A Community of Practice (CoP) led by Circle Economy, the Amsterdam-based circular economy group, and Sustainable Finance Lab, the network for sustainable finance, launch an open infrastructure pilot project to reduce the administrative burden on product-as-a-service businesses.
The decentralised digital Circular Service (CISE) platform has been developed by a specially convened Community of Practice (CoP) in collaboration with Bundles, Rabobank, Allen & Overy, ABN AMRO, ING Bank, DLL, and Leystromen, with the support of Nederland Circulair!
The CoP designed a decentralised digital infrastructure to lower the administration costs, in time and money, of providing circular services. The platform will automate administration and network coordination for circular, pay-per-use service providers. Key learnings from the proof-of-concept phase are available in a Circular Service Platform whitepaper, to be launched on April 11.
The Circular Service platform has been tested for three different types of assets: milk, cars, and washing machines. Companies and entrepreneurs who are keen to transition to a circular, pay-per-use model are invited to pilot their service on the platform.
The Value Hill
In the circular economy, supplier and providers of different types (hardware, consumables, and service providers) collaborate to optimise the lifetime of the assets they provide as a service. This collaboration spans from pre-use to post-use, and can be represented in terms of a value hill for any product; for example, a washing machine, or a set of headphones.
An integrated life-cycle system requires that all costs and services involved in operating the asset are shared between participants.
“The technical infrastructure we developed is a means to scaling circular initiatives. Commercial benefits don’t come from the maintenance of the infrastructure, but from the circular business that is facilitated by it. Therefore, it is essential that the platform be open-source and community-maintained”Elisa Achterberg, Project Lead at Sustainable Finance Lab
Collaboration of this nature depends on trust and openness in the network which services the asset. To date, such networks have incurred challenges in coordination and administration, in particular in relation to financing needs and often complex divisions of ownership.
The Circular Service Platform (“CISE” Platform)
The “Managing Value in Circular Networks” Community of Practice (CoP) designed a decentralised digital payment platform for circular pay-per-use business models. The platform could support automatic execution and enforcement of contracts (or “smart contracts”). In future, such a platform could be engineered to support micropayments.
The CISE Platform aims to unburden pay-per-use service providers, such as Bundles, from the administrative hassles involved in servicing assets. The platform functions as a flexible and open facility and is collectively owned and maintained by the service providers.
“The question is: how do we ensure that the value created with our asset is made transparent, and that everyone is compensated according to their performance and that upsides and downsides can be shared?”Marcel Peters, CEO Bundles
“The advantage of DLT is transparency, the disadvantage is transparency”Rob Guikers, Innovation consultant at Rabobank
“It is not about removing intermediaries. Whether existing or new players take on the new roles that come up does not matter, as long as it brings a circular economy closer”Arnoud Boot, professor of Corporate Finance and Financial Markets, University of Amsterdam
The CISE platform is currently in pilot stage and has already been piloted with electric cars (pay-per-driven km), milk robots, and Bundles’ pay-per-use washing machines.
Entrepreneurs keen to provide pay-per-use/circular products or services are welcome to join and make use of the platform; so are financiers seeking to support such value propositions; as well as distributed ledger technology experts and enthusiasts interested in how the technology can enable a circular economy.
“It is my goal to put this story into practice by involving the parties that actually transition towards a circular economy. If you fail to address real challenges companies have, your efforts are useless.”Henk Kuipers, Innovator at Rabobank
“The economic reality changes so fast that it is only by bundling our knowledge that we can contribute substantially to the transition towards a circular economy”Beryl van Wilgen, ABN AMRO
For more information on the platform and on the design choices involved in its development, download the whitepaper at http://circle-economy.com/circular-service-platform
The “Managing Value in Circular Networks” Community of Practice brought together experts from Circle Economy, Sustainable Finance Lab, Bundles, Rabobank, Allen & Overy, ABN AMRO, ING Bank, DLL, and Leystromen, and was supported by Nederland Circulair!