Sharing Economy: a powerful tool for a new era of sustainability.
The so-called “Sharing Economy” (SE) has been gaining more and more relevance in the last few years - especially since 2015, the year that coincides with the inclusion of the term in the Oxford Dictionary. A wide range of stakeholders have increasingly gained a great interest in the SE—namely—in relation with its real nature, reach, scope and implications for the sustainability of the planet and human civilization. Did you know that the Sharing Economy (SE) was nominated as one of the 10 ideas that will change the world, evaluated at $26 billion value in 2013 and, most recently, estimated to have a growth of $335 billion by 2025?
In this article, I try to explain—in the most concise way possible—some of the central ideas about the SE, which may contribute to a better clarification of what this new Era of “post-ownership economy” is – with particular incidence on (i) the potential of a partnership between the SE and the United Nations (UN) 2030 Agenda’s Sustainable Development Goals (SDGs) and (ii) the impacts of the SE on the sustainability of the resources of the planet.
Old, but new.
It is consensual that the habit of sharing is as old as humanity, but—although it is an ancient practice in which people often shared assets with one another—the SE is a relatively new phenomenon through standards of technology born in the era of the Internet, particularly, Web 2.0. In this era you are not helping a friend for free, but instead you are providing SE services to a stranger in exchange for money. Thanks to the SE, people can have access to rooms – Airbnb, Roomorama –, cars and bicycles – Relay Rides, Wheelz—and taxi services – Uber, Lyft.
The SE has had a notable boost and attracted a great deal of attention in recent years from a wide variety of stakeholders. Throughout this process, the SE has been assessed as having enormous potential to create new businesses and services that can allocate value in a fairer way, that are organised in a more democratic manner and reduce ecological footprints, while bringing people together in new ways. So far, it has involved millions or even billions of participants and has allowed to capitalise on existing assets (artefacts and goods – i.e. cars, bicycles, unused rooms in apartments, agricultural machinery, etc.), producing indirect effects on the economy - by introducing “new” assets that were not considered and were being under-utilised.
There is a real transformative dimension associated with the SE. Being fostered by exciting new technologies, it has introduced an easiness by which individuals, even strangers, can now connect, exchange, share information and cooperate while always being in tune with the demands of social responsibility. These developments began to challenge traditional thinking about how resources can and should be offered and consumed, supporting the arguments that incremental improvements in our existing production and consumption systems are insufficient to transform our global economy towards sustainability.
“Incremental improvements in our existing production and consumption systems are insufficient to transform our global economy towards sustainability”
What these new forms of business models have in common is that they operate in “shared economies” of collaborative consumption, where people offer and share under-utilised resources in a creative and new way. Airbnb, for example, allows people to rent part or whole of their homes for short stays, and Uber allows travel in real time and based on location. An increasing number of individuals who may not have considered sharing or renting a room in a private apartment as their vacation residence a few years ago, now prefer these sharing models to more common alternatives. The SE success was also driven by a growing environmental awareness combined with the ubiquity of the Internet and the associated information and communication technologies that enable sharing at scale.
The global partnership between the SE and the UN 2030 SDGs
Reading carefully the Sustainable Development Goals (SDGs) of the UN Agenda 2030 (United Nations, 2017), especially those of numbers 12 and 17—together with the respective data revealed by the organisation—we see that they are in line with what, in my view, is the fundamental purpose of the SE: to constitute a potential tool to bring people together, enable the sharing of information and the better rationalisation of resources that may instigate and lead to considerably more sustainable consumption patterns. I am absolutely convicted that there is a true “partnership” potential between the SE and UN’s SDGs, which may indeed contribute to the global mission and generate the desired sustainable development of the whole society.
“To constitute a potential tool to bring people together, enable the sharing of information and the better rationalisation of resources”
Let’s analyse the SDGs numbers 12 and 17:
SDG 12. Responsible consumption and production
Some of the current obstacles to achieve it are:
• 1.3 billion tons of food are wasted daily;
• The world would save $120 billion annually if people used energy-saving light bulbs;
• The global population is expected to reach 9.6 billion people by 2050 and the equivalent of three planets would be needed to provide the natural resources needed to sustain today’s lifestyle;
• More than 1 billion people still do not have access to drinking water.
SDG 17. Partnerships for the goals
Some of the difficulties in implementing such a guideline are:
• Official Development Assistance (ODA) raised approximately $135 billion in 2014;
• In 2014, 79% of products from developing countries entered the duty-free market in developed countries;
• The debt of developing countries remains stable, at around 3% of export earnings;
• The number of Internet users in Africa has almost doubled in the past four years;
• In 2015, 95% of the world population has cellular signal coverage;
• 30% of the world’s youth are digital natives, active online for at least five years;
• The world population showed an increase in Internet use from 6% in 2000 to 43% in 2015, however, more than 4 billion people do not use this network, and 90% of them are from developing countries.
It appears, therefore, that there is still a long way to mitigate the current gigantic discrepancies and deficiencies in the rationalisation of production and consumption patterns, as well as effectively counteracting the progressive depletion of natural resources. The Sharing Economy movement may come to play an important role in strengthening the means of implementing more sustainable growth. But, in what way?
“The Sharing Economy movement may come to play an important role in strengthening the means of implementing more sustainable growth”
Let me ask you a question, first. Do you believe that sharing rooms and apartments—as Airbnb and other services have allowed—has managed to contribute to a better rationalisation of the civil construction sector? In my opinion, yes! This is because this concept of sharing prevents the construction of new housing buildings—saturating cities with more concrete—using the logic of using resources (rooms and apartments) that already exist in abundance.
I call this perspective a better rationalisation of the assets already present in society and our daily lives. Likewise, we have the services of companies like Uber (or Drive Now, in Portugal), that are on a path to mitigate the constant frenzy of producing cars - leading consumers to question whether it is worth buying a car in the first place. In addition, even if the consumer already owns a car, he/she can opt to use a type of transportation service that assures him/her (1) car quality, (2) low cost in terms of both price and time, and (3) being in consonance with sustainable responsible consumption and production patterns (SDG 12).
There is, therefore, an enormous potential in the new platforms to constitute a mean to implement more sustainable practices and, thus, contribute to the revitalization of a true global partnership for sustainable development (SDG 17).
Sustainable solution? Yes, but only if…
Despite these evident liaisons between the SGDs 12 and 17 and the potential reach of the SE, I have to also bring forward the other side of the coin, where some have been alerting about the negative impacts and implications associated with the SE and its related business services. In the case of Airbnb, for example, some have been claiming that—by having existing buildings become temporary holiday destinations—scarcity of rents in cities might actually increase, thus leading to even higher construction.
I understand this argument and, indeed, I also see it as a threat. However, my argument is that solutions like Airbnb should precisely be at the service of all citizens. Meaning not only destined to tourists, but—most importantly—to local citizens, habitants of cities in the form of rents (equivalent to conventional rents). In my opinion, if it is done so, the necessity to even higher construction would not be a case.
If the Airbnb rooms and apartments are only destined to temporary, very short-term rentals to foreign travellers, such practice surely narrows down the “window” for local residents to have access to rentals as offered by such platform. So, how to achieve such parity? Well, knowing in hand that it might be controversial, I defend that there should be a very specific regulation (some sort of control) on limiting the number (through means of quotas, let’s say) of local existing apartments/rooms for the use of tourists. Or the other way around: limiting the number of tourists in accessing Airbnb (and other alike platforms). In this way, cities won't be de-characterized, and the renting business would be more fairly distributed.
“There should be a very specific regulation on limiting the number of local existing apartments for the use of tourists”
Also—in my very own view—I reckon that the conventional accommodations, such as Hotels and/or Hostels, should not be left aside in this whole problematic. There should also be incentives (in the form of regulation, subsidies, etc.) to reinforce the stimulus for tourists to still look for such forms of temporary stays, so that, they don't overload and asphyxiate these new forms of temporary rentals as Airbnb and others alike.
In a European Union context, for example, all these adjustments understandably require long term deep discussions, negotiations amongst member States, and governmental officials in order to regulate, “standardize”, harmonise the needed laws across the European Union space. In this respect, there still are many things to be done and accomplished. The SE and all its business archetypes have a tremendous potential; however, it should be conducted in an appropriate way, always by defending the interests of all stakeholders involved and not just a portion of them. It is a no easy affair, by no means. But it should be faced in a very serious and responsible way.
The DNA of the SE: Web 2.0
Bearing all the above standpoints, arguments and counter-arguments in mind, there is—however—a fundamental element in this whole process, which we all rarely take consciousness about, because it is already part of the “global system” and way of living our lives. I call it the “DNA” that makes it run: the use of Web 2.0. Without it, solutions like Airbnb, Uber or Drive Now (or any other equivalents) would simply not exist. The world needs to exploit the full potential of Web 2.0 and the Sharing Economy movement, thus, making it possible for the aforementioned 4 billion people who still do not use it, to also contribute themselves to the better rationalization of resources.
There are still 10 years ahead before the SDGs 12 and 17 are reached, but time is imperatively running out. Is everything really being done to in order to achieve this 2030 desideratum? I leave this open question for you—my dear readers—to meditate about.
“Is everything really being done in order to achieve this 2030 desideratum?”
The impact of the SE on the sustainability of the planet’s resources
Since, in principle, the SE apparently discourages consumerism as we knew it and helps to mitigate climate change, can it be said that ‘owning is really worse than sharing’?
At first glance, I would say no. Owning is no worse than sharing. As well as, the very purpose of the SE is not to discourage consumerism. This is not the question on the table. Instead, it is rather to reinvent and redefine the logic behind “owning” and “consuming”. The SE is not and will not end anything. It rather comes to compel us to consume in a different way. Consumerism will never end. It is part of human nature. It is the way that it is done that can be changed. Given the current evidences—especially scientific—that something will have to be done to promote better environmental sustainability rates on the planet, the use of Web 2.0 (a condition inherent to the SE) has to be a key tool for this purpose. In what way?
“The very purpose of the SE is not to discourage consumerism {…} it is rather to reinvent and redefine the logic behind ‘owning’ and ‘consuming’”
As I tried to explain and defend earlier, innovations like Airbnb, Uber and even Drive Now come to contribute to a better rationalization of the planet’s resources. In regards to the first (Airbnb, and other similar ones in the accommodation sector), it has progressively redefined the logic behind “owning”. In the sense that—thanks to this benchmark, and on a global scale—people have increasingly come to join the sharing of their houses and properties (existing resources, therefore) in the form of “temporary income”, thereby inhibiting a frenzy of civil construction companies to build concrete in the cities. There is no need to build new houses when these already exist in abundance.
The same is true in regards to the second example—Uber—in the transportation/mobility sector. Instead of the consumer buying a car for his/her own individual exclusive use, he/she can—in a more rational way—opt to get on-demand access to cars that are of excellent quality (it is so, in Europe, for example), paying values that are below market rates compared to conventional taxis and enjoying a “private driver”. With this new consumption behavior, consumers can also contribute to the decrease in the production of automobiles for private consumption, which has been one of the great harms for environmental sustainability.
In regards to the third case, it is even more striking. Drive Now contributes to a better rationalization of the planet’s resources in two ways: 1 – its fleets are electric, thereby helping to instigate non-fossil consumerism and, therefore, to mitigate current climate changes due to CO2 emissions and the consequent “greenhouse effect” on the planet; 2 – the reinvention of mobility, especially in cities, leading to their better reorganization. Both ways help to the arising of a new paradigm of how environmental sustainability can be achieved. In this regard, I strongly recommend the reading of a recent scientific article on the perspectives surrounding SE’s impacts on sustainability—one of them environmental.
All stakeholders should seize the breakthrough opportunity brought by the SE
I conclude with the following: it is in our hands—of all stakeholders involved—to seize the opportunity that the Web 2.0 (and other upcoming derivates) has brought to, without further excuses, and finally profoundly reinvent consumerism. By doing that, we can preserve our most precious good: our very own “home” without which life would not exist – the Earth. The SE is already a reality. There is no pretext to ignore and disdain its potential reach, scope and fundamental role in redesigning the way we all consume, share, produce, relate to each other and—with that—promote better environmental sustainability for the planet.
João Miguel O. Cotrim
João is a Researcher and PhD Candidate at ISCTE-IUL Business School, Lisbon, Portugal. His work focuses on how and why the Sharing Economy has progressively been gaining legitimacy over the years. His other core research interests deal with Sustainability of the Planet, Globalization, Global Citizenry, Leadership, Social Entrepreneurship & Innovation. Among other academic activities, he was a Fellow Lecturer of Team Management (granted with an ISCTE-IUL Internal Grant), a Visiting Professor and Speaker at Schools of Executive Education in São Paulo (Brazil), Braga and Leiria (Portugal), as well as speaker at several international conferences.
September 2020
Recommended links for further reading:
Belk, R. (2014) You are what you can access: Sharing and collaborative consumption online. Journal of Business Research, 67, 1595–1600.
Bonciu, F. & Bâlgar, A. C. (2016) Sharing Economy as a Contributor to Sustainable Growth. An EU Perspective. Romanian Journal of European Affairs, 16(2), 36–45.
Botsman, R. & Rogers, R. (2010) What’s mine is yours: The rise of collaborative consumption. New York: Harper Collins, UK.
Cannon, S. & Summers, L. H. (2014) How Uber and the Sharing Economy Can Win Over Regulators – HBR. Harvard business review.
Frenken, K. (2017) Sustainability Perspectives on the Sharing Economy. Environmental Innovation and Societal Transitions, 23, 1–2.
Geron, T. (2013) Airbnb And The Unstoppable Rise Of The Share Economy – Forbes. Forbes.
Lovins, H. & Cohen, B. (2011) Climate capitalism: Capitalism in the age of climate change. New York, NY: Hill & Wang.
Malhotra, A. & Van Alstyne, M. (2014) The dark side of the sharing economy... and how to lighten it. Communications of the ACM, 57(11), 24–27.
Stead, J. G. & Stead, W. E. (2013) The coevolution of sustainable strategic management in the global marketplace. Organization & Environment, 26, 162–183.
Sundararajan, A. (2016) The Sharing Economy: The End of Employment and the Rise of Crowd- Based Capitalism. Cambridge, MA: The MIT Press.
Tabcum, S. The Sharing Economy Is Still Growing, And Businesses Should Take Note. (Online) Available from: https://www.forbes.com/sites/forbeslacouncil/2019/03/04/the-sharing-economy- is-still-growing-and-businesses-should-take-note/#781918874c33
Teubner, T. (2014) Thoughts on the Sharing Economy. In Proceedings of the International Conference on e-Commerce, 11, 322–326.
United Nations (2017) Conheça os novos 17 Objetivos de Desenvolvimento Sustentável da ONU. (Online) Available from: https://nacoesunidas.org/conheca-os-novos-17-objetivos-de- desenvolvimento-sustentavel-da-onu/
Zifkin, A. (2015) Interview. In: Politik Media Inc. 2015. (Online) Available from: http://www.politik.io/articles/the-sharing-economy/ (Accessed on 16 September 2020).