Rental management: Rental and the circular economy

On the 2nd of December 2015, the European Commission published the Circular Economy Package. It includes several initiatives towards a Circular Economy and is accompanied by legislative proposals.

The objective of a circular economy is to maintain the value of products, materials and resources in the economy for as long as possible, while minimising the generation of waste.

Background

In December 2014, the European Commission decided to withdraw a pending legislative proposal on waste, as part of the political discontinuity exercise carried out for the first Work Programme of the Juncker Commission.

The Commission committed at that time to use its new horizontal working methods to present a new package by the end of 2015. It said this new package would not only cover waste reduction targets but the full economic cycle, drawing on the expertise of all the Commission’s services.

As part of the process to develop the Circular Economy Package, the Commission organised a circular economy conference in Brussels in June 2015. This conference was attended by 700 stakeholders, wishing to contribute to shaping European economic policy making.

In addition to the conference, a 12-week public consultation took place from 28 May to 20 August, which received 1500 submissions, among which was the European Rental Association’s (ERA). As well as this, the Commissioners, their Cabinets and the services held intensive and collaborative consultations with key stakeholders.

The Commission is now calling on the European Parliament and Council to build on this important preparatory work and prioritise adoption and implementation of the legislative proposals.

ERA’s position and undertaking

In April 2015, ERA wrote its first position paper on the revision of the Waste Framework Directive 2008/98/EC to the European Commission and met with the Environment Directorate – General of the European Commission.

Following on from this, in August 2015, ERA contributed to the Public Consultation on Circular Economy. The Association sent a second position paper to the European Commission on the contribution of the equipment rental industry to a European Circular Economy.

At the same time, ERA decided to start an advocacy campaign towards some of the Permanent Representations to the European Union. The objective of this campaign was not only to gather support for the European Commission, but also to be heard by the national authorities.

This project saw the ERA Secretariat meet with the Permanent Representations of the UK, Denmark, Sweden, Finland, France, Spain and the Netherlands during 2015.

Meanwhile in November last year, ERA obtained a meeting with Member of Parliament, Sirpa Pietikainen, who is the rapporteur for the Circular Economy at the European Parliament.

Now that the European Commission has issued the Circular Economy Package, the stakeholders have the opportunity to react to it. Part of this includes the possibility of sending their comments to the European Commission.

ERA has been analysing the Circular Economy Package and will issue a Position Paper very soon, taking into account the pros and cons of the Package. This position will then be communicated to the Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs (DG GROW) and to the Environment Directorate – General (DG ENV).

After this, ERA will go back to the Permanent Representatives so that they can support the rental industry and, at the same time, ERA can help them in their answer to the Commission, which it is expected would be eager to receive some comments.


Why did ERA take this position on the Circular Economy?

In 2013, the ERA Board decided to revive the Sustainability Committee. It was aimed at supporting the rental industry in promoting the environmental benefits of rental as well as in developing tools for helping members to respond to requests from customers and aligning practices in the industry where relevant.

The ERA Committee chose to appoint the consulting firm Schuttelaar & Partners to carry on a study about sustainability in the rental business. This study confirmed and highlighted the benefits of the equipment rental industry in improving sustainability.

Indeed, it highlighted the fact that the rental business can find intrinsic benefits with regard to sustainability – a fact which deserves great recognition.

ERA decided to work with its 13 national rental associations as wel as IPAF (the International Powered Access Federation) in order to make sure that all the rental companies, and especially the SMEs, were aware of the benefits of being sustainable.

As a reminder, ERA has around 100 registered members all over Europe, and the Association also represents over 5000 rental companies thanks to the combined strength of its 13 national rental associations and IPAF members.

At the same time, Schuttelaar & Partners concluded an audit of European rules and regulations in order to allow ERA to better engage with policy makers. This audit identified an opportunity for ERA to take a position in the revision of the Waste Framework Directive, and more widely in the new Circular Economy Package planned for the end of 2015. This is where ERA started its advocacy campaign aimed at the European institutions.

ERA called on the European Union to promote the environment benefits of the rental concept. The concept of rental is of course known to the European authorities, but is very often referred to as “leasing” or as “sharing economy”. As a result, one of ERA’s key objectives is to have rental mentioned as such, since the term rental is different from both concepts.

The motivation of ERA comes from the five principles used in the rental business:
- Shared usage
- Reparability
- Resource use
- Reusability
- Recyclability

Shared usage:
The construction companies and the other customers of the rental industry (including non-construction customers in industrial applications, events and agriculture, etc.) can access equipment when required. The centralised ownership leads to a more frequent, and therefore more efficient, use of the equipment.

Reparability:
Product design that facilitates maintenance and repair has a positive impact on the life-cycle of the equipment, and therefore contributes to the circular economy. To improve the reparability of a piece of equipment, the rental business focuses on two issues:
- Building more robust equipment that lowers the number of breakdowns;
- Standardising equipment. This is one of the most important issues for the rental industry in the search for cost optimisation.

The availability of information on product repair contributes as well to the circular economy.

It is easy to understand why - the ability of rental companies to maintain and repair equipment effectively and according to users’ specification can have obvious benefits to helping to extend the equipment life-cycle.

And a focus on spare parts management is also part of this life-cycle. As far as rental companies are concerned, the increased availability of spare parts improves the reparability of rental equipment.

Resource use:
Lowering resource use in the use phase of the equipment is an important factor in the circular economy.

The resource efficiency of equipment, meaning its consumption of water, electricity or fuel, depends on two criteria: the design of the equipment and how it is used.
- Product design: rental companies actively search for more sustainable equipment for their fleets in order to offer the greenest options to their customers. Economies of scale play a part here. Large rental companies also, if possible, can and do use their bargaining power to demand that their suppliers to invest more in R&D to increase safety and limit/reduce pollution and non-recyclable material in equipment.
- Use of the equipment: at the request of their customers, rental companies can also provide theoretical as well as practical training on how to use their equipment properly. This training can the be followed by an evaluation of the operator’s performance in the workplace, and as such it can enable end-users to optimise the use of the rental equipment.

Reusability:
Components of dismantled construction equipment can be reused.
As re-use is considered to be a form of waste prevention, the rental concept is also closely linked to this idea, which is the preferred option in the waste management hierarchy.

Recyclability:
Rental companies take care of their equipment by repairing when it is still possible, recycling when it is at the end of its life cycle, or selling it to second hand markets, if the used machine still complies with the regulations.

Recyclability is a pillar of the circular economy that becomes increasingly important in the rental business.

The larger rental companies can also use their bargaining power to demand that equipment suppliers invest more in their research and development efforts with a view to limiting the use of non-recyclable material in their machines. In addition, these big rental companies can also lobby manufacturers to take responsibility for end-of-life equipment, by collecting, reusing or recycling used machines.

All those principles are outlined in the Manifesto for the promotion of the sustainable benefits of rental, also used by ERA in its efforts advocating the rental industry as it lobbied the European authorities. The Manifesto is available on the ERA website, http://erarental.org/en/publications/sustainability.

Background
Since ERA began its advocacy works back in April last year, it has found that the reaction of the European authorities has been very positive and supportive of the rental business.

As mentioned before, the term ‘rental’ was the word that was actually meant by many in the Commission, but instead the term ‘leasing’ was used and promoted in the texts that the Commission published. However, now all of the European authorities understand how rental can contribute to a European Circular Economy.

In the report Resource efficiency: moving towards a circular economy, the European Parliament highlights the importance of identifying possible regulatory uncertainties, barriers and/or gaps that could hamper the development of new business models, such as the rental one, which are based on resource efficiency.

According to ERA, the concept of rental also requires a proper definition and regulation, considering its importance from the perspective of saving energy and resources and contributing to a European circular economy.

ERA has recently published its online Sustainability brochure, available at http://sustainability.erarental.org. The brochure presents a dynamic set of best practices on sustainability in the rental industry, categorised according to their role in the supply chain.

Rental companies have the opportunity to share more best practices from their own company experience, and to gather and send information about what they do in this respect to the ERA Secretariat.
If the best practice is selected, it will appear in the next updated version of the Sustainability brochure, as well as being automatically selected as an entry for the Sustainable Business Innovation Award in Rental, which is one of the awards categories featured in the upcoming European Rental Awards, which will be held on 8 June 2016 in Stockholm, during the ERA Convention.

This is a feature from the March 2016 issue of IRN. To read the full article, with extra images and information, subscribe to the magazine: http://www.khl.com/subscriptions/magazines/international-rental-news/