What is Green Servitization
At The ESG Institute, we believe that advancing sustainability starts with understanding the language that shapes it. Our "ESG Terms" series breaks down complex, often overlooked concepts in sustainability and Environmental, Social, and Governance (ESG) reporting—so you can stay informed, inspired, and one step ahead in your journey toward responsible business.
What is Green Servitization?
🔺Green Servitization refers to the shift from selling physical products to providing sustainable services that fulfill the same needs. This approach supports the circular economy by reducing waste and extending product lifecycles.
🔺Why It Matters: Green Servitization challenges the traditional “take-make-dispose” model by incentivizing companies to design longer-lasting, repairable products while minimizing resource extraction and waste. For consumers, it offers access to high-quality services without the environmental cost of ownership. By embracing this model, businesses can align profitability with sustainability and reduce their carbon footprint.
🔺Example: In 2023, Danfoss introduced a Refrigeration-as-a-Service (RaaS) model for supermarket clients. Instead of selling refrigeration units, Danfoss retains ownership and offers refrigeration as a service, ensuring optimal performance and maintenance. This model promotes energy efficiency, reduces material waste, and aligns with circular economy principles.
🔺Did You Know?: A 2023 study by Dr. Sehrish Atif highlights that servitization strategies can enhance resource efficiency and sustainability across various industries, contributing significantly to environmental goals. (Check link in the comments).
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