nonprofit cooperative businesses that actually reclaimed the packaging. Now, the law is gradually being broadened to require manufacturer responsibility for not only a product’s packaging, but the safe disposal of the products themselves, including electronics, kitchen appliances and automobiles.

The Eco-Lease

In North America, with no regulatory EPR mandates, the case for manufacturers’ responsibility for products and “eco-leasing” is being pushed by a small group of green-thinking companies. Interface, an Atlanta-based carpet maker, has been perhaps the most vocal proponent. Inspired by Paul Hawken’s 1993 book The Ecology of Commerce, Interface chairman Ray Anderson has been trying to get corporate customers to regard carpeting as a renewable “service” they should lease rather than buy. Under the company’s Evergreen Lease program, Interface retains ownership of the carpet tile it installs. The lessee gains the “use” of carpet underfoot for a monthly fee—and at a lower price than if it had been purchased outright—while Interface remains responsible for the carpet’s upkeep, as well as for recycling it when it wears out, and reinstalling new flooring.

Despite its commitment, the Georgia-based firm has been hit with challenges, and to date has only concluded five carpet leasing transactions, the most recent with Blue Cross and Blue Shield of New York, says Interface official John Hartzfeld. A tax glitch has prevented the company from offering the low lease payments it had hoped to be able to offer, and changing the thinking of building contractors in favor of leasing has been tough. “We believe this is where the future will move,” Hartzfeld adds.

“For computers and electronics, there are several key strategies: from as-is sales to re-selling and upgrading products,” says Tufts’ Dillon. “And if items aren’t resellable as units, then they can be used for parts recovery. I’ve talked with the top four computer companies, and they all have leasing programs for their equipment and PCs. Product take-back is routinely part of the business transaction, but recovery so far has not been free of charge.”

Xerox Corporation has a long history of leasing its copiers and office products to other businesses, though no consumer lease program is available yet. But at its Webster, New York facility, Xerox has embarked on an ambitious initiative which will include leasing programs involving the reclaiming and recycling of its products, says a company spokesperson.

Telecommunications companies, meanwhile, which had moved away from leasing their equipment, are reexamining this practice as they seek more efficient ways of doing business, says Duncan Noble, an environmental sustainability design advisor with Nortel in Ottawa, Ontario. Clients may want bandwidth, he says, but don’t need to own the hardware that facilitates it.

In Europe, Germany’s take-back legislation may soon extend to telecommunications equipment too, and there is a pending European Union directive requiring electronics takeback and recycling, both of which Nortel is monitoring, Noble adds. Such requirements make sense because the manufacturer knows its products best, and has the ability to design them so their components can be easily identified, separated, reclaimed and recycled. It’s going to be the consumers, however, who decide if the trend catches on.