UNITED NATIONS ECONOMIC COMMISSION FOR EUROPE

UNITED NATIONS FRAMEWORK

CLASSIFICATION FOR RESOURCES AND
UNITED NATIONS RESOURCE
MANAGEMENT SYSTEM: ENABLING
RESOURCE SERVITIZATION PARADIGM

ECE Energy Series XX

UNITED NATIONS

Geneva, 2023
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FOREWORD
The 2030 Agenda for Sustainable Development and the Paris Agreement on climate change have
clearly mandated a transformation towards a more sustainable and circular use of natural resources.
To support this transformation, UNECE has developed two complementary tools: the United Nations
Framework Classification for Resources (UNFC) and the United Nations Resource Management
System (UNRMS). These tools offer a universally applicable, principles-driven, and user-friendly
framework for classifying, managing, and reporting energy and mineral resources, aimed at aligning
policy, industry, and investment decisions with the Sustainable Development Goals (SDGs).

One of the key concepts that underpin UNFC and UNRMS is resource servitization. This paradigm
shift transforms the traditional commodity-based economy into a service-based economy, where
resources are offered as solutions to meet the needs of customers and society. Resource
servitization can enhance resource efficiency, reduce environmental footprint, create value-added
services, and foster innovation and competitiveness. However, it also poses challenges and
opportunities for policymakers, industry actors, and other stakeholders.

The growing consciousness among younger consumers is shifting the responsibility for sustainability
from producers to individuals, emphasizing conscious resource consumption decisions. This shift
represents enduring value, as it underlines the long-term relationships and benefits that resources
can provide consumers. Resource servitization is a fundamental principle of a circular economy, an
economy that decouples economic activity from the consumption of finite resources. The circular
economy aims to reduce demand for primary materials, improve the quality of life, and create a
sustainable, regenerative society while reducing any human activity's climate, energy and
environmental footprint.

To enable resource servitization, we need tools that can help us assess and report the social,
environmental, and economic viability of resources, as well as their technical feasibility and
confidence in estimates. This report explores how UNFC and UNRMS can facilitate resource
servitization in different sectors and regions and illustrates their applications and benefits. The
report also identifies the challenges and opportunities for implementing resource servitization in
practice and offers recommendations for policymakers, industry actors, and other stakeholders to
support this transformation.

I encourage policymakers, industry actors, investors, civil society organizations, and other
stakeholders to adopt the principles and requirements of UNFC and UNRMS and use the concepts,
guidelines, and best practices mentioned in this report to implement a robust resource servitization
model. I also recommend establishing clear national visions, strategies, and industrial policies to
support a just energy transition and attain a circular economy. Together, we can create a more
sustainable future for all.

United Nations Under-Secretary-General

Executive Secretary
United Nations Economic Commission for Europe
Acknowledgements
The experts who have contributed to the drafting and review of this document [TO BE COMPLETED]
are Julian Hilton, Aleff Group, UK; Simon Michaux, Geological Survey of Finland (GTK), Finland;
Ludwig Hermann, Proman Consulting, Austria; Frances Wall, University of Exeter, UK; Teresa Ponce
de Leão, Laboratório Nacional de Energia e Geologia, Portugal; Bob Felix Ocitti, Expert, African
Union; Charlotte Griffiths, ECE and Harikrishnan Tulsidas, ECE.
Contents
Introduction...........................................................................................................................................8
What is resource servitization?.........................................................................................................9
Historical context and evolution......................................................................................................10
The current state of resource servitization......................................................................................11
The importance of circular economy...............................................................................................11
Sustainability challenges to the circular economy...........................................................................12
Resource efficiency..........................................................................................................................14
A total resource reset......................................................................................................................20
Circularity and the end of wastes....................................................................................................21
Role of technology and data............................................................................................................24
Resource servitization model to complement the commodity models...........................................24
Challenges and barriers to resource servitization............................................................................25
Future trends and 0pportunities in resource servitization..............................................................26
Role of UNFC and UNRMS in supporting resource servitization......................................................27
UNFC and UNRMS: Concepts and principles........................................................................................29
United Nations Framework Classification for Resources.............................................................30
United Nations Resource Management System..........................................................................32
UNFC and UNRMS: Applications and best practices for sustainable resource management...........34
UNFC and UNRMS for CRMs: Guidelines and best practices for MSMEs in Ukraine....................34
UNFC and UNRMS for geothermal resources: A case study from Albania...................................35
How UNFC and UNRMS can enable resource servitization..............................................................35
UNFC and UNRMS: Benefits and challenges for resource servitization...........................................37
Resource servitization: A new paradigm for sustainable resource management................................39
The origins of resource servitization................................................................................................40
Drivers and barriers.........................................................................................................................43
Behavioural change – the rise of the instinctively responsible consumer.......................................43
Resource use efficiency and closing the loops.................................................................................44
Resource servitization: A policy approach to reducing resource consumption...............................45
Decoupling...................................................................................................................................45
Subscription, membership or pay-as-you-go economy...............................................................46
Models: Consumables, Network model.......................................................................................47
Impacts and implications of resource servitization..........................................................................47
The resource ecosystem: how the innovative resource sector can deliver resource servitization......49
Food, water, energy, raw material nexus........................................................................................49
 Innovation.......................................................................................................................................50
Breaking the silos.............................................................................................................................50
Resource servitization in practice....................................................................................................52
Energy as a service...........................................................................................................................54
Efficiency as a service......................................................................................................................55
Critical raw materials as a service....................................................................................................57
Resource servitization, financial reporting and intangible assets....................................................59
Transition from a linear to a resource servitization model..............................................................61
Resource servitization: Implications and recommendations for sustainable resource management..63
Policy drivers: Regulation of resource servitization.........................................................................64
Good practices in resource servitization..........................................................................................66
Outcomes and lessons learned........................................................................................................67
Recommendations...........................................................................................................................69
Introduction

The world faces multiple crises threatening the well-being of people and the planet. Climate change,
food insecurity, energy scarcity, and environmental degradation are some of the urgent challenges
that require collective action and systemic change. Natural resources are essential for human well-
being, economic development, and environmental protection. However, the current resource
production and consumption patterns are unsustainable, as they deplete the finite resource base,
generate harmful emissions and waste, and create social and economic inequalities. To address
these challenges, the United Nations has adopted the 2030 Agenda for Sustainable Development
(2030 Agenda) and the Paris Agreement on climate change, which calls for a transformation towards
a more sustainable and circular use of natural resources.

To support the transition towards a sustainable resource management approach, the UNECE has
developed two complementary tools: UNFC and UNRMS. UNFC serves as a global, principles-based,
and user-friendly classification system for energy and mineral resources. Its comprehensive scope
covers minerals, oil, gas, renewable energy sources, nuclear energy, carbon dioxide storage,
groundwater, and secondary resources. UNFC aspires to align policy, industry, and capital allocation
with the Sustainable Development Goals (SDGs). UNRMS emerges as a comprehensive framework
for sustainable resource management that looks towards the future. It aims to assist stakeholders in
achieving diverse objectives, such as fostering a circular economy where possible. UNRMS is
grounded in UNFC and employs a unique approach to assess resources based on three dimensions:
environmental, social, and economic viability; technical feasibility; and confidence in estimates.

One of the key concepts that underpins UNFC and UNRMS is resource servitization, which is a
paradigm shift that transforms the traditional product-based economy into a service-based
economy, where resources are offered as solutions to meet the needs of customers and society.
Resource servitization can enhance resource efficiency, reduce the environmental footprint, create
value-added services, and foster innovation and competitiveness, but it also poses challenges and
opportunities for policymakers, industry actors, and other stakeholders. Resource servitization is a
form of open-service innovation, which involves bundling services with existing product offerings,
and collaborating with external partners to create and deliver value.

This report introduces the concept of resource servitization, which is a paradigm shift from selling
resources as products to offering them as services that meet the needs of customers and society.
Resource servitization can support the transition to a circular economy, where resources are used
more sustainably and responsibly, minimising or eliminating waste.

We require tools that can help us evaluate and communicate the technical feasibility, as well as the
social, environmental, and economic sustainability of resources to enable resource servitization.
These tools should also give us confidence in the accuracy of estimations. This document delves into
the ways in which UNFC and UNRMS can enable resource servitization across diverse industries and
geographical areas, while providing examples of their uses and advantages The challenges and
possibilities of implementing resource servitization in practice are recognized and addressed in the
report. Additionally, recommendations are provided for policymakers, industry actors, and other
stakeholders to facilitate this transformation.

This report aims to contribute to the global efforts to achieve the SDGs and the Paris Agreement by
promoting a more responsible and circular use of natural resources. The report is based on the May
2021 UN Policy Brief "Transforming Extractive Industries for Sustainable Development", which
recommends using UNFC and UNRMS as a delivery platform for resource servitization. The concept
proposed in this report must be tested in appropriate resource life cycles before verifying its actual
use. It may or may not apply to all situations and resources.

The key messages of the report are:

• UNFC and UNRMS are complementary tools that enable more sustainable and circular
use of natural resources, in line with the 2030 Agenda and the Paris Agreement.
• Resource servitization is a paradigm shift that transforms the traditional product-based
economy into a service-based economy, where resources are offered as solutions to
meet the needs of customers and society.
• Resource servitization can enhance resource efficiency, reduce the environmental
footprint, create value-added services, and foster innovation and competitiveness.
Resource servitization presents both obstacles and possibilities for decision-makers,
participants in various industries, and other relevant parties.

This report aims to explore the concept of resource servitization and its implications for UNFC and
UNRMS, as well as to provide examples and recommendations for its implementation in different
resource sectors.

What is resource servitization?

Resource servitization is a concept that describes the transformation of the traditional commodity-
based economy into a service-based economy, where resources are offered as solutions to meet the
needs of customers and society. Resource servitization can be seen as open-service innovation,
which involves bundling services with existing resource offerings and collaborating with external
partners to create and deliver value. For example, a copper producer can offer a service that
guarantees the supply and quality of copper for its customers rather than selling it as a commodity.
This can reduce material and energy consumption, extend the life cycle, and increase customer
loyalty and satisfaction. The copper producer can also collaborate with other stakeholders, such as
recyclers, manufacturers, and end-users, to create a circular economy for copper, where the
material is reused, repaired, refurbished, remanufactured, and recycled rather than disposed of. This
can create value-added services, such as traceability, certification, and innovation, and foster
competitiveness and sustainability.

However, resource servitization also poses several challenges that need to be addressed to ensure
its sustainability and effectiveness. These technical challenges include developing and adopting new
technologies and processes that enable eco-design, reuse, repair, refurbishment, remanufacturing,
and recycling of products and materials. Some are economic, such as shifting from a linear to a
service-based business model and dealing with market failures and distortions favouring linear
practices. Some are social, such as changing the behaviour and culture of consumers, producers, and
policymakers and managing unintended social impacts.

Therefore, resource servitization requires a holistic and systemic approach that considers the
environmental, economic, and social dimensions of sustainability and that involves the collaboration
and participation of all stakeholders, the integration and alignment of policies and regulations, the
innovation and adaptation of technologies and business models, and the education and
empowerment of citizens and communities.
Historical context and evolution
Resource servitization, a concept that has evolved over time, is a shift from a commodity-based
economy to a service-based one. This model originated during the financial meltdown of 2008 as a
modest experiment and has since gained traction, particularly accelerated by the COVID-19
pandemic.

Traditionally, extractive industries such as mining, oil and gas, and forestry relied on the commodity
model, producing and selling raw materials as products. This model, however, exposed them to the
volatility of commodity prices and generated negative externalities like environmental degradation
and resource depletion.

Resource servitization emerged as a solution to these challenges. It offers resources as solutions to

meet customer and societal needs rather than as products to be consumed and disposed of. This
model is transforming industries globally, including retail, journalism, manufacturing, media,
transportation, and enterprise software.

The shift to a service-based economy is driven by various factors, including increasing demand and
scarcity of natural resources, growing awareness and regulation of environmental and social
impacts, and the advancement of digitalization, automation, and data-driven insights.

However, the transition also poses challenges. It requires a transformation of organizational culture,
capabilities, processes, and partnerships, as well as a change in customer behavior and expectations.
It also faces different drivers and barriers depending on the context and market of each industry and
region.

Resource servitization is a promising avenue for advancing the circular economy and the SDGs, but it
also causes significant challenges and risks that need to be carefully addressed. It is not a one-size-
fits-all solution, but a context-dependent and dynamic process that requires a holistic and systemic
approach.

The evolution of resource servitization represents a paradigm shift in our approach to resource
management, offering a more sustainable and efficient model for the future.
The current state of resource servitization
Resource servitization has gained prominence in a diverse range of countries and industries,
providing a new lens through which to view resource management. Its implementation has
successfully traversed various contexts and markets, including agriculture, automotive, healthcare,
robotics, building technology, workplace technology, transportation, and energy. This shift from a
product-oriented economy to a service-driven one has presented both hurdles and opportunities for
policymakers, industry players, and other stakeholders, who must continuously adapt and innovate
to align with evolving circumstances and best practices. Resource servitization necessitates a holistic
and systemic approach that actively engages multiple stakeholders and perspectives while
embracing a continuous process of innovation and adaptation.

Regulatory principles related to resource servitization vary between countries. The policy drivers
adopted in this report to guide the effective regulation of resource servitization as applied to natural
resources share a crucial assumption. The purpose of adopting resource servitization as a framing
condition of resource management policy is to facilitate and enhance the efforts invested by
individual nations to improve their overall management of natural resources to benefit their citizens
in the face of a severe global challenge. This is to be achieved by enhancing social, environmental,
and economic performance in national resource management, ensuring the equitable distribution of
benefits to national citizens from valorization and use of these resources by third countries or
external investors, enhancing governance, accountability, and stakeholder confidence in natural
resource management.

The diversity of needs and priorities across nations and within them precludes the existence of a
single, universally applicable solution. Each country's approach to resource management should be
tailored to its unique context and challenges. Resource servitization has emerged as a promising
approach in various countries and industries, offering a fresh perspective on resource management.
However, its implementation and regulatory framework differ significantly between countries,
necessitating customized strategies to address specific circumstances and challenges.

The importance of circular economy

The circular economy (CE) is a transformative approach to sustainable resource management that
challenges the traditional linear "take-make-dispose" model. In a circular economy, the focus is on
designing out waste and pollution, keeping products and materials in use for as long as possible, and
regenerating natural systems. This model is pertinent to sustainable resource management as it
promotes the efficient use of resources, reduces environmental impact, and fosters economic
resilience.

In a CE, economic activity is decoupled from the consumption of finite resources, aiming to create a
regenerative system that benefits businesses, individuals, and the environment. The concept
extends beyond recycling, encompassing a holistic economic model that revolutionizes production,
consumption, and our interaction with nature. It seeks to minimize the demand for primary
materials, enhance the quality of life, and establish a sustainable society while significantly reducing
human activities' climate, energy, and environmental footprint.

Resource servitization, a key circular economy principle, represents a paradigm shift from a product-
centric to a service-oriented economy. Here, resources are provided as services to meet customer
and societal needs, improving resource efficiency, reducing environmental impact, creating value-
added services, and driving innovation and competitiveness. This shift is not without its challenges,
but it presents opportunities for policymakers, industry players, and stakeholders to rethink and
reshape the way resources are managed and utilized.

The CE's relevance to sustainable resource management is underscored by its potential to address
the increasing demand for materials, as evidenced by the projected need for 190 billion tonnes
annually by 20601. By adopting circular principles, we can mitigate the unsustainable extraction and
consumption of natural resources, thereby supporting climate action targets and contributing to a
more sustainable future.

The CE is a critical framework for sustainable resource management, offering a pathway to more
efficient, equitable, and environmentally friendly use of resources, which is essential for the long-
term health of our planet and society.

Sustainability challenges to the circular economy

The CE is a model of production and consumption that aims to minimize waste and maximize value
by keeping resources in use for as long as possible and by recovering and regenerating them at the
end of their life cycle. The CE is a key strategy to achieve SDGs and the Paris Agreement, as it can
reduce greenhouse gas (GHG) emissions, enhance resource efficiency, create jobs, and foster
innovation.

However, the transition to a CE also faces several challenges that need to be addressed to ensure its
sustainability and effectiveness. Some of these challenges are:

• Technical challenges: The CE requires the development and adoption of new

technologies and processes that can enable the eco-design, reuse, repair, refurbishment,
remanufacturing, and recycling of products and materials. However, these technologies
and processes may not be readily available, affordable, or scalable, especially for
complex products that contain multiple materials and components. Moreover, some
products and materials may have inherent limitations that prevent their circularity, such
as low durability, high toxicity, or low recyclability.
• Economic challenges: The CE implies a shift from a linear to a service-based economy,
where products are offered as solutions to meet the needs of customers and society.
However, this shift may entail significant costs and risks for businesses, such as the need
to invest in new infrastructure and equipment, the loss of revenue from reduced sales,
the uncertainty of customer demand and satisfaction, and the increased competition
from new entrants and alternative solutions. Furthermore, the CE may face market
failures and distortions, such as the lack of price signals that reflect the environmental
and social costs and benefits of circularity, the existence of subsidies and incentives that
favour linear practices, and the presence of externalities and information asymmetries
that hinder the coordination and collaboration among stakeholders.
• Social challenge: The CE involves changing the behaviour and culture of consumers,
producers, and policymakers, who all need to adopt new values, norms, and habits that
support circularity. However, this change may encounter some barriers, such as the lack
of awareness and knowledge, resistance to change and innovation, the preference for
ownership and convenience, distrust and dissatisfaction with circular products and
services, and the inequality and exclusion of vulnerable groups. Additionally, the CE may
have unintended social impacts, such as the displacement and disruption of workers, the

1
See UNEP (2019) Global Resources Outlook https://www.resourcepanel.org/reports/global-
resources-outlook
 erosion and appropriation of traditional and local knowledge, and the violation and
infringement of human rights and ethical principles.
• Natural resource management challenges: The CE also implies a new approach to
natural resource management, which is the process of planning, developing, allocating,
and using natural resources sustainably and equitably. However, natural resource
management faces several difficulties, such as the complexity and uncertainty of natural
systems, the diversity of and conflicting stakeholder interests, the fragmentation and
inconsistency of policies and institutions, and the lack of data and information.
Moreover, natural resource management needs to consider the trade-offs and synergies
between different types of resources, such as energy, water, land, and materials, and
their impacts on the environment and society. Therefore, natural resource management
requires a holistic and integrated framework that can account for the interdependencies
and interactions among resources, sectors, and actors and that supports the transition
to a CE.

These challenges illustrate the complexity and diversity of the issues that the CE entails and the need
for a holistic and systemic approach that considers the environmental, economic, and social
dimensions of sustainability. Hence, the CE requires the collaboration and participation of all
stakeholders, the integration and alignment of policies and regulations, the innovation and
adaptation of technologies and business models, and the education and empowerment of citizens
and communities.

The United Nations Policy Brief on Transforming the Extractive Industries, 25 May 2021 2, identifies
the extractive industries as perhaps the most critical to successfully delivering the Sustainable
Development Goals (SDGs)3, notably SDGs 7, 8, 9, 12, 13, and the Paris Agreement, Paris (2015), see
https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement 4. However,
current raw materials extraction and recycling are too low to accommodate the energy transition,
and a broad section of society is increasingly concerned about the social and environmental impacts
of the activities of the extractive industries. Concerns related to the well-being of indigenous peoples
worldwide and other challenges, such as low environmental standards, freshwater use and poor
governance, make the energy transition and climate action goals hard to achieve. The central point
identified in the Policy Brief – the need for a "shift in mindset" – is the issue of dealing with the
extensive range of environmentally damaging and highly costly negative externalities, a legacy of the
past. Of these, climate change is the most serious and most universally significant. This means a
radical shift from past practices of extractive activities sourcing a market to resource servitization
(Resource Servitization), taking one (or more) step further to encompass how resources are
deployed to meet societal needs. The range of business cases to achieve this must be built with the
participation of the extractives sector, as underlined by the Policy Brief:

"Transforming extractive industries must be part of the solution. This will require
giving equal weight to the management of the impact of extractives on societies

2
UNITED NATIONS, Policy Brief: Transforming Extractive Industries for Sustainable Development,
New York, May 25, 2021, see
https://www.un.org/sites/un2.un.org/files/sg_policy_brief_extractives.pdf
3
UNITED NATIONS Sustainable Development Goals, New York (2015) (https://sdgs.un.org/goals)
4
THE PARIS AGREEMENT, Paris (2015), see https://unfccc.int/process-and-meetings/the-paris-
agreement/the-paris-agreement
 and the environment, as has been given to economic considerations in the past. A
shift in mindset is also needed away from short-term economic considerations to
long-term financial risks and broader-based benefits associated with the
transition to net-zero economies, that include social, environmental and cultural
externalities."

Delivering this "shift in mindset" demands nothing less than a total resource management reset
based on improved and robust information on the value of the benefits that an increase in current
costs will achieve, as best crystallized in the circular economy transition5, combined with the
development of a social circular economy model which will mainstream circular economy in the
households and societal life and promote sustainable production and consumption patterns.

Resource servitization is a fundamental principle of a CE, an economy that, by definition, decouples

economic activity from the consumption of finite resources. A CE is a resilient system for businesses,
people, and the environment6. Often mistakenly reduced to a single objective, recycling, the CE is a
comprehensive, holistic, constantly developing economic concept that aims to revolutionize our
production, consumption, and interaction with nature. The CE aims to reduce demand for primary
materials, improve the quality of life, and create a sustainable, regenerative society while reducing
any human activity's climate, energy and environmental footprint.

The economy can be transformed from a commodity-based one to a service-based one through
resource servitization. This shift provides solutions to customers and society's needs by offering
resources as services. Resource servitization is a type of open-service innovation that involves
collaborating with external partners to create and deliver value by bundling services with existing
product offerings.

These concepts are now being turned into regulatory principles in many countries (Table 1).

Resource efficiency
Resource efficiency is a critical component of sustainable resource management, emphasizing the
optimal use of natural resources to achieve desired outcomes while minimizing environmental
impact. It involves carefully and responsibly managing resources to maximize their value and
minimize waste throughout their life cycle, from extraction to final disposal.

In sustainable resource management, resource efficiency is about doing more with less—increasing
resource use efficiency to reduce the consumption of raw materials, energy, and water. This
approach conserves valuable resources and reduces pollution and GHG emissions, contributing to
environmental protection and the mitigation of climate change.

Resource efficiency is closely linked to the principles of the CE, which seeks to keep resources in use
for as long as possible, extract the maximum value from them while in use, and recover and
regenerate products and materials at the end of their service life. Companies can significantly
enhance resource efficiency by designing products for durability, reparability, and recyclability and
by implementing business models that encourage the sharing, leasing, or remanufacturing of
products.
5
See also negative externality case study, HILTON, J, “Phosphogypsum – management and
opportunities for use: Resolving a conflict between negative externality and public good”, Proc. No.
587, International Fertiliser Society, Leek, UK, (2006).
6
Ellem MacArthur Foundation Circular economy introduction
https://ellenmacarthurfoundation.org/topics/circular-economy-introduction/overview
Moreover, resource efficiency is not just about environmental benefits but also economic
implications. Efficient resource use can lead to business cost savings by reducing the amount of raw
materials needed and lowering energy and water bills. It can also drive innovation as companies seek
new ways to use resources more effectively and develop new products and services that meet the
demands of a resource-conscious market.

To support the transition to more sustainable and efficient resource management, tools like the
United Nations Framework Classification for Resources (UNFC) and the United Nations Resource
Management System (UNRMS) have been developed. These tools provide a framework for
classifying, managing, and reporting on resources that align with the SDGs and support the
implementation of resource servitization—a shift from selling products to offering services that meet
customer needs while optimizing resource use.

Resource efficiency is a cornerstone of sustainable resource management, offering a pathway to

environmental sustainability, economic viability, and social well-being. It requires a systemic
approach that integrates technological innovation, economic incentives, and regulatory frameworks
to transform the way we produce, consume, and think about resources.
Table 1

Examples of circular economy policies and strategies from different countries, and their elements, innovation, approaches, and materials that emphasize
the central concept of resource servitization.

Country Elements Innovation Approaches Materials

Armenia Green and inclusive Green growth and climate Resource optimization, secondary Energy, water, land,
economy change adaptation strategy, raw materials, eco-innovation and materials
GREEN Armenia platform green entrepreneurship
Azerbaijan Zero plastic waste, Plastic waste management Eco-design, collection, recycling, Plastic products and
green growth strategy, green growth recovery, renewable energy and packaging, energy, water,
concept resource efficiency land, materials
Belarus Green and inclusive Sustainable development Resource efficiency and Energy, water, land,
economy strategy, national action plan productivity, waste reduction and materials
on green economy pollution, renewable energy and
clean technologies
Brazil Waste management Solid waste management plan, Collection, sorting, recycling, Waste, energy
and treatment national policy on solid waste disposal, waste-to-energy
Canada Zero plastic waste Plastic waste management Eco-design, collection, recycling, Plastic products and
strategy, plastic innovation recovery packaging
challenge
Chile Circular economy Circular economy roadmap, Eco-design, collection, recycling, Mining, fisheries and
circular economy innovation recovery, innovation and financing aquaculture,
centre construction, packaging
China Ecological Circular economy legislation, Resource conservation, recycling, Energy, water, land,
civilization circular economy pilot zones environmental protection materials
Colombia Circular economy Circular economy strategy, Agriculture and food, forestry, Energy, water, land,
circular economy observatory industry, tourism, urban materials
development, public procurement
Egypt Waste management Solid waste management Collection, sorting, recycling, Waste, energy
and treatment strategy, waste-to-energy disposal, waste-to-energy
 centre of excellence
European Union Zero pollution, zero Green financing, green deal, Waste hierarchy, circular economy Energy, minerals, CO2,
waste, do no green growth action plans, SDG indicators groundwater, secondary
significant harm resources
Finland Carbon-neutral and Circular economy roadmap, Sustainable food systems, forest- Biomass, wood, metals,
resource-wise circular economy accelerator based loops, technical loops, minerals, chemicals
society transport and logistics
Ghana Plastic waste Plastic waste management Biodegradable plastics, ban on Plastic products and
recovery and policy, plastic waste buy-back single-use plastics, innovation and packaging
recycling scheme investment in plastic sector
Japan 3R (reduce, reuse, Circular economy vision, circular Resource efficiency, waste Energy, water, land,
recycle) economy partnership management, green innovation materials
Kazakhstan Green economy Green economy concept, Resource efficiency and Energy, water, land,
green bridge partnership productivity, waste prevention and materials
program management, eco-innovation and
green technologies
Kyrgyzstan Sustainable Sustainable development Resource conservation, recycling, Energy, water, land,
development strategy, green economy and reuse, green infrastructure and materials
learning assessment urban planning, low-carbon and
climate-resilient development
Moldova Low-carbon and Green growth and climate Resource optimization, secondary Energy, water, land,
resource-efficient change adaptation strategy, raw materials, eco-innovation and materials
economy green city action plan green entrepreneurship
Russian Low GHG emissions Socio-economic development Waste management and recycling, Energy, water, land,
Federation and resource with low emissions strategy, green technologies and innovations, materials
efficiency national project on ecology environmental governance and
cooperation
Rwanda Zero waste Green growth and climate Sustainable consumption and Energy, water, land,
resilience strategy, national production, waste prevention and materials
circular economy policy valorization, green industry and trade
Senegal Green and inclusive Sustainable development Resource optimization, renewable Energy, water, land,
economy strategy, national program for energy, eco-design and eco- materials
a green economy innovation
Tajikistan Quality of life and Development strategy, Efficient and rational use of natural Energy, water, land,
well-being national adaptation plan resources, prevention and reduction materials
of waste generation, development
and dissemination of green
technologies and innovations
Ukraine Circular economy Green economy transition Waste management and recycling, Energy, water, land,
action plan, circular economy green public procurement and eco- materials
platform labelling, green industrial
development and innovation
Uruguay Circular opportunities National circular economy Sustainable management of natural Energy, water, land,
strategy, circular economy resources, circular design and business materials
platform models, circular cities and territories
The circular economy and resource servitization are two concepts that aim to transform the
traditional product-based economy into a service-based economy, where resources are offered as
solutions to meet the needs of customers and society. Some of the best practices for implementing
these concepts are :

• Aligning the vision and strategy: It is important to have a clear and shared vision of what
CE and resource servitization mean for the organization and how they can create value
for the stakeholders. The vision and strategy should be aligned with the organization's
mission, values, and goals and communicated effectively to the internal and external
audiences.
• Engaging and collaborating with stakeholders: The transition to a CE and resource
servitization requires the involvement and participation of various stakeholders, such as
customers, suppliers, partners, employees, regulators, and society. The organization
should collaborate with these stakeholders to understand their needs, expectations, and
challenges and to co-create and co-deliver solutions that benefit all parties.
• Innovating and adapting the business model: The organization should innovate and
adapt its business model to offer services instead of products, bundle services with
products, and close the loops of resource flows. The business model should consider the
entire life cycle of the resources, from the design, production, delivery, use,
maintenance, repair, refurbishment, and remanufacturing to the recycling and recovery.
The business model should also capture the value created by the circular economy and
resource servitization and reflect it in the cost structure and revenue streams.
• Leveraging technology and data: Technology and data are key enablers for CE and
resource servitization, as they can facilitate the design, management, and optimization
of the resource loops and enhance the quality and efficiency of the services. The
organization should leverage technology and data to monitor and measure the
performance and impact of the circular economy and resource servitization and to
provide feedback and insights for continuous improvement and innovation.

In light of the growing worldwide momentum in the post-COVID-19 economic recovery phase
towards this transition from a linear to a CE, it is a particularly convenient time to reassess and
revalue the growing number of opportunities for the safe, beneficial valorization of these materials
with a "zero waste" outcome in mind. While there is a close-to universal agreement that these issues
must be dealt with urgently and systematically, the actions, including establishing framework
conditions to foster positive business cases, required to implement that agreement are falling far
short in terms of scale and precision, critical delivery timelines. The Food and Agriculture
Organization of the United Nations (FAO) signalled in December 2017, "We only have one Earth.
Now is the time to take action7," but as of June 2022, we are still further away from protecting that
one Earth than four years ago.

The clearest indicator of the need for this seismic paradigm shift in resource management can be
found in the previously referenced UN Policy Brief: "As the global population increases, the demand
for minerals and metals is almost certain to rise. Extractive industries are on the frontline of
extracting and recycling sufficient raw materials to cover the high demand for the energy transition
and the circular economy (CE). They are central to meeting climate action targets. In 2017,
extraction reached 92 billion tons, compared with 27 billion in 1970. If current trends continue, the
world will require 190 billion tons of material annually by 2060, including green technologies needed
7
Food and Agriculture Organization, “We have only one Earth”, See
https://www.youtube.com/watch?v=ejeSYO4ETPs
to transition to a sustainable future. These trends make an increasingly urgent need for an inclusive
and circular economy"8. The issue becomes even more significant regarding critical raw materials.
Enlightening in that respect is the "Report on Critical Raw Materials and the Circular Economy" of
the European Commission of 2018 and subsequent relevant European Commission publications
available on its website. The statement is, in turn, built on the 2019 appraisal by the UN
Environment Programme of just how quickly the global demand for critical resources commonly
associated with the naturally occurring radioactive material industries is outstripping demand.

A total resource reset

Natural resources are the foundation of life, well-being, and prosperity. However, the current way of
exploiting and consuming natural resources is unsustainable, as it generates negative externalities
that threaten the environment, society, and economy. The linear "extract – use – dispose of" system
is no longer viable, as it depletes the finite resource base, emits GHGs, causes conflicts and
migrations, and creates the "resource curse" phenomenon. A radical transformation is needed to
address these challenges: a total resource reset. This means shifting from a product-based economy
to a service-based economy, where resources are offered as solutions to meet the needs of
customers and society. Resource servitization is a type of open-service innovation that has the
potential to improve resource efficiency, decrease environmental impact, produce value-added
services, and encourage innovation and competitiveness.

The economic model which has driven the build-up of negative externalities to the point of causing
actual and potentially severe damage to Earth's climate and biodiversity is the "linear" system of
"extract – use – dispose of ". This has been mirrored in a business model focused on commodifying
essential resources, notably energy, predominantly fossil fuels such as coal, oil and gas, founded on
its greenhouse gas-generating combustion. As the world is learning, extraction and use of
commoditized fossil fuels have increasingly caused national, regional and global conflicts with
ancillary impacts such as uncontrolled, large-scale migrations. And as the pressure on land and water
resources reciprocally increases, the harmful social, environmental, and economic impacts will be
further exacerbated. The higher the degree of concentration on commoditizing resource use, the
higher the potential negative externality burden that results in the "resource curse" phenomenon
experienced in many different socio-economic and geographical contexts over the past two
centuries.

The symptoms of that curse manifest as: "land loss, the destruction of sites of cultural heritage or
spiritual significance, marginalization and systematic discrimination and the impacts from associated
air, water, and social pollution have also exacerbated the loss of lives, health, livelihoods, identities
and cultures, pushing many indigenous peoples into extreme poverty while prompting localized
armed conflict".9 Little wonder then that the social licence to operate between the extractives
industries and the communities in which they serve or plan to invest is so hard to regain. Climate
migration is also happening and is exacerbated by the above.

8
UNITED NATIONS ENVIRONMENT PROGRAMME UN Calls for Urgent Rethink as Resource Use
Skyrockets, UNEP (2019). Available at www.unep.org/news-and-stories/press-release/ un-calls-
urgent-rethink-resource-use-skyrockets
9
UNITED NATIONS, Policy Brief: Transforming Extractive Industries for Sustainable Development,
New York, May 25, 2021, see
https://www.un.org/sites/un2.un.org/files/sg_policy_brief_extractives.pdf
In that regard, the Policy Brief points out:

"The challenge now is to both ensure that […] those countries rich in the
materials needed for the green transition can capitalize on these trends and
achieve economic and social benefits, in the same way, that now-advanced
economies benefitted from their resources during and after the Industrial
Revolution, while keeping sustainability objectives, including the goals of the
Paris Agreement, front and centre."

So, it becomes increasingly clear that a modestly-paced "shift in mindset" is not enough. Though
undoubtedly necessary, the burden of externality is well beyond the point where process
optimization within existing linear production and consumption models is sufficient. Only an
immediate step-change to a new, circular, service-based paradigm of balanced and integrated
resource management will provide solutions. This change will be as transformative as natural
resource management practices and attitudes as the market shifts to "stakeholder capitalism"
transform policies and procedures in managing financial resources.

Resource servitization is a promising concept that can help achieve the SDGs and the Paris
Agreement and the green and inclusive recovery from the COVID-19 pandemic. However, resource
servitization also faces several technical, economic, and social challenges that must be overcome to
ensure its sustainability and effectiveness. A comprehensive and interconnected strategy is
necessary to implement resource servitization, which accounts for the environmental, economic,
and social aspects of sustainability. This approach requires the cooperation and involvement of all
parties, as well as the harmonization and synchronization of policies and regulations, the
introduction and adjustment of technologies and business models, and the education and
empowerment of individuals and communities. Resource servitization is not only a change in the
way of producing and consuming resources but also in thinking and acting. It is a paradigm shift that
can transform the world for the better.

Circularity and the end of wastes

The CE responds to many challenges by reducing waste and closing the material and process loops,
thereby preserving the earth's natural capital. A transition to renewable energy and materials
underpins it. The Ellen McArthur Foundation defines CE as a system solution framework based on
three principles driven by design:

• Eliminate waste and pollution

• Circulate products and materials (at their highest value)

• Regenerate nature.

A CE decouples economic activity from the consumption of finite resources. The CE may not meet all
the demands for raw materials. Still, it can contribute to a resilient system for businesses, people,
and the environment10. Often mistakenly confused with recycling, the CE is holistic, constantly
developing an economic concept that aims to revolutionize our production, consumption, and
interaction with nature. The main objective of the circular economy is to decrease the need for
primary materials, enhance the standard of living, and build a sustainable and regenerative society,
all while minimizing the climate, energy, and environmental impact of any human activity.

10
https://ellenmacarthurfoundation.org/topics/circular-economy-introduction/overview
This broader perspective makes existing linear business models seem primarily inefficient and
wasteful. The circular economy's challenge has been conceptualising and integrating new business
models to address these inefficiencies and create new value. The existing circular business models
attempt to close, slow down, narrow, intensify and dematerialize the resource loops (Table 2) 11. In
this respect, Environmental and Social Governance (ESG) patterns are developing fast to mainstream
CE into the business sector and thus attract green financing for private businesses, transforming the
concept of ESC into Circular ESG (CESG).

Table 2

Five business models of the circular economy

Substituting primary materials with secondary materials through

Closing the resource loops reusing, repairing, remanufacturing, or recycling is essential in
this context, industrial symbiosis.

Slowing down resource loops Reducing the environmental footprint by extending

the lifecycle of products
Narrowing the resource loops Increasing the efficiency of production, distribution,
and consumption processes by implementing
technological improvements, reducing waste or
energy consumption
Intensifying the resource Removing idle times when products are not used
loops (renting otherwise empty apartments)
Dematerializing the resource Replacing products with services (leasing the light
loops instead of buying a lightbulb)

Source: UNECE, based on Geissdoerfer, M., Morioka, S., de Carvalho, M., & Evans (2018) 12.

As shown in Table 2, dematerializing resource loops means replacing products with services.

In modelling an accelerated transition from a "linear" to a "reuse" to a "circular" economy (see

Figure I), the following key assumptions are applied:

a) The defining principles of the CE are resource servitization, optimized use efficiency, and
primary resource conservation, leading to "Zero Waste" (See Section II);
b) The default resource management condition is that accessing "primary" resources is
necessary only when "secondary (reusable)" resources are not sufficiently available;
c) New materials may be found from secondary or primary resources, where the attribute
"new" maybe (i) previously unused, now used (or critical for) innovative purposes; (ii) once
used but for other purposes; (iii) reprocessed for innovative purposes using innovative
technologies;

11
Geissdoerfer, M., Morioka, S., de Carvalho, M., & Evans, S. (2018). Business models and supply
chains for the circular economy.
12
Martin Geissdoerfer, Sandra Naomi Morioka, Marly Monteiro de Carvalho, Steve Evans (2018)
Business models and supply chains for the Circular Economy. Available at:
https://doi.org/10.1016/j.jclepro.2018.04.159
 d) The Linear economy is broken: "Extractive" requires a new, "circular" narrative based on
redefined "lifecycles" for all resources. All resources stay within the system boundary, even
if no foreseeable solution to their current status as "waste" is currently available;
e) Resources are managed in "nexus" structures or clusters, such as Food: Energy: Water (the
FEW nexus), based on meeting essential SDG needs and within a new Social Resource
Contract;
f) Risk/benefit models and algorithms need to be fundamentally rethought;
g) The process needs to be supported by digital economy tools and data banks for separately
collected recyclables, and industrial symbiosis resources/secondary products must be
developed.

Figure 1

Transitioning from Linear to Reuse and Circular Economy – Resource Servitization

and Zero waste as drivers

Following these fundamental assumptions and adopting the importance of the principle of "Zero
Waste" in delivering a CE is, of course, an aspirational goal. But it is to question and challenge at root
the convenience of linear economic models of resource production and use that waste at scale is
inevitable and a cost of doing business. Often, behaviours which incentivize and reward waste are
promoted. So, the Total Resource Reset is a circular economic, moral imperative, a perfect
complement to "Zero Waste". Resource servitization is the stewardship and governance algorithm
for sustaining and sustainable circular resource flows. Resource servitization as a producer/
consumer concept accords with "Zero Waste" because the optimal outcome in efficient resource
management is that the consumer is instinctively responsible and does not need a constant
challenge to stop generating waste.

Early analysis of one of the unexpected benefits of blockchain systems implementation, for example,
in the food production and consumption sector, is that real-time and accurate digital traceability and
trackability of wastes – primarily user-generated wastes such as buying food but never eating it or
cooking it for others to eat – has an immediate impact on "smart" consumer behaviours. The
consumer in the circular model is fully integrated into the circular resource flow and grounded in the
objectives of SDG 12, which recognizes both the need for (obligation to) responsibility on the part of
the consumer not to be a net contributor to avoidable waste in the resource flow but also appreciate
and quantify the tangible social and economic benefits of doing so. As SDG 9 on industry, innovation
and infrastructure is embedded in resource servitization, the smart consumer is a natural and
progressive innovator. Of course, the irony is that the habits of mind that underlie this smart
behaviour are uncannily similar to pre-industrial revolution behaviours, mainly regarding food,
renewable energy, and water sources.

Role of technology and data

Resource servitization, a concept that has gained traction in various industries and regions, is closely
intertwined with the role of technology and data in facilitating the design, management, and
optimization of resource loops. The advent of digitalization, automation, and data-driven insights has
enabled new capabilities and solutions for resource management and service delivery. Leveraging
technology and data is pivotal in enhancing the quality and efficiency of services, thereby
contributing to sustainable resource management.

In the context of resource servitization, technology plays a crucial role in monitoring and measuring
the performance and impact of the circular economy and resource servitization. It provides valuable
feedback and insights for continuous improvement and innovation. For instance, smart metering and
billing systems offer real-time information and feedback on resource consumption and savings,
incentivizing customers to optimize their use. Similarly, remote sensing and geographic information
systems provide spatial and temporal data and analysis on resource availability and quality,
supporting decision-making and planning.

Furthermore, the integration of technology and data in resource servitization fosters collaboration
and co-creation among various stakeholders, such as producers, consumers, regulators, and
researchers. This collaboration generates new ideas and solutions for the Food, Energy, and Water
nexus. It also facilitates the creation and implementation of new or improved products, services,
processes, or business models that have value for the company, the customer, or society.

The role of technology and data in resource servitization is instrumental in enhancing the quality and
efficiency of services, monitoring and measuring performance, providing feedback and insights for
continuous improvement and innovation, supporting decision-making and planning, fostering
collaboration and co-creation among various stakeholders, and enabling the creation and
implementation of new or improved products, services, processes, or business models that have
value for the company, the customer, or society.

Resource servitization model to complement the commodity models

The extractive industries, such as mining, oil and gas, and forestry, have traditionally relied on the
commodity model, where they produce and sell raw materials as products in the global market.
However, this model exposes them to the volatility and uncertainty of commodity prices, which are
influenced by various factors, such as supply and demand, geopolitics, and environmental
regulations. Moreover, this model generates negative externalities, such as environmental
degradation, social conflicts, and resource depletion, which undermine the sustainability and
profitability of the extractive industries. Therefore, there is a need for a new model that can
complement the commodity model and create value for both the extractive industries and their
customers. This is the resource servitization model, in which resources are offered as solutions to
meet the needs of customers and society rather than as products to be consumed and disposed of.

The resource servitization model is not new, originating in the financial meltdown 2008. It began as a
modest experiment but has since rapidly gained traction, to the extent accelerated by the COVID-19
pandemic. It is transforming the industry globally, whether in retail, journalism, manufacturing,
media, transportation, or enterprise software. Today, many significant companies generate most of
their revenue from committed services that can be subscribed over small to large timeframes. The
service model is quite different from the commodity model, which binds the extractive industries
perpetually to the instabilities of daily commodity price changes. In other sectors, commerce is being
reorganized around the subscription model, which gives the companies predictive revenue.

The resource servitization paradigm rests on achieving and maintaining a new equilibrium of social,
environmental and economic benefits in our management of natural resources. Its founding
principles are zero or minimal waste, zero harm and transforming negative externalities into positive
internalities such as public good and intangible assets, new knowledge and new capabilities.

Resource servitization is a concept that can help the extractive industries to diversify their revenue
streams, enhance their competitiveness, and reduce their environmental and social impacts. By
offering services instead of products or bundling them with products, the extractive industries can
create long-term and strategic relationships with their customers and provide customized and
integrated solutions that address their specific challenges and opportunities. Resource servitization
can also help the extractive industries to optimize the use and management of their resources and
to close the loops of resource flows by applying the principles of CE. Resource servitization can thus
contribute to achieving the SDGs and the Paris Agreement and the green and inclusive recovery from
the COVID-19 pandemic. However, resource servitization also requires the extractive industries to
overcome various technical, economic, and social barriers and collaborate with stakeholders, such as
policymakers, regulators, suppliers, partners, and civil society. Resource servitization is not only a
change in the business model but also in the mindset and culture of the extractive industries.

Challenges and barriers to resource servitization

Resource servitization offers a promising approach to enhance resource utilization, efficiency, and
sustainability. However, the transition to this paradigm is not without its challenges and barriers.
These obstacles can be broadly categorized into three main areas: financial, contractual and
regulatory, and organizational and cultural.

 Financial Challenges: Resource servitization often involves significant upfront investments in

infrastructure, equipment, and service capabilities. These investments can be challenging for
organizations to secure, especially in industries with tight profit margins or limited access to
capital. Additionally, the operational costs associated with servitization, such as
maintenance, repair, and data management, can be higher than traditional product-based
sales. These costs can be difficult to recoup in the early stages of servitization adoption,
making it challenging for organizations to realize a return on investment.
 Contractual and Regulatory Barriers: Implementing resource servitization often requires the
negotiation of complex contractual agreements that go beyond traditional product sales.
These agreements need to clearly define ownership rights, service levels, performance
expectations, and dispute resolution procedures. Additionally, servitization may necessitate
compliance with new regulatory requirements related to data privacy, asset management,
and product liability. Understanding and navigating these legal and contractual complexities
can be time-consuming and costly for organizations.
 Organizational and Cultural Change: Transitioning to a servitization business model requires
significant organizational and cultural changes. This includes developing new skills and
expertise in service delivery, fostering a customer-centric mindset, and adapting
performance metrics to reflect the value proposition of servitization. Organizations may also
need to overcome resistance from employees who are accustomed to a traditional product-
based sales approach.
Despite these challenges, resource servitization offers substantial benefits in terms of resource
efficiency, sustainability, and customer satisfaction. Organizations can overcome these barriers by:

 Thorough planning and risk assessment: Carefully evaluate the financial, contractual, and
organizational implications of servitization before embarking on a full-scale implementation.
 Establish clear servitization goals: Define the specific value proposition and performance
targets for servitization initiatives.
 Invest in technology and data infrastructure: Utilize technology to support service delivery,
asset tracking, and customer relationship management.
 Develop a cross-functional servitization team: Bring together expertise from sales,
operations, service delivery, and engineering to drive the servitization transformation.
 Educate and empower employees: Provide training and support to employees to ensure
they understand and embrace the servitization business model.
 Seek external expertise: Collaborate with consultants, technology partners, and industry
experts to gain insights and guidance on servitization implementation strategies.

By addressing these challenges and overcoming barriers, organizations can successfully transition to
the resource servitization paradigm, unlocking a new era of resource-efficient, sustainable, and
customer-centric business practices.

Future trends and 0pportunities in resource servitization

The future of resource servitization is bright, driven by a confluence of trends and opportunities that
align with the growing demand for resource efficiency, sustainability, and customer-centricity.

Consumers are becoming increasingly aware of the environmental and social impacts of their
purchasing decisions. This growing consciousness is driving a shift towards "instinctively responsible
consumerism," where consumers proactively seek out products and services that are
environmentally friendly and ethically sourced. This trend presents a significant opportunity for
resource servitization, as it aligns with the core principles of resource efficiency, circularity, and long-
term value creation.

Resource servitization is well-positioned to play a crucial role in the transition to a circular economy.
By moving away from the traditional linear "take-make-dispose" model, a circular economy aims to
maximize resource utilization and minimize waste generation. Resource servitization aligns with this
circularity approach by focusing on providing access to products and services rather than ownership,
extending the lifespan of resources and reducing the need for new production.

The rapid advancement of technologies, such as data analytics, blockchain, the Internet of Things
(IoT), and Artificial Intelligence (AI), is further fueling the growth of resource servitization. These
technologies enable real-time monitoring, predictive maintenance, and adaptive service delivery,
enhancing the efficiency and effectiveness of servitization models. Additionally, data-driven insights
can be used to optimize resource allocation, improve customer satisfaction, and personalize service
offerings.

Governments are recognizing the potential of resource servitization to address environmental and
resource challenges. Policies and regulations are being implemented to encourage servitization
adoption, such as providing tax incentives, supporting infrastructure development, and establishing
standards for data sharing and asset tracking. These initiatives are creating a supportive
environment for the growth of servitization across various industries.
As these trends and opportunities unfold, resource servitization is poised to become a dominant
business model, transforming the way organizations create, deliver, and manage resources. By
embracing servitization, organizations can unlock a new paradigm of resource efficiency,
sustainability, and customer value, aligning with the evolving needs and expectations of the modern
market.

Role of UNFC and UNRMS in supporting resource servitization

UNFC and UNRMS play a crucial role in promoting and enabling resource servitization. These
frameworks provide a comprehensive and standardized approach to resource assessment,
management, and utilization, which are essential for successful servitization implementations.

UNFC is a globally accepted classification system for resources, providing a standardized and
consistent way to categorize and describe resources across different industries and sectors. This
standardized approach is critical for resource servitization, as it enables organizations to effectively
manage and track the life cycle of both products and services. By having a clear understanding of
resource types, attributes, and location, organizations can tailor their servitization offerings to
specific resource requirements and optimize their service delivery processes.

UNRMS expands on UNFC by providing a comprehensive framework for sustainable resource

management. It outlines principles and requirements for planning, designing, operating, and closing
resource extraction and processing activities, ensuring that resource servitization initiatives are
conducted in an environmentally and socially responsible manner. UNRMS emphasizes the
integration of economic, environmental, and social considerations throughout the resource life
cycle, ensuring that servitization models contribute to sustainable development goals.

Both UNFC and UNRMS offer several key features that support resource servitization:

 Standardized resource classification: Provides a consistent language for describing and

managing resources, facilitating collaboration and data exchange across organizations.
 Life cycle perspective: Addresses the entire resource lifecycle, from exploration and
extraction to utilization, maintenance, and disposal, ensuring that servitization strategies
consider the long-term implications of resource consumption.
 Focus on resource efficiency: Promotes resource optimization and circularity, encouraging
organizations to maximize resource utilization and minimize waste generation.
 Support for risk assessment: Enables organizations to identify and mitigate potential
environmental and social risks associated with resource extraction and servitization
activities.
 Emphasizes stakeholder engagement: Encourages open communication and collaboration
with stakeholders throughout the resource management process, promoting transparency
and accountability.

Organizations can leverage UNFC and UNRMS to enhance their resource servitization initiatives:

 Resource assessment and planning: Utilize UNFC to accurately categorize and assess
resource types and quantities, informing servitization planning and service offering
decisions.
 Service design and delivery: Apply UNRMS principles to design servitization offerings that
align with resource management principles, ensuring sustainable and efficient resource
utilization.
  Performance measurement and optimization: Evaluate servitization performance using
UNRMS metrics, such as resource efficiency and customer satisfaction, to continuously
improve service offerings.
 Standardization and data exchange: Adopt UNFC and UNRMS standards for data collection,
management, and sharing, enabling seamless collaboration and resource tracking across the
servitization value chain.

By effectively utilizing UNFC and UNRMS, organizations can navigate the challenges and
opportunities of resource servitization, unlocking a new era of resource-efficient, sustainable, and
customer-centric business practices. These frameworks provide a robust foundation for
organizations to transition to a servitization paradigm, aligning with the growing demand for
resource-conscious and responsible consumption.
UNFC and UNRMS: Concepts and principles

The world is facing unprecedented challenges and opportunities in the 21st Century. The 2030
Agenda, adopted by all United Nations Member States in 2015, provides a shared blueprint for
peace and prosperity for people and the planet, now and into the future. At its heart are the 17
SDGs, which are an urgent call for action by all developed and developing countries in a global
partnership. They recognize that ending poverty and other deprivations must go hand-in-hand with
strategies that improve health and education, reduce inequality, and spur economic growth – all
while tackling climate change and working to preserve our oceans and forests.

The SDGs are interrelated and interdependent, requiring a holistic and systemic approach to achieve
them. One of the key enablers of the SDGs is the optimal and responsible production and use of
natural resources, such as minerals, petroleum, renewable energy sources, nuclear fuel resources,
and anthropogenic resources, as well as geological storage and groundwater. These resources are
essential for human well-being, economic development, and environmental protection, but they also
pose significant challenges regarding availability, accessibility, affordability, quality, and
sustainability. The current resource supply and demand patterns are unsustainable, and they present
risks and trade-offs for social, environmental, and economic objectives.

To address these challenges and opportunities, the United Nations Economic Commission for Europe
(UNECE) has developed UNFC and UNRMS. UNFC is a unified system for classifying and reporting
activities associated with resource production based on social, environmental and economic
viability, technical feasibility and degree of confidence in resource estimates. UNRMS is a dynamic
resource management system that extends beyond a classification system to a comprehensive
information framework and methodology to support resource progression and sustainability. UNFC
and UNRMS are designed to be global, voluntary, and flexible standards for integrated and
sustainable resource management, that can help countries, organizations, and companies to align
their policies, regulations, and practices with the SDGs.

UNFC and UNRMS are systems that can help achieve the SDGs by supporting the optimal and
responsible production and use of natural resources, such as minerals, petroleum, renewable energy
sources, nuclear resources, anthropogenic resources, geological storage and groundwater. The
availability, accessibility, affordability, quality, and sustainability of essential resources pose
significant challenges, despite their importance for human well-being, economic development, and
environmental protection. UNFC and UNRMS can help address these challenges and opportunities
by providing a unified, flexible, and voluntary framework for classifying, reporting, and managing
resources based on social, environmental, and economic viability, technical feasibility, and degree of
confidence in resource estimates.

UNFC and UNRMS can also help align the policies, regulations, and practices of various stakeholders,
such as governments, industry, investors, and civil society, with the SDGs. UNFC and UNRMS can
enable the integration and coordination of different resource sectors and activities and support the
transitions to low-carbon, circular, and digital economies. UNFC and UNRMS can also leverage the
opportunities and benefits of digitalization, automation, and data-driven insights, which enable new
capabilities and solutions for resource management and service delivery. UNFC and UNRMS can also
foster collaboration and co-creation among various stakeholders and generate new ideas and
solutions for resource management.
UNFC and UNRMS have been endorsed by the United Nations Economic and Social Council (ECOSOC)
and recommended for global application. They are global standards for integrated and sustainable
resource management and have been adopted or implemented by a number of countries and
organizations around the world. UNFC and UNRMS can thus be seen as key enablers of the resource
servitization paradigm, where resources are used more efficiently and sustainably to deliver services
and benefits to society.

Key features and components of UNFC and UNRMS

The UNECE Expert Group on Resource Management has developed UNFC, a system that categorizes
and communicates information about initiatives according to their potential for success in terms of
environmental, social, and economic factors, as well as their practical feasibility and the level of
certainty surrounding resource estimates. Recently, UNRMS, in complement to UNFC, has entered
the specification and development process supporting the resource delivery aspects of meeting the
2030 Agenda.

United Nations Framework Classification for Resources

The UNFC is a standard that can be used all over the world to classify and report on projects that
involve resources. This classification is based on factors like how viable the project is from an
environmental, social, and economic perspective, as well as how technically feasible it is and how
confident people are in the estimates.UNFC covers various activities, such as minerals, petroleum,
renewable energy sources, nuclear resources, anthropogenic resources, geological storage, and
groundwater.

Figure 2

UNFC Classification using three criteria

The key features and components of UNFC are:

 • Principles: UNFC is based on three fundamental principles: (a) a project-based approach,
where resources are classified according to the characteristics and status of the projects
to develop them; (b) a generic and flexible structure, where resources are classified
using three sets of criteria: environmental-socio-economic viability (E), technical
feasibility (F), and confidence in estimates (G); and (c) global applicability and
compatibility, where resources are classified using a numerical coding system that can
be aligned with other classification systems and standards (Figure 2).
• Generic Specifications: UNFC provides generic specifications for applying the principles
and criteria of UNFC to any resource project, regardless of the type, nature, or location
of the resource. The generic specifications define the terms and concepts used in UNFC,
the classification framework and coding system, the classification workflow and process,
and the requirements for competency and communication.
• Bridging Documents: Bridging Documents have been developed for mapping and
harmonizing UNFC with other classification systems and standards, such as the
Committee for Mineral Reserves International Reporting Standards (CRIRSCO) Template,
the Petroleum Resources Management System (PRMS), and the International Atomic
Energy Agency (IAEA) Nuclear Fuel Resources Classification.
• Guidelines and Best Practices: UNFC provides guidelines and best practices for applying
UNFC to specific resource sectors and projects, such as bioenergy, geothermal energy,
solar energy, wind energy, hydropower, injection projects, and anthropogenic resources.
The guidelines and best practices provide detailed guidance on the definitions,
specifications, and examples of UNFC for each resource sector and project.

UNFC supports the sustainable management of natural resources in several ways, such as:

• Aligning with the SDGs: UNFC is a tool for effective management of natural resource
endowments needed for realizing the SDGs, which are a set of 17 goals and 169 targets
that aim to end poverty, protect the planet, and ensure peace and prosperity for all by
2030. UNFC can help measure and monitor the progress and impact of resource projects
on the SDGs and identify the trade-offs and synergies among different goals and targets.
• Facilitating the transition to a CE: UNFC can help promote resource efficiency and
minimize waste generation and environmental impact by applying the principles of
circular economy, which is a model of production and consumption that aims to keep
resources in use for as long as possible, and to recover and regenerate them at the end
of their life cycle. UNFC can help optimize the use and management of resources and
close the loops of resource flows by enabling the eco-design, reuse, repair,
refurbishment, remanufacturing, and recycling of products and materials.
• Fostering innovation and investment in the resource sectors: UNFC can help stimulate
innovation and investment in the resource sectors by providing a common language and
framework for communication and collaboration among stakeholders, such as
governments, industry, investors, and civil society. UNFC can help harmonize and align
policies and regulations, standards and guidelines, data and information and create a
level playing field for resource projects.
• Enhancing the quality and availability of resource information: UNFC can help improve
the quality and availability of resource information by providing a consistent and
transparent methodology for data collection, analysis, and reporting. UNFC can help
reduce the uncertainty and variability of resource estimates and increase the
 comparability and compatibility of resource information across different resource types,
regions, and systems.

United Nations Resource Management System

UNRMS is a voluntary global standard for integrated resource management within the framework of
public, public-private and civil society partnerships that uniformly apply to all resources. UNRMS is
based on UNFC and covers a wide range of resources, such as minerals, petroleum, renewable
energy sources, nuclear resources, anthropogenic resources, geological storage, and groundwater.

The key features and components of UNRMS are:

• Objectives: UNRMS has four main objectives: (a) to support the implementation of the
2030 Agenda and the Paris Agreement on climate change by providing a holistic and
systemic approach to resource management that considers the environmental, social,
and economic dimensions of sustainability; (b) to facilitate the transition to a CE, by
promoting resource efficiency and minimizing waste generation and environmental
impact; (c) to foster innovation and investment in the resource sectors, by providing a
common language and framework for communication and collaboration among
stakeholders, such as governments, industry, investors, and civil society; and (d) to
enhance the quality and availability of resource information, by providing a consistent
and transparent methodology for data collection, analysis, and reporting.
• Structure: UNRMS is structured around three core elements: (a) UNFC, which is the
classification and reporting system for resource projects based on their environmental,
social, and economic viability, technical feasibility, and confidence in estimates; (b)
UNRMS Principles and Requirements, which are the guiding principles and minimum
requirements for applying UNRMS to any resource project, regardless of the type,
nature, or location of the resource; and (c) UNRMS Guidelines and Best Practices, which
are the detailed guidance and examples for applying UNRMS to specific resource sectors
and projects.
• Principles-based: For sustainable resource management to be holistic, i.e., respond to
the complexity of all resources, time and space scales, and life cycles, it should be
principles-based. UNRMS is based on twelve fundamental principles that provide general
guidance on sustainable resource management's direction. The fundamental principles
of sustainable resource management are as follows (Figure 3):

(a) State rights and responsibilities in the management of resources;

(b) Responsibility to the planet;

(c) Integrated management of resources;

(d) Social engagement;

(e) Service orientation for the use and reuse of resources;

(f) Comprehensive resource recovery;

(g) Value addition;

(h) Circularity;

(i) Health and safety;

 (j) Innovation;

(k) Transparency;

(l) Continuous strengthening of core competencies and capabilities.

Figure 3

Fundamental principles of UNRMS

Integrated and
State rights and Responsibility to
indivisible Social engagement
responsibilities the planet
management

Comprehensive
Service orientation Value addition Circularity
resource recovery

Core competencies
Health and safety Innovation Transparency
and capabilities.

UNRMS supports the SDGs and the CE by measuring and monitoring the impact and efficiency of
resource projects and by optimizing and closing the resource loops. UNRMS also fosters innovation
and investment in the resource sectors by providing a common framework and methodology for
communication and collaboration among stakeholders and enhancing resource information's quality
and availability. In addition, UNRMS can support sustainable resource management by:

• Supporting the implementation of the Paris Agreement: UNRMS can help support the
implementation of the Paris Agreement, which aims to limit the global temperature rise
to well below 2°C and pursue efforts to limit it to 1.5°C by enhancing the mitigation and
adaptation actions of the resource sectors. UNRMS can help assess the GHG emissions
and removals13 of resource projects, and identify the low-carbon and climate-resilient
solutions that can reduce the climate impact and increase the climate resilience of the
resource sectors.
• Promoting the participation and empowerment of local communities: UNRMS can help
promote the participation and empowerment of local communities in the resource
management process by ensuring that their rights, interests, and needs are respected
and addressed. UNRMS can help enhance the social license to operate resource projects

13
GHG removals refer to the process of removing GHGs from the atmosphere. This can be achieved
through natural processes, such as carbon sequestration by forests, or through technological
solutions, such as carbon capture and storage (CCS) projects. Injection projects are a type of CCS
project that involves injecting captured CO2 into deep geological formations, such as depleted oil
and gas reservoirs or saline aquifers. This can help to permanently store CO2 underground and
reduce its impact on the climate.
 by engaging and consulting with local communities and by providing them with benefits
and opportunities, such as employment, education, and capacity building.
• Strengthening the governance and transparency of the resource sector: UNRMS can help
strengthen the governance and transparency of the resource sectors by providing a
common framework and methodology for resource management that can be applied by
different actors, such as governments, industry, investors, and civil society. UNRMS can
help improve the accountability and responsibility of resource projects by requiring
them to comply with the principles and requirements of UNRMS and by disclosing their
resource information to relevant stakeholders.
• Encouraging the diversification and transformation of the resource sectors: UNRMS can
help encourage the diversification and transformation of the resource sectors by
supporting the development and deployment of new and emerging resources, such as
renewable energy sources, nuclear resources, anthropogenic resources, geological
storage, and groundwater. UNRMS can help facilitate the integration and
complementarity of different resource types and the creation of new value chains and
markets by applying a holistic and systemic approach to resource management.

UNFC and UNRMS: Applications and best practices for sustainable resource
management
UNFC and UNRMS have been applied and implemented by various countries and organizations
worldwide, demonstrating their relevance and usefulness for different resource sectors and
activities. Some examples of the applications and best practices of UNFC and UNRMS are provided
below.

UNFC and UNRMS for Critical Raw Materials: Guidelines and best practices for MSMEs in
Ukraine
Critical raw materials (CRMs) are essential for developing key sectors such as renewable energy,
electronics, health, and defence. However, CRMs are also characterized by high supply risks and
environmental impacts, which pose challenges for the security and sustainability of resource
management. Micro-, small and medium enterprises (MSMEs) play a vital role in the CRMs value
chain as they contribute to the exploration, extraction, processing, recycling, and innovation of
CRMs. However, MSMEs also face various barriers and difficulties in accessing and utilizing CRMs,
especially in the context of the COVID-19 pandemic and its economic and social consequences.

UNECE has developed guidelines and best practices for MSMEs in Ukraine to assure resiliency and
progress towards a circular economy in sustainable resource management and CRM supply chain
solutions. The guidelines and best practices are based on the application of UNFC and UNRMS, two
interrelated systems that provide a comprehensive and consistent framework for classifying and
managing natural resources. UNFC and UNRMS can help MSMEs assess and report the value and
sustainability of CRMs projects and the outcomes and benefits they generate for society.

The guidelines and best practices cover eight key areas that are relevant for MSMEs in the CRMs
supply business environment in Ukraine: business facilitation and registration, policy, legal and
regulations, access to data, information and knowledge, entrepreneurship skill facilitations, market
access, access to finance, access to technology, and logistics and supply chains. For each area, the
guidelines and best practices provide an overview of the current situation, the challenges and
opportunities, and the recommendations and examples for MSMEs to overcome the barriers and
enhance their competitiveness and resilience. The guidelines and best practices also include policy
recommendations for the government and other stakeholders to support and enable MSMEs in the
CRMs sector.

UNFC and UNRMS for geothermal resources: A case study from Albania
Albania has significant geothermal potential, especially in the form of natural geothermal springs
that have been used for centuries for health and recreational purposes. However, due to various
technical, financial, regulatory, and social barriers, Albania has not yet exploited its geothermal
resources for energy production. To overcome these barriers and to support the sustainable
development of its geothermal resources, Albania has applied UNFC and UNRMS to classify and
manage its geothermal projects.

The case study focused on the Llixha Elbasan springs, one of Albania's most important geothermal
resources. It assessed the feasibility of using them for energy production, besides their utilization for
health purposes. The case study applied the UNFC specifications and guidelines for geothermal
energy resources, as well as the UNRMS principles and criteria for sustainable resource
management. The case study also considered the geothermal project's environmental, social, and
economic aspects and its alignment with the SDGs.

The case study demonstrated the benefits and challenges of applying UNFC and UNRMS to
geothermal resources in Albania. Some of the benefits include enhancing the transparency,
consistency, and comparability of geothermal information; supporting the decision-making and
planning processes of the government and the industry; facilitating the communication and
collaboration among different stakeholders; and contributing to the sustainability and resilience of
the geothermal sector⁴ Some of the challenges include: adapting the UNFC and UNRMS principles
and criteria to the specific context and needs of Albania; ensuring the quality and availability of data
and information; and addressing the technical, environmental, social, and economic uncertainties
and risks associated with the geothermal project.

The case study also provided insights and recommendations for improving and enhancing the
application of UNFC and UNRMS to geothermal resources in Albania and other countries. The case
study identified the need for developing national and regional guidelines and best practices for
applying UNFC and UNRMS and establishing a national and regional network and platform for
sharing experiences and lessons learned. The case study also highlighted the potential for applying
UNFC and UNRMS to other renewable energy resources, such as wind, solar, and hydropower, to
achieve an integrated and holistic approach to resource management. Albania is committed to
continuing the implementation of UNFC and UNRMS in the geothermal sector and beyond as a way
to advance the sustainable development agenda and the energy transition nationally.

How UNFC and UNRMS can enable resource servitization

UNFC can support resource servitization by providing a consistent and transparent way of assessing
and reporting the value and sustainability of resource projects and the outcomes and benefits they
generate for society. UNFC can also help harmonize policy frameworks, government oversight,
industry business processes, and efficient capital allocation for resource sectors, which are essential
for resource servitization. UNFC can facilitate the transition from a commodity-based to a service-
based approach to resource management by considering the full life cycle of resources, from
exploration to production, consumption, and reuse. UNFC can also promote circularity and
innovation as resources are used more efficiently and effectively, and new business models and
opportunities emerge. UNFC is aligned with the SDGs and can help realise sustainable resource
management objectives. UNFC is a flexible and adaptable system that can be applied to different
resource sectors and projects, including renewable energy, nuclear energy, minerals, and injection
projects for the geological storage of CO2, groundwater, and anthropogenic resources.

As highlighted previously, UNRMS principles strongly focus on sustainable development while

expanding it from the net quantities used. Value addition, circularity and innovation are the
fundamental principles and are well tied to the resource servitization concept. The principles point
to opportunities that the industry can enrich, including the Micro, Small and Medium Enterprises
(MSMEs). Examples of such subscription-based opportunities are provided in Table 3.

UNRMS Principle 5, service orientation for the use and reuse of resources, the principle that
resources are to be produced primarily as a service to society, is at the heart of the resource
servitization concept. Decoupling natural resource use and environmental impacts from economic
activity and human well-being is essential to transition to a sustainable future. Decoupling can
deliver substantial social and environmental benefits, including repairing past environmental
damage while supporting economic growth and human well-being. Service orientation departs from
the narrow and restricted commodity view of resources hitherto followed by the resource sector.
There is a growing recognition that industry, including resource-based industries, primarily exists to
"serve" customers, employees, suppliers, and communities. Industry can only create long-term value
for shareholders and society through that service perspective.

Table 3

Potential services based on the UNRMS model

UNRMS Principles Examples of services

State rights and responsibilities in Information and knowledge management, Cadastral

the management of resources and GIS services, regulatory support services,
technical and financial services
Responsibility to the planet General environmental services, Environmental
Impact Assessment services, Strategic
Environmental Assessment (SEA) processes under
the Espoo Convention and the SEA Protocol,
Climate Proofing, Environmental Liability,
Environmental Criminality, Environmental
Management and Audit Schemes, Ecolabel, reducing
carbon footprint in operations, coast-benefit
assessments, resource efficiency improvements, land
use management services, biodiversity conservation
and improvement services, sustainability reporting
services, implementation of sustainability standards
Integrated management of Multi-resource assessments, integrated supply chain
resources management services, life cycle assessments and
management services
Social contract on natural resources Social communications, real-time information
availability services, and local content development
services include indigenous peoples, gender and
disability sensitization, human rights monitoring,
environmental information, public participation and
justice under the Aarhus Convention.
Service orientation Resource Servitization business model generation,
strategic consulting services, long-term investor
 UNRMS Principles Examples of services

value creation services such as valorization of

intangible assets, customer value-creation services
Comprehensive resource recovery End-of-life mine reassessments, brownfield
exploration services, residue utilization models and
strategies, intangible assets management
Value addition Up-stream linkages into resource capital goods,
down-stream linkages into beneficiation, processing,
refining and manufacturing, consumables and
services industries, side-stream connections into
infrastructure (power, logistics, communications,
water) and skills and technology development

Circularity Residue valorization and management services;

Recycling and reuse services, conservation of water,
land and soil resources
Health and Safety Personnel protection and monitoring, risk
management, emergency and disaster preparedness
management services, quality assurance and control
Innovation Research and development in new processes and
materials, diversification and technological
upgrading, carbon neutral process development
Transparency Blockchain-enabled services to enable transparency
and traceability
Continuous strengthening of core Human resource development on new social,
competencies and capabilities environmental and resource consciousness

The UNRMS requirement for service orientation promotes resource servitization as a business model
whereby customers pay for a value-added product or service, such as heat, light or mobility, without
owning the resources themselves.

Resource servitization is a promising and transformative concept that can revolutionize how natural
resources are managed and utilized. By applying the UNRMS principles, especially the service
orientation principle, the resource sector can adopt a more holistic and integrated approach to
resource management, considering the environmental, social, and economic dimensions of
sustainability. Resource servitization can also create new value propositions, competitive advantages
for the resource sector, and new opportunities for collaboration and innovation. Resource
servitization can lead to a more sustainable and prosperous future for humanity and the planet.

UNFC and UNRMS: Benefits and challenges for resource servitization

Applying UNFC and UNRMS to different resource sectors and projects can have various benefits and
challenges. Some benefits include enhancing resource management's effectiveness and efficiency,
supporting higher-order decision-making and land-use planning, facilitating consistent and
transparent reporting and communication, and aiding the financing of resource sectors. Some
challenges include adapting to changing circumstances and evolving best practices, ensuring
stakeholder engagement and alignment, and addressing data availability and quality issues. UNFC
and UNRMS are designed to be flexible and adaptable to different contexts and needs and to
provide a common language and framework for resource management (Table 4).
Table 4

Benefits and Challenges for Resource Management using UNFC and UNRMS to support resource
servitization

Benefits Challenges
Enhancing the effectiveness and efficiency of Adapting to changing circumstances and
resource management by considering the full evolving best practices by regularly
life cycle of resources and the outcomes and reviewing and revising the UNFC and
benefits they generate for society UNRMS documents and applications
Supporting higher-order decision-making and Ensuring stakeholder engagement and
land-use planning by providing a consistent and alignment by involving governments,
transparent way of assessing and reporting the industry, investors, and civil society in the
value and sustainability of resource projects development and implementation of
UNFC and UNRMS
Facilitating consistent and transparent Addressing data availability and quality
reporting and communication by using a issues by establishing standards and
common language and framework for resource guidelines for data collection, analysis,
management across different resource sectors and dissemination
and projects
Aiding the financing of resource sectors by Managing the risks and uncertainties
providing a sustainability framework that can associated with resource projects by
attract and mobilize capital for resource applying the technical, environmental,
projects social, and economic criteria of UNFC and
UNRMS
Promoting circularity and innovation by Balancing the trade-offs and synergies
encouraging efficient discovery and modelling among different resource sectors and
of in-place resources and allowing higher projects by applying an integrated and
precision during recovery and processing holistic approach to resource
management
Contributing to sustainable development by Measuring and monitoring the impacts
aligning with the SDGs and supporting the and outcomes of resource projects by
United Nations Decade of Action for using indicators and metrics that reflect
accelerating sustainable solutions for resource the social, environmental, and economic
management dimensions of sustainability
Resource servitization: A new paradigm for sustainable resource
management

Resource servitization is a model commodity-oriented companies can use to enhance and

differentiate their competitiveness by integrating services into their overall business model. It can
also play a big role in driving both decarbonization efforts and global economic recovery, as it shifts
the focus from selling commodities to delivering solutions that meet customer needs and create
value. Resource servitization is relevant for the 2030 Agenda and the Paris Agreement, as it can
contribute to the sustainable management of natural resources and reduce greenhouse gas
emissions.

However, resource servitization is not without challenges. It requires a transformation of the

organizational culture, capabilities, processes, and partnerships of companies, as well as a change in
customer behaviour and expectations. Moreover, resource servitization faces different drivers and
barriers depending on the context and market of each industry and region. For example, some
factors that can influence resource servitization are the availability and cost of resources, the
regulatory and policy environment, the level of innovation and digitalization, and the degree of
competition and customer demand.

Resource servitization can have significant impacts and implications on various aspects of resource
management. By embracing digitalization, automation, and data-driven insights, businesses can
enhance resource allocation, minimize waste, and improve productivity. Resource servitization can
also improve the environmental performance of companies, as they have the incentive to design
products that are durable, reusable, and recyclable and to optimize the use of energy and materials.
Furthermore, resource servitization can create new sources of value and innovation for companies
and customers as they collaborate to co-create solutions that address specific needs and problems.

Many examples of resource servitization initiatives and business models exist in different sectors and
regions. For instance, some companies offer performance-based contracts, charging customers
based on the outcomes or benefits they provide rather than the products they sell. Other examples
are product-service systems, where companies retain the ownership and responsibility of the
products and provide them as a service to customers. Several companies have adopted resource
servitization as a business model (Table 5).

Examples include Mining Equipment as a Service (MEaaS), which provides customers with access to
advanced mining equipment, software, and services on a pay-per-use or performance-based basis,
reducing the capital expenditure and maintenance costs; the Resource Recovery and Recycling (R3)
initiatives, which aims to recover and reuse valuable metals and minerals from mining and
processing wastes, such as tailings, slag, and sludge, creating new revenue streams and minimizing
environmental impacts; and the Circular Pelletizing Technology (CPT), which enables the use of iron
ore fines and steel plant wastes as raw materials for pellet production, reducing the need for mining
and landfilling.
Table 5

Selected examples of resource servitization models

Industry Company Model Comments

Aerospace Rolls-Royce Power by the Customers pay for the engine

Hour performance and availability, rather
than the ownership and maintenance
Document Xerox Document Customers pay for the number and
management management quality of copies and prints rather than
solutions the equipment and consumables
Lighting Philips Light as a Customers pay for the light they use
Service rather than the lamps and fixtures, and
Philips retains the ownership and
responsibility of the lighting system
Iron and steel Primetals Circular Customers use iron ore fines and steel
Technologies Pelletizing plant wastes as raw materials for pellet
Technology production, reducing the need for
mining and landfilling
Mining Epiroc Mining Customers have access to advanced
Equipment mining equipment, software, and
as a Service services on a pay-per-use or
performance-based basis, reducing
capital expenditure and maintenance
costs

The origins of resource servitization

Resource servitisation is a concept that has emerged in recent years as a response to the growing
challenges of resource scarcity, environmental degradation, and social inequality. It refers to
transforming product-oriented businesses into service-oriented ones, where the value proposition is
based on the outcomes or benefits of the resources rather than the resources themselves. Resource
servitization is a strategic option for enhancing competitiveness and customer satisfaction and a
potential paradigm shift for achieving sustainable resource management.

Resource servitization is applied in cloud computing, where a server or software system is charged
"on demand" or "as used", i.e. by the second or minute or per transaction, like hiring a taxi rather
than leasing or taking ownership of the car. The premise is that the business model which resource
servitization supports is one "which requires economic decisions to be taken in real-time by
automatic agents". 14

Some other examples of resource servitization in different industries are:

14
Danielle Movsowitz, Orna Agmon, Ben-Yehuda, Assaf Schuster, Attacks in the Resource-as-a-
Service (RaaS) Cloud Context, International Conference on Distributed Computing and Internet
Technology 2016, pp 10–18.
  Banking, where some banks offer financial wellness services, such as budgeting, saving, and
investing, rather than just financial products like loans, deposits, and cards.
 Automotive, some car manufacturers offer mobility services, such as car sharing, ride-
hailing, and subscription, rather than just selling or leasing cars.
 Healthcare, where some medical device manufacturers offer outcome-based services, such
as diagnosis, treatment, and monitoring, rather than just selling or renting devices.
 Robotics, where some robot manufacturers offer robots as a service, where customers pay
for the tasks or functions that the robots perform, rather than the ownership and
maintenance of the robots.
 Building technology, where some building technology providers offer smart building
services, such as energy management, security, and comfort, rather than just selling or
installing building equipment and systems.
 Workplace technology, where some workplace technology providers offer workplace as a
service, where customers pay for the access and use of flexible and collaborative workspaces
rather than the ownership and maintenance of office furniture and equipment.
 Transportation, where some transportation providers offer transport as a service, where
customers pay for the mobility and convenience that the transport modes provide, rather
than the ownership and operation of the vehicles.
 Energy, where some energy providers offer energy as a service, where customers pay for the
energy savings and reliability that the energy systems provide, rather than the ownership
and consumption of the energy sources.

When the resource servitization model extends into the uses of natural resources, the concept of
"service" is even more pronounced, balancing the intrinsic value of the help with the service it
provides to the user or beneficiary. The value proposition undergoes a fundamental pivot in the
circular economy continuous lifecycle model. Away from the resource as a "fungible token," i.e., as a
commodity, one unit of which the customer buys, for example, as a litre of water, a kilowatt/hour, a
kilo of flour), to the resource as a unique "non-fungible token" where at the point of service delivery
the benefit conveyed is special to that moment and that individual consumer or that community.

In the resource servitization model applied to tangible resources such as food, energy and water, the
blockchain or verifiable digital identifier concepts of the "automatic agent" is replaced by an
"instinctively responsible consumer" whose behaviour and values as a consumer are aligned to the
principles of sustainability and are fully respectful of the importance of the principle of public good
in ensuring the security of access to and affordability of resources critical to life. This, in turn, shifts
the emphasis from a supply-driven linear value model to a supply-demand equilibrium where each
consumer derives benefit from a given resource or resource combination but also recognizes that
with that benefit comes responsibilities. These are: (i) to optimize the use of that resource, (ii) to
reduce or eliminate avoidable waste, and (iii) to aid the onward progression of the resource flow to
contribute to the sustainable (intergenerational) security of the supply of that resource.

For the objectives of the 2030 Agenda to be met, there must be a secure, ideally uninterrupted, fully
trackable and traceable flow of natural resources within a circular economy. However, rising
population numbers and increased urbanization will significantly pressure demand per person,
especially in high-income countries. Every two years, the United Nations makes projections for
future population growth. Its latest medium projection estimates a population of 9.7 billion in 2050
and 10.4 billion in 2100. These numbers will exceed the Planet's carrying capacity unless the CE
becomes the dominant economic model and is fully implemented worldwide. Current patterns of
resource consumption are highly skewed. In its CESG plans, populations in high-income countries
typically consume more than 25 tonnes of resources per person per year.15

In contrast, in the lowest-income economies, resource consumption per head is less than 2.5 tonnes
per year, i.e., some 90 per cent less. As living standards improve in medium- and lower-income
countries, consumption rates will increase and may not reach the current trends. The overall
quantities of resources required to meet that demand will increase drastically, to a point which will
be wholly unsustainable and force efficiencies in both high- and low-income economies. Significant
opportunities exist in shaping development patterns to give rise to such efficiencies.

A linear model which increases resource production and supply pro rata to meet demand and
consumption predicates a planet of potentially infinite resources. The Earth's capacity to help,
however, is finite. If conducted in a "business as usual" manner, the relentless increase in production
will generate an even higher burden of negative externalities, starting with a potentially catastrophic
environmental and carbon footprint. With grades of mineral resources becoming poorer and
sourcing mining and petroleum products reliant on increasingly difficult and expensive sources to
valorize, the Energy Return on the Energy Invested (EROEI) is significantly squeezed. These factors
rapidly crystallize into insurmountable problems, whether passing beyond the point when reversing
the global warming trend is possible or weakening the social contract between suppliers and
consumers of natural resources that relations break down or end in conflict, the "weaponization" of
resources. It is the imminent metastasizing of these problems that have also forced investors and
financiers to extend and enrich the concept of "materiality" in terms of decision-making on
investment approval or capital allocation for resource progression to create a concept of "double
materiality" where economic factors are in equilibrium with both social and environmental factors.
This means "companies have to report how sustainability issues affect their business and their
impact on people and the environment".16

Resource use efficiencies need to be improved drastically. Decoupling development and resource
use are required, which means getting more out of fewer resources17. However, although some
materials producers are planning for, and even approaching, 100 per cent recycling of all they
produce, for example, steel and aluminium industries, in aggregate, the current volumes of materials
recycled across all resources are only 8 per cent of total flows (REE recycling is less than 1 per cent).

Resource servitization is a concept that has gained momentum in the academic and business
literature and the policy and practice arenas. It offers a new perspective on how to use natural
resources in a more efficient, effective, and ethical way by focusing on the service they deliver rather
than the quantity they consume. Resource servitization is not a one-size-fits-all solution, but a
context-dependent and dynamic process that requires a holistic and systemic approach. It involves a
change in the mindset and behaviour of both producers and consumers, as well as a change in the
institutional and regulatory frameworks that govern resource flows. Resource servitization is a
promising avenue for advancing the circular economy and the sustainable development goals, but it
also poses significant challenges and risks that need to be carefully addressed.

UNEP (2019) Global Resources Outlook. https://www.resourcepanel.org/reports/global-resources-

15

outlook
16
See European Commission
https://ec.europa.eu/commission/presscorner/detail/en/QANDA_21_1806
17
See UNEP (2019) Global Resources Outlook https://www.resourcepanel.org/reports/global-
resources-outlook
Drivers and barriers
Product-based companies can shift towards a service-oriented approach through resource
servitization. In this model, the value proposition is centered on the benefits or outcomes provided
by the resources rather than the resources themselves. Resource servitization can positively impact
resource efficiency, environmental performance, value creation, and innovation, but it also faces
various challenges and risks in different contexts and markets. Table 6 summarizes some drivers and
barriers for resource servitization in the commodity trade, especially in the critical raw materials,
mining and recycling industry.

Table 6

Resource servitization: Drivers and barriers

Drivers Barriers
- Increasing demand and scarcity of natural resources, - High upfront investment and
which create pressure and incentives for resource operational costs, which require
optimization and conservation long-term commitment and
financial viability
- Growing awareness and regulation of the - Complex contractual and
environmental and social impacts of resource regulatory arrangements, which
extraction and consumption, which create require trust and transparency
opportunities and obligations for sustainability and among multiple stakeholders
responsibility
- Advancement of digitalization, automation, and - Cultural and organizational
data-driven insights, which enable new capabilities changes, which require a shift in
and solutions for resource management and service the mindset and behaviour of both
delivery producers and consumers
- Diversification and differentiation of customer needs - Customer acceptance and trust,
and expectations, which create demand and value for which require education and
customized and integrated solutions communication of the benefits and
risks of resource servitization

Behavioural change – The rise of the instinctively responsible consumer

In recent years, a paradigm shift has emerged in consumer behavior, driven by an increasingly
conscious and responsible mindset18. This shift is particularly evident among younger generations,
who are more attuned to the environmental and social impacts of their purchasing decisions. The
traditional focus on producers and goods has given way to a heightened emphasis on consumers and
the long-term outcomes of their consumption choices.

Conventional product cultures have been built upon linear thinking, with assembly lines organized in
a straightforward, single-directional flow. This linear approach, however, fails to capture the deeper
value that consumers seek beyond the immediate transaction of acquiring a product. The
instinctively responsible consumer desires more than just a product; they seek enduring value,
derived from meaningful relationships, long-term benefits, and a positive impact on the world
around them.

18
Tzuo, T., & Weisert, G. (2018). Subscribed: Why the subscription model will be your company's
future and what to do about it. Penguin.
A commodity company, focused solely on producing and selling goods, often occupies a diminished
position in the customer's mind. This lack of connection limits the company's understanding of
customer needs and aspirations, hindering its ability to deliver products and services that truly
resonate with consumers. Moreover, the absence of a deeper connection between company and
customer impedes the growth of both parties, ultimately eroding trust and loyalty at the community
level.

The instinctively responsible consumer represents a departure from this transactional mindset. They
are driven not by guilt or obligation but by a genuine desire to make a positive difference through
their consumption choices. Unsatisfied with the status quo, they actively seek innovative solutions
and value propositions that align with their values and aspirations. These consumers are not passive
bystanders; they are proactive agents of change, driven to shape a more sustainable and responsible
future.

The instinctively responsible consumer is not merely a purchaser of goods; they are also a citizen, a
leader, and a change agent. They actively engage in the shaping of their communities, advocating for
sustainable practices and influencing the behavior of others. Their actions extend beyond individual
consumption choices, encompassing a broader commitment to environmental stewardship and
social responsibility.

The rise of the instinctively responsible consumer presents a significant opportunity for businesses
to transform their operations and align with the evolving expectations of their customers. By
embracing resource servitization, businesses can move beyond the traditional product-centric model
and focus on providing value-added services that address the long-term needs of their customers.
This shift aligns with the core principles of a circular economy, where economic activity is decoupled
from resource consumption and businesses operate in a more sustainable and responsible manner.

The instinctively responsible consumer is not a fleeting trend; they are a driving force shaping the
future of consumption. Businesses that fail to recognize and respond to this evolving landscape risk
becoming marginalized, while those that embrace the changing dynamics will emerge as leaders in a
more sustainable and responsible world.

Resource use efficiency and closing the loops

The success of an industry focused on services will not be judged by the extent to which productivity
per worker and overall production outputs increase but by the degree of its capacity to innovate, its
success in recovering and reusing secondary resources, in reducing the demand for and use of
primary resources, and in lowering its levels of energy- and land-use intensity which taken together
a new, sustainable point of equilibrium in the service supply/ demand equation. At its simplest, from
a balance sheet perspective, this pivot moves the net present valuation of the industry from a
primary or total emphasis on its tangible assets to its intangibles. The intangibles' valuation is
grounded in its workforce and supply chain's capabilities and delivering enduring benefits through its
value chain to its loyal and satisfied customers. A combination of resource efficiency and innovative
substitution –for example, green ammonia for fossil fuel energy or new materials for construction -
will be at the core of performance evaluation, which translates to efficient production with the least
environmental or climate footprint. Industry and users become real partners and grow together.
Customer loyalty will permeate society, and a social contract on natural resources will be fostered.

Suppose the extractives sector takes the resource servitization step change. In that case, it will
subsequently be much more straightforward for the "commodity" industry to evolve into a service
industry (Figure 4), just as accepting Environmental, Social and Governance (ESG) principles of
investment will significantly facilitate the mobilization of primary financial resources to fund this.
The manufacturing industry is, in many ways, leading this change from within. Instead of focusing on
products, inventories, and promotion, the industry is razor-focused on the audience, its customers.
Transitioning to a service industry has been less painful than imagined for any industry that has
walked this path. Information technology (Software as a Service, Artificial Intelligence as a Service,
Blockchain as a Service, etc.), media (Content as a Service), manufacturing (Product as a Service) and
transport (Transportation/Mobility as a Service) provide a few good examples of this transformation.

Figure 4

Possible pathways to transforming the "commodity" industry into "a service" industry. The
commodities can evolve into products and subsequently to "as a service," or commodities can be
converted directly to "as a service"

Even if market vagaries are inherently not fully controllable for complex supply chains, better
prediction and preparedness will be possible as blockchain, verifiable digital identifiers, and machine
learning tools are increasingly smart. The resultant enhanced stability of the resource market will
benefit governments, who can anticipate stable economies and thus plan better, especially for
unforeseen crises such as COVID-19. The transformation will foster a more equitable distribution of
benefits across all societal stakeholders, thus firming firm foundations for the social contract on
natural resources.

Resource servitization: A policy approach to reducing resource consumption

Over the past 50 years, a significant acceleration in resource consumption has resulted in
exponential, non-sustainable growth of mineral and fuel extraction, production and use 19. A global
economy assuring the well-being of a maximum number of human beings while retaining resource
extraction and consumption within planetary boundaries requires total resource management -
producing more with less20. The target is simple to express, but how can it be achieved?

19
Marina Fischer-Kowalski, 2016, Decoupling of resource use and economic growth, and the role of
international trade, International Resource Panel.

World Commission on Environment and Development (WCED), 1987, ”Our common future” also
20

known as “Brundtland Report” after the Commission's chairwoman, Gro Harlem Brundtland.
Decoupling
The decoupling concept is focused on performing the desired function. In contrast, the operation
performed is individual, non-tangible and service-based. The primary function of food and drink is to
quench hunger and thirst; the primary function of garments is to protect humans from wind and
cold; and the primary function of a car is individual or group mobility, transportation of their goods,
equipment and belongings. Yet, all of the above products have multiple functions going far beyond
the mechanical or transactional, e.g., the social standing humans may attribute to owning a
expensive car or wearing a fashionable outfit. A lesser challenge will be the transfer of more basic
commodities to a service. The function of fertilizers is to make or keep soils fertile, and soils provide
growing media and nutrition to crops. Economists must stop measuring the success or failure of a
business by the number or volume of items sold and used but by the achievement of a specific state
or quality of service and outcome21. Yet, this requires a new way of thinking, a total resource
mindset reset, and a "circular economy culture".

Fertilizers are an excellent example of the potential of de-commodification of an essential but

commoditized good – a "fungible token" – and their transformation into individualized and collective
services – "non-fungible tokens" – not equity but a utility token required by users to interact with
the network22. The available services are food security, infant and child development and learning at
school, and public health. Currently, fertilizers are commodities sold by tonnes of products. Growing
a fertilizer manufacturer's business means selling more tonnes of fertilizing products. This holds for
most if not all, commodities. Yet, soil fertility can result from tools and measures such as enhanced
biodiversity, soil improvers, bio-based fertilizers, speciality mineral fertilizers and digital tools
accessing, interpreting and applying big data. Instead of selling and using more commodity
fertilizers, a mix of nature-based solutions, digital tools, soil improvers, controlled-release fertilizers,
or high-efficiency fertigation could be applied. In short, several services replace commodity products
and perform the desired function: fertile soil for food and feed production. 23

The current economic landscape shows singular developments in the right direction. Spectacles are
being leased instead of sold. In German-speaking countries, Samsung has offered to take back used
mobile phones for a fair price in part exchange for new phones. Yet, leasing car batteries has been
abandoned by Renault, one of the pioneers of such a "shared" system. A clear trend to circularity
across all types of innovative devices is not yet visible. Leasing car tyres – winter to replace the other
season ones – has been successfully applied by some tyre producers and washing machines leasing,
developing thus "services good practices".

Subscription, membership or pay-as-you-go economy

In line with the original cloud-based business model for managing on-demand services to clients,
such as real-time, on-demand automated decision-making, the broader resource servitization
economic model can be understood as a subscription or membership-based service arrangement but
without minimum charges or commitments to use. In that sense, it has the attributes of a pay-as-
you-eat food court, an "a la carte tailored service".

Ernst Ulrich von Weizsäcker, 1995, Factor Four: Doubling Wealth—Halving Resource Use: A New
21

Report to the Club of Rome

22
Tapscott, D., & Tapscott, A. (2016). Blockchain revolution: how the technology behind bitcoin is
changing money, business, and the world. Penguin.

The Farm to Fork Strategy for a fair, healthy and environmentally-friendly food system, European
23

Union, 2020.
An excellent example of a transformative resource servitization approach is where ownership of a
physical resource for enabling individual mobility or freedom of movement is an "as needed"
subscription to a car, scooter or bicycle sharing organization where the service's cost equates to its
duration and successful delivery. By becoming a member of a time-shared ownership platform, one
obtains the right to use, for instance, a car from a pool, which eliminates the need for any individual
to take full ownership of and responsibility for a vehicle and also remedies the current highly
resource-wasteful situation where 90 per cent of the individually owned cars at any time are parked
on the road or in a driveway and are not used. A membership economy may save unnecessary
demand for the resource stocks taken up by cars and relieve pressures on critical raw materials
supply chains.

Models: Consumables, Network model

Resource servitization provides opportunities for the circular economy. It could be the basis of new
circular business models – a service economy built on paid labour salaries. Reusing,
remanufacturing, and recycling are potentially more labour-intensive than extracting and processing
primary resources. This would mean reducing the current tendency of constantly lowering the
workload on one specific product to increase the capital- and material intensity. Reducing the tax
load on labour and increasing it on money is probably necessary to make it successful24.

Resource servitization is a strategy that product-oriented companies use to enhance and

differentiate their competitiveness by integrating services into their overall business model. This
shift can have various impacts and implications on resource efficiency, environmental performance,
value creation, and innovation, depending on the context and market of each industry and region. In
this section, some potential benefits and challenges of resource servitization for these aspects of
resource management are analysed.

Impacts and implications of resource servitization

Opting for resource servitization can be a strategic move to improve competitiveness and meet
customer expectations. Moreover, it has the potential to bring about a fundamental shift in resource
management practices, leading to more sustainable outcomes. By providing services instead of just
products, companies can better manage the lifecycle of their resources and reduce waste, leading to
a more environmentally friendly and efficient use of resources. In addition, servitization can create
new revenue streams for companies and offer customers more personalized and flexible solutions to
meet their needs.

Resource efficiency is using natural resources optimally to achieve a desired outcome or benefit
while minimizing resource consumption and waste. Resource servitization can improve resource
efficiency by shifting the focus from selling commodities to delivering solutions that meet customer
needs and create value. For instance, by offering performance-based contracts, where customers
pay for the outcomes they receive, companies have an incentive to design durable, reusable, and
recyclable products and optimize the use of energy and materials. Additionally, companies can
improve resource allocation, minimize waste, and enhance productivity by adopting digitalisation,
automation, and data-driven insights.

Environmental performance refers to the impact of resource extraction and consumption on the
natural environment. This includes the emission of greenhouse gases, the depletion of natural
resources, and the generation of pollution and waste. Resource servitization can help improve

GROWTH WITHIN: A CIRCULAR ECONOMY VISION FOR A COMPETITIVE EUROPE, Ellen MacArthur
24

Foundation and McKinsey Center for Business and Environment, 2015.

environmental performance by reducing the reliance on resource-intensive manufacturing processes
and increasing the circularity of resource flows.

For example, companies can offer product-service systems that retain ownership and responsibility
for the products and provide them as a service to customers. This approach can enable companies to
extend the product life cycle, reduce the need for new production, and facilitate the recovery and
reuse of valuable resources.

Furthermore, companies can reduce the environmental footprint of their products and services by
adopting outcome-based services, where customers pay for the value they derive from the
resources rather than the quantity they consume. This approach can align the interests of the
companies, customers, and society and help reduce environmental impact.

Value creation generates value for both the business and the customer by providing products and
services that fulfil customer needs and expectations while capturing a fair share of the value created.
Resource servitization can help improve value creation by diversifying and distinguishing the
company's offerings and by boosting customer satisfaction and loyalty. By providing customised and
integrated solutions, businesses can cater to each customer's needs and issues, creating a
competitive edge over their rivals. Moreover, by providing bundled support services such as
maintenance, repair, and upgrading, businesses can guarantee the quality and reliability of their
products and services, creating long-term relationships with their customers.

Innovation refers to creating and implementing new or improved products, services, processes, or
business models that value the company, the customer, or society. Resource servitization is a
strategy that can promote innovation by providing new opportunities and challenges for companies
and customers while also facilitating collaboration and co-creation among various stakeholders. For
instance, companies can generate new sources of revenue and cost savings by offering resource
recovery and recycling services, which can also help them contribute to sustainable development
goals. Furthermore, by involving customers and partners in the design and delivery of their products
and services, companies can benefit from their knowledge and feedback and generate fresh ideas
and solutions.
The resource ecosystem: how the innovative resource sector can
deliver resource servitization
Resource servitization is a concept that has emerged in recent years as a response to the growing
challenges of resource scarcity, environmental degradation, and social inequality. Converting
businesses that focus on products into those that provide services is what this refers to. In such
cases, the value proposition is centered on the benefits or results of the resources, rather than the
resources themselves. Resource servitization enhances competitiveness, customer satisfaction, and
sustainable resource management. By adopting resource servitization, businesses can diversify and
differentiate their offerings, create long-term customer relationships, and contribute to the circular
economy and sustainable development goals.

Resource servitization can capitalize on the transformative power of digitalization, automation, and
data analytics, paving the way for advanced capabilities and solutions in resource management and
service delivery. However, resource servitization also encompasses substantial challenges and risks,
such as substantial upfront investments, complex contractual arrangements, organizational shifts,
and gaining customer acceptance. To effectively navigate these challenges, resource servitization
demands a holistic and systemic approach that actively engages multiple stakeholders and
perspectives while continuously innovating and adapting to evolving market dynamics.

Food, water, energy, raw material nexus

The need to meet the SDGs demands managing all resources in a nexus format, not simply as
individual commodities, which has been well recognized25. Building on this argument, UNECE reports
and documents have proposed that one such critical nexus – perhaps the key nexus for the SDGs – is
that of Food, Energy and Water, without which life is essentially impossible26. The Food, Energy and
Water nexus refers to the complex and interlinked uses of these resources and the trade-offs and
synergies among them. It also considers the social, economic, and environmental dimensions of
resource management and the impacts of climate change and other drivers on resource availability
and quality.

Managing the Food, Energy, and Water nexus requires a holistic and systemic approach involving
multiple stakeholders and perspectives and a continuous process of innovation and adaptation. One
of the concepts that can support this approach is resource servitization, which refers to transforming
product-oriented businesses into service-oriented ones, where the value proposition is based on the
outcomes or benefits that the resources provide rather than the resources themselves. Resource
servitization can help improve resource efficiency, environmental performance, value creation, and
innovation by shifting the focus from selling commodities to delivering solutions that meet customer
needs and create value.

Utilizing digitalization, automation, and data-driven insights, resource servitization can harness new
capabilities and solutions for managing resources and delivering services effectively. This approach

25
Raimund Bleischwitz , Catalina Spataru, Stacy D. VanDeveer, Michael Obersteiner, Ester van der
Voet, Corey Johnson, Philip Andrews-Speed, Tim Boersma, Holger Hoff, Detlef P. van Vuuren,
Resource nexus perspectives towards the United Nations Sustainable Development Goals, Nature,
December 2018.
https://dspace.library.uu.nl/bitstream/handle/1874/411923/s41893_018_0173_2.pdf?sequence=1

Natural Resource Nexuses in the ECE region https://unece.org/info/Sustainable-Energy/UNFC-and-

26

Sustainable-Resource-Management/pub/355180
can further leverage the opportunities and advantages of these technologies, leading to enhanced
resource management and service delivery. For example, smart metering and billing systems can
provide real-time information and feedback on resource consumption and savings, incentivising
customers to optimize their resource use. Similarly, remote sensing and geographic information
systems can provide spatial and temporal data and analysis on resource availability and quality and
support decision-making and planning. Resource servitization can foster collaboration and co-
creation among various stakeholders, such as producers, consumers, regulators, and researchers,
and generate new ideas and solutions for the Food, Energy and Water nexus.

Innovation
Innovation is one of the key aspects of resource management, as it enables the creation and
implementation of new or improved products, services, processes, or business models that have
value for the company, the customer, or society. Resource servitization is a concept that can foster
innovation by providing new opportunities and challenges for companies and customers and by
facilitating collaboration and co-creation among various stakeholders. Resource servitization meets
this nexus management objective most clearly in its response to delivering SDG 9 "industry,
innovation and infrastructure", where the service of innovation within a sustainable resource
valorization ecosystem is the fulcrum for development, whether of industry or infrastructure. And
the key to valorization is the optimization of resource stocks. It flows as this process indefinitely
through the CE (see Figure 1).

Resource servitization refers to transforming product-oriented businesses into service-oriented

ones, where the value proposition is based on the outcomes or benefits the resources provide rather
than the resources themselves. Businesses can expand their offerings and establish stronger
relationships with their customers by adopting resource servitization. Additionally, this approach can
promote the circular economy and support the achievement of sustainable development goals.
Digitalization, automation, and data-driven insights can open up new possibilities and advantages for
resource servitization, allowing for innovative solutions and capabilities in managing resources and
delivering services. For example, smart metering and billing systems can provide real-time
information and feedback on resource consumption and savings and incentivize customers to
optimize their use. Remote sensing and geographic information systems have the ability to offer
spatial and temporal data and analysis on resource availability and quality. This, in turn, can assist in
decision-making and planning processes.

Resource servitization also presents substantial obstacles and potential hazards, including
substantial initial expenditures and ongoing operational costs, intricate contractual and regulatory
agreements, cultural and organizational adjustments, and the need for customer approval and
confidence. To enable resource servitization, a comprehensive and integrated approach is essential
that takes into account the views and interests of various stakeholders. This requires a continuous
process of creativity and adjustment, with a focus on innovation and adaptation. Resource
servitization can be applied to various resources, such as minerals, petroleum, nuclear fuel,
renewable energy, bioenergy, hydro, geothermal, solar, wind, injection projects, anthropogenic
resources, and groundwater. It can also be implemented in different contexts and markets, such as
banking, automotive, healthcare, robotics, building technology, workplace technology,
transportation, and energy.

Breaking the silos

Breaking the silos is one of the key challenges and opportunities for sustainable resource
management, as it requires a holistic and systemic approach that involves multiple stakeholders and
perspectives and a continuous process of innovation and adaptation. Breaking the silos means
overcoming the barriers and boundaries that separate different sectors, disciplines, functions, and
actors and creating new connections and collaborations that enhance resource efficiency,
environmental performance, value creation, and innovation. Resource servitization is a concept that
can support breaking the silos, as it transforms product-oriented businesses into service-oriented
ones, where the value proposition is based on the outcomes or benefits that the resources provide
rather than the resources themselves.

Within the industrial landscape, new ecosystems for energy production grounded in resource
servitization principles (see Figure 1) are emerging, demonstrating how innovation cannot help but
break silos and disrupt long-standing business sectoral boundaries. These innovative models address
specific energy transition challenges and make new high-growth industries in the process. For
example, green ammonia, produced from renewable energy sources, is forging new business models
and technologies to develop and promote it as an energy source for shipping. This alliance can
extend to shipbuilders and energy storage and distribution service providers, who can offer
integrated solutions that reduce the maritime industry's carbon footprint and fuel costs 27. Similarly,
green hydrogen, which is hydrogen produced from renewable energy sources, is spawning new
financial-technical fusions, for example, between offshore wind power generation and hydrogen
production from seawater – through desalination, zero brine, and processes – for shipment to land
for storage and use. This approach can create new value chains and markets for clean energy,
contributing to the decarbonization of various sectors, such as transport, industry, and power.

Breaking the silos also implies breaking the conventional thinking and behaviour of both producers
and consumers and creating a new culture and mindset that embraces resource servitization and
circular economy. This requires education and communication of the benefits and risks of resource
servitization and trust and transparency among the stakeholders. It also requires a supportive and
enabling policy and regulatory environment that incentivizes and facilitates resource servitization
and innovation. Breaking the silos is not a one-time event but a dynamic and iterative process that
involves learning from the best practices and lessons learned from different sectors and regions and
adapting to the changing needs and contexts. Breaking the silos is a challenging but rewarding
journey that can lead to a more sustainable and prosperous future for all.

Some examples of breaking the silos in other sectors are:

 Agriculture, where some farmers offer agroecosystem services, such as carbon

sequestration, biodiversity conservation, and water quality improvement, rather than just
selling crops and livestock.
 Education, where some schools offer learning as a service, where students pay for the skills
and competencies they acquire rather than the courses and degrees they complete.
 Healthcare, where some hospitals offer health as a service, where patients pay for the
outcomes and quality of care they receive rather than the procedures and treatments they
undergo.
 Tourism, where some hotels offer hospitality as a service, where guests pay for the
experiences and memories they create rather than the rooms and amenities they use.
 Media, where some publishers offer content as a service, where readers pay for the
information and insights they access rather than the publications and subscriptions they buy.

27
For the Maersk Yara alliance and wider eco-system partnerships for Green Ammonia see
https://www.maritime-executive.com/article/maersk-keppel-and-yara-join-forces-for-ammonia-
bunkering-in-singapore
Resource servitization in practice
Some sectors have already advanced some forms of resource servitization. In the IT sector, several
software companies offer Software as a Service (SaaS), where customers pay for the access and use
of the software rather than the ownership and installation of the software. A good example is also
the technology companies that have adopted a service strategy in favour of product sales. Instead of
pursuing deals of engineering, equipment and manufacturing facilities, "predictive maintenance"
service contracts are substituted with existing manufacturing plants to increase the service life and
productivity of components and technical equipment. By closely monitoring the function of features,
one can more precisely predict failures, swapping out the aged component before it fails to reduce
the risk of such loss and more extensive damage to the equipment or the production process. An
even more recent development involves creating a "digital twin" of the system, which acts as a
complete virtual facsimile of the actual system by implementing machine learning to record and
understand the behaviour of the actual procedure and by overlaying AI over the performance history
to optimize its future performance but also to predict and mitigate future operational inefficiencies
and faults, the overall service performance and operator return on investment can be significantly
enhanced.

Resource servitization is not limited to the energy and technology sectors but can be applied to
various other sectors, such as media, retail, transport, and manufacturing. Resource servitization can
help create new value propositions and business models in these sectors by shifting the focus from
selling products to delivering solutions that meet customer needs and create value. In the media
sector, some publishers offer Content as a Service (CaaS), where customers pay for the information
and insights they access rather than the publications and subscriptions they buy. In the retail sector,
some retailers offer Fashion as a Service (FaaS), where customers pay for the access and use of
clothing and accessories rather than their ownership and maintenance. In the transport sector, some
transport providers offer Transport as a Service (TaaS), where customers pay for the mobility and
convenience that the transport modes provide rather than the ownership and operation of the
vehicles. In the manufacturing sector, some manufacturers offer Manufacturing as a Service (MaaS),
where customers pay for the production and delivery of customized products rather than purchasing
and storing standardized products.

Leveraging digitalization, automation, and data-driven insights can also be beneficial for resource
servitization. These technologies offer new solutions and capabilities for service delivery and
resource management. For example, in the IT sector, cloud computing and artificial intelligence can
provide scalable and flexible data storage and processing¹ solutions. Social media and analytics can
provide interactive and personalized solutions for content creation and distribution in the media
sector. In the retail sector, e-commerce and blockchain can provide secure and transparent solutions
for online shopping and payment. Smart mobility and the Internet of Things can provide efficient and
sustainable solutions for traffic management and vehicle sharing in the transport sector. In the
manufacturing sector, additive manufacturing and digital twins can provide agile and innovative
product design and prototyping solutions.

Collaboration and co-creation between different stakeholders, including producers, consumers,

regulators, and researchers, can be enhanced by resource servitization. This, in turn, can lead to the
generation of novel ideas and solutions for resource management. For example, open source and
crowdsourcing in the IT sector can facilitate knowledge sharing and problem-solving among software
developers and users. User-generated content and participatory journalism can enhance content
quality and diversity among media producers and consumers in the media sector. In retail, circular
fashion and social responsibility can promote resource efficiency and sustainability among fashion
retailers and consumers. In the transport sector, mobility as a service (MaaS) and public-private
partnerships can integrate different transport modes and services into a seamless and accessible
system. A servitization network and ecosystem in the manufacturing sector can connect different
manufacturing actors and resources into a collaborative and adaptive system.

Resource servitization can bring many advantages, such as increased customer satisfaction, revenue,
and competitiveness, as well as reduced environmental impact and resource consumption. Resource
servitization presents notable difficulties and hazards, including but not limited to substantial initial
investment and operational expenses, intricate contractual and regulatory obligations, alterations to
organizational and cultural norms, and the need to win over customer acceptance and trust. A
comprehensive approach involving various stakeholders and perspectives is necessary for the
successful implementation of resource servitization. It is imperative to continuously innovate and
adapt throughout the process.

Different indicators and metrics can be used to measure the level and performance of resource
servitization depending on the service offerings' type and scope, the context and market of the
servicing firms, and the objectives and expectations of the servitization strategy. Key metrics for
resource servitization are service portfolio, revenue, profit, quality, customer satisfaction, loyalty,
resource efficiency, environmental performance, value creation, and innovation.

Different measures and actions can be taken to mitigate the challenges and risks of resource
servitization, depending on the specific situation and problem of the servicing firms. Some of the
possible mitigation measures are shared infrastructure planning, central reporting and data
provisioning, strategic environmental assessments, talent pipeline development, more CE research,
open source and crowdsourcing, user-generated content and participatory journalism, circular
fashion and social responsibility, mobility as a service and public-private partnership, and
servitization network and ecosystem. Table 7 summarizes the challenges and risks, and mitigation
measures for resource servitization in different sectors.

Table 7

Key challenges, risks and mitigation measures.

Sector Challenges and Risks Mitigation Measures

Energy High upfront investment and Shared infrastructure planning,
operational costs, complex central reporting and data
contractual and regulatory provisioning, strategic
arrangements, customer acceptance environmental assessments, talent
and trust, environmental impact and pipeline development, more circular
sustainability economy research
IT Cultural and organizational changes, Open source and crowdsourcing,
customer acceptance and trust, cloud computing and artificial
security and privacy issues, intelligence, scalable and flexible
compatibility and interoperability solutions, data storage and
issues processing
Media Cultural and organizational changes, User-generated content and
customer acceptance and trust, participatory journalism, social
quality and diversity issues, media and analytics, interactive and
competition and disruption issues personalized solutions, content
creation and distribution
Retail High upfront investment and Circular fashion and social
 operational costs, customer responsibility, e-commerce and
acceptance and trust, quality and blockchain, secure and transparent
reliability issues, logistics and solutions, online shopping and
inventory issues payment
Transport High upfront investment and Mobility as a service and public-
operational costs, complex private partnership, smart mobility
contractual and regulatory and internet of things, efficient and
arrangements, customer acceptance sustainable solutions, traffic
and trust, environmental impact and management and vehicle sharing
sustainability
Manufacturing High upfront investment and Servitization network and
operational costs, complex ecosystem, additive manufacturing
contractual and regulatory and digital twin, agile and innovative
arrangements, cultural and solutions, product design and
organizational changes, customer prototyping
acceptance and trust

Energy as a service
Energy as a Service (EaaS) is a business model where customers pay for an energy service without
making any upfront capital investment. EaaS models usually take the form of a subscription for
electrical devices owned by a service company or management of energy usage to deliver the
desired energy service. EaaS can provide various benefits for customers, such as reduced energy
costs, improved energy efficiency, enhanced reliability and resilience, and lower environmental
impact. EaaS can benefit service providers through increased customer loyalty, revenue
diversification, and market differentiation.

EaaS can be applied to different energy resources, such as renewable energy, bioenergy, hydro,
geothermal, solar, wind, injection projects, anthropogenic resources, and groundwater. EaaS can
also leverage the opportunities and benefits of digitalization, automation, and data-driven insights,
which enable new capabilities and solutions for energy management and service delivery. For
example, smart metering and billing systems can provide real-time information and feedback on
energy consumption and savings, incentivising customers to optimize their energy use. Similarly,
remote sensing and geographic information systems can provide spatial and temporal data and
analysis on energy availability and quality and support decision-making and planning.

EaaS can also foster collaboration and co-creation among various stakeholders, such as energy
producers, consumers, regulators, and researchers, and generate new ideas and solutions for energy
management. For example, energy communities, where groups of consumers and producers jointly
manage and share energy resources, can enhance energy democracy, security, and affordability.
Similarly, energy platforms, where intermediaries connect and coordinate energy supply and
demand, can facilitate energy market access, transparency, and efficiency.

However, EaaS also faces some challenges and risks, such as high upfront investment and
operational costs, complex contractual and regulatory arrangements, customer acceptance and
trust, and cybersecurity and privacy issues. Therefore, EaaS requires a holistic and systemic
approach, involving multiple stakeholders and perspectives, and a continuous process of innovation
and adaptation. EaaS also requires a supportive and enabling policy and regulatory environment,
that incentivizes and facilitates EaaS and innovation.
EaaS is a concept that has emerged in recent years as a response to the growing challenges of
energy transition, climate change, and customer empowerment. It represents a shift from asset-
focused, centralized power generation and sale to end-to-end management of customer's energy
assets and services. EaaS can help improve energy efficiency, environmental performance, value
creation, and innovation, by shifting the focus from selling energy to delivering solutions that meet
customer needs and create value. The benefits of digitalization, automation, and data-driven insights
can be harnessed by EaaS to unlock new capabilities and solutions for energy management and
service delivery. This allows EaaS to take advantage of opportunities presented by these
technologies. EaaS can also foster collaboration and co-creation among various stakeholders, and
generate new ideas and solutions for energy management.

The shift from using fossil fuels to renewable energy sources such as wind and solar power
represents a significant change in how we generate energy. This change involves moving from a
process that involves burning fuels and releasing carbon dioxide into the atmosphere to a more
sustainable process that uses minerals and other materials that can be recovered and recycled.
Renewable electricity is a critical component of this process as it allows us to reuse materials in a
way that is more environmentally friendly. Other renewable energy sources include tides, waves,
green waste, biomass, biogas, and biofuels. These sources can be combined with geothermal energy
and hydropower to create a green energy mix. Green hydrogen is also a promising option for the
future. Gas pipelines must be adapted to transport gas and hydrogen to accommodate these new
energy sources. Storage capacity is also essential to ensure the reliability of renewable energy
systems.

Although these technologies are still relatively new, they have already demonstrated efficiency
increases of up to 15 per cent28. Automated equipment allows for faster reactions and better
performance; remote monitoring and servicing manufacturing facilities can improve efficiency.
Training can be done remotely; physical component replacement is the only on-site requirement.

Efficiency as a service
Efficiency as a Service (EfaaS) is a new model for energy efficiency that delivers services – not
products – to customers. In this model, customers pay for the energy savings they achieve rather
than for installing hardware or software. EfaaS can provide various benefits for customers, such as
lower energy bills, improved comfort and productivity, reduced maintenance and replacement costs,
and lower greenhouse gas emissions. EfaaS can also benefit service providers, such as technology
manufacturers, energy utilities, and financiers, by creating new revenue streams, enhancing
customer loyalty, and increasing market penetration.

EfaaS can be applied to different energy services, such as lighting, heating, cooling, ventilation, air
conditioning, refrigeration, compressed air, water heating, and power generation. EfaaS can also
integrate different energy sources, such as renewable energy, bioenergy, hydro, geothermal, solar,
wind, injection projects, anthropogenic resources, and groundwater. Additionally, EfaaS can also
leverage the opportunities and benefits of digitalization, automation, and data-driven insights, which
enable new capabilities and solutions for energy management and service delivery. For example,
smart metering and billing systems can provide real-time information and feedback on energy
consumption and savings, incentivizing customers to optimize their energy use. Remote sensing and

28
DPP-Forum 09.09.2021, Dr. Peter Schmittel, BASF SE, Perspektiven der Mono-
Klärschlammverbrennung.
geographic information systems have the capability to offer analysis and data on the availability and
quality of energy in a spatial and temporal manner. This can be useful in decision-making and
planning processes.

EfaaS can also foster collaboration and co-creation among various stakeholders, such as energy
producers, consumers, regulators, and researchers, and generate new ideas and solutions for energy
management. Groups of consumers and producers managing and sharing energy resources can
create energy efficency communities that promote energy democracy, security, and affordability.
Energy market access, transparency, and efficiency can be enhanced through energy platforms that
enable intermediaries to connect and coordinate energy supply and demand. Such platforms can
play a pivotal role in promoting energy market accessibility and efficiency.

Some examples of Efficiency as a Service are:

 Light-as-a-Service (LaaS): ETAP, a Belgian company that produces high-quality lighting

solutions, offers Light as a Service (LaaS) to its customers. LaaS allows customers to pay for
the light they use rather than the lighting equipment and enjoy the benefits of energy
efficiency, maintenance, and recycling. ETAP retains the ownership and responsibility of the
lighting equipment and ensures that it is designed for durability, reuse, and recyclability,
thus supporting the circular economy principles.
 Light as a Service in Retail: LaaS is revolutionising the retail sector by providing energy-
efficient and tailor-made lighting solutions for different retail environments. LaaS enables
retailers to reduce their energy costs, improve their customer experience, and enhance their
brand image without making any upfront investment or taking operational risks. LaaS also
helps retailers to comply with the environmental regulations and standards and contribute
to the global climate goals.
 Cooling as a Service (CaaS): Nerdalize, a Dutch company that provides cloud computing
services, offers Cooling-as-a-Service (CaaS) to its customers. CaaS is a novel concept that
uses the excess heat generated by the servers to heat the buildings where they are installed,
such as homes, offices, or greenhouses. CaaS allows customers to save on their heating bills
while also reducing the cooling and energy costs of the data centres. CaaS also lowers the
carbon footprint of the cloud computing industry and creates new opportunities for local
and renewable energy sources.
 Heating as a Service (HaaS): This is a business model where customers pay for the heating
service they receive rather than for the heating equipment or fuel. HaaS can lower the
upfront cost and risk for customers and encourage the adoption of energy-efficient and low-
carbon heating technologies. HaaS can also optimise and manage heating demand and
supply and support the integration of renewable energy sources. One example of HaaS is
Switch2, a UK company that provides community and district heating solutions and offers
customers metering, billing, and maintenance services.

However, Efficiency as a Service (EfaaS) also faces challenges and risks, such as high upfront
investment and operational costs, complex contractual and regulatory arrangements, customer
acceptance and trust, and cybersecurity and privacy issues. Therefore, EfaaS requires a holistic and
systemic approach involving multiple stakeholders and perspectives and a continuous process of
innovation and adaptation. EfaaS also requires a supportive and enabling policy and regulatory
environment that incentivizes and facilitates EaaS and innovation.
EfaaS is a concept that has emerged in recent years as a response to the growing challenges of
energy transition, climate change, and customer empowerment This indicates a move away from the
concentration on specific assets and the centralized production and distribution of energy towards
comprehensive management of customer energy assets and services. EfaaS can help improve energy
efficiency, environmental performance, value creation, and innovation by shifting the focus from
selling energy to delivering solutions that meet customer needs and create value. EfaaS can also
support the CE principles by encouraging the design, reuse, and recycling of energy equipment and
materials. EfaaS can also contribute to the global climate goals by reducing the energy demand and
carbon footprint of various sectors and activities. EfaaS can thus be seen as a key enabler of the
resource servitization paradigm, where resources are used more efficiently and sustainably to
deliver services and benefits to society.

Critical raw materials as a service

Critical raw materials (CRMs) are economically essential but are also highly vulnerable to supply-
chain disruption or weaponization. Lists of necessary materials may be made for international
regions (e.g. EU29), countries (e.g. USA30), or at the regional or company level. Examples of CRMs such
as rare earth elements (REEs), lithium, and cobalt are enablers of many clean technologies essential
for the energy transition and digital technologies. Creating resource servitization models would
decrease the environmental footprint of our use of CRMs. Still, they would also significantly improve
the security of supply. More intensive use of the CRMs in circulation, more reuse and recycling, as in
circular economy models, would be ideal for keeping resource flows in their countries of service. For
example, in the application, many CRMs are dispersed in low amounts, in complex materials and
components for which there are few reverse loops involving reuse and remanufacturing and few
processes for recycling. End-of-life recycling and recycling input rates are low 31.

One example of resource servitization involving the CRM, rhenium, is the 'power by the hour' leasing
of aircraft engines32. This resource servitization model leads to an overall recycling rate of 50 per
cent for rhenium. Most of Rolls Royce's rhenium supply is now recycled material. The company's
resource servitization model has helped secure a critical raw material. Another example is the use of
platinum group metals, which, owing to their high economic value, have higher recycling rates than
most CRMs. In the chemical industry, Platinum Group Metals (PGM) catalysts can be part of the
initial capital investment for the plant, purchased on a 'supply and refine basis'. They then remain
the user's property and are recycled (multiple times) through a refiner to create a new active
catalyst33. This service model results in a recycling rate of 80-90 per cent for PGMs in catalysts,
compared to a rate of 60-70 per cent in automotive catalysts where PGM are recycled without using

European Commission, 2020, Critical Raw Materials Resilience: Charting a Path towards greater
29

Security and Sustainability, https://ec.europa.eu/docsroom/documents/42849. Accessed 18.7.22.

30
Nassar, N.T., and Fortier, S.M., 2021, Methodology and technical input for the 2021 review and
revision of the U.S. Critical Minerals List: U.S. Geological Survey Open-File Report 2021–1045, 31 p.,
https://doi.org/10.3133/ofr20211045. Accessed 18.7.22.
31
EU Raw Materials Scoreboard
https://www.era-min.eu/sites/default/files/docs/et0320656enn.en_.pdf
32
Rolls-Royce celebrates 50th anniversary of Power-by-the-Hour
https://www.rolls-royce.com/media/press-releases-archive/yr-2012/121030-the-hour.aspx

University of Birmingham Policy Commission, 2021, Securing Technology Critical Metals for Britain.
33

84pp. www.birmingham.ac.uk/creamcommission.
a resource servitization model, to just 5-10 per cent recycling in waste electronics, where the small
amounts, dispersion and complexity of components make recycling much more difficult.

Lithium-ion batteries require CRMs such as lithium, cobalt, and graphite, which will likely be
undersupplied in the next ten years as the battery market multiplies34. They are subject to much
interest in possible service models. The small lithium-ion batteries in power tanks are among the
best resource servitization examples. At events and airports35 36, companies offer electrical charging
for small consumer devices. The user pays and takes a power tank, charges their device, and returns
the power tank sometime later. Thus, the power tank belongs to the service provider who has it safe
to use again and ready to recycle when need be. Moving to larger batteries, Sun Mobility has a
battery swap business model for e-rickshaws to provide e-mobility as a service in India 37. Chinese EV
start-up NIO offers battery-as-a-service (BaaS) in China and now in Norway38. It takes just five
minutes to change to a new battery at its swap stations, thus saving the time to charge a large
battery. NIO has 885 power swap stations in China and plans 4,000 worldwide by 2025. The Chinese
company CATL also now has a BaaS model. Other major car manufacturers have not chosen this
route. Although various short- and long-term car leasing models converge towards resource
servitization, most people own their cars, including batteries. Some companies have plans for
battery second life as energy storage, presumably expecting a high proportion of returns at the end
of life via car scrap yards that they can use for this. The regulatory control of car scrappage is key to
ensuring proper materials stewardship and second-life uses will need the same level of regulation.
Car resource servitization schemes thus still seem to have some way to go, especially as most tariffs
are competitive for people who can afford new/nearly new cars but not for the sizeable second-
hand car market.

Resource servitization models seem absent from most products that use rare earth elements (REE),
except as they are used in motors in EVs and thus included in car leasing (see above). In most
applications until recently, the amount of REE was too small (e.g. just a few grammes) to merit much
interest, and hard disk drives were the most attractive product to recycle. EV permanent magnet
motors and generators in large offshore wind turbines create much larger concentrations of REEs (up
to tonnes of material in wind turbines). This is undoubtedly worth recycling and maybe worth the
resource servitization models to ensure collection. However, wind turbine manufacturers seem to
sell the turbines to energy companies simply. It is essential for the relevant circular economy plans
to be developed as systemic tools to ensure specific waste streams and separate collection and
recycling targets for wind turbines and PV panels.

In consumer electronics, resource servitization models can overcome some problems of the diversity
of equipment that goes to general recycling, 'hibernation' of old devices in people's homes and the
frequent changes and upgrades. The responsible consumer mentioned above may be interested in
buying a mobile phone service and returning the device - probably frequently - for reuse,
remanufacturing or recycling. A few phone leasing schemes supply both new and refurbished

34
https://www.iea.org/reports/the-role-of-critical-minerals-in-clean-energy-transitions/mineral-
requirements-for-clean-energy-transitions#abstract
35
https://www.lifesaverpower.com/pages/events
36
https://www.bristolairport.co.uk/at-the-airport/passenger-information/charge-before-you-fly.
37
https://www.sunmobility.co.in/about.html.
38
https://www.nio.com/nio-power
equipment39. Apple is an example of a high-profile manufacturer that seems to be taking steps
toward this route40.

Resource servitization, financial reporting and intangible assets

In financial reporting, resource servitization enabled by UNRMS may be defined as an "intangible
asset" designed to manage the "tangible assets" of natural resources in a balanced, integrated and
transparent way. These tangible assets are addressed as "non-fungible tokens", where each unit
("token") of each resource is understood to have a unique role and service purpose according to an
individual or societal need and circumstance and is managed as such within a circular economy, not
as previously in a linear economy as a "fungible token," i.e. a commodity where there is no need- or
circumstance-specific service value, simply a market price. While the market price effectively
determines who gets and does not get critical resources, the resource servitization premise that
underpins the non-fungible resource tokens assumes there is an overriding public good argument in
force which ensures that even those who cannot afford the market price nevertheless have the right
of access to that resource critical to meeting local individual and societal needs.

The central role of resource management determines this fundamental shift in the status of
resources from fungible to non-fungible plays in delivering the SDGs as a whole, not just in providing
specific goals and their respective performance objectives. This is particularly the case in delivering
those resources critical to life and well-being, whether through food security to enable zero hunger,
clean water and sanitation for good health and well-being or affordable and clean energy for
climate-smart, productive economic activity.

The enabling technology to make this possible in resource servitization based on UNRMS is a
combination of distributed ledger, commonly known as "blockchain", and machine learning or
neural networking, widely known as artificial intelligence, because by applying these technologies
together, resources can be managed in a trackable, traceable and integrated manner. That
integrated process lies at the heart of blockchain. In the distributed ledger, monies and molecules
are simply two different ways of expressing the service value of the resource itself as delivered to
the consumer or user, which fuse as a single resource currency.

From this fusion, the transactional aspect of UNRMS as a resource management tool can also be
derived, whereby the obverse of the coin ("heads") is data, and the reverse ("tails") is money. The
payment process for using the intangible asset, whether pay as you go or subscription, consists of
two complementary parts: the uploading or "paying in" of data about the tangible assets, including
the volumes and values these data represent, and the downloading or "drawing down" of that data,
in the form of a range of services, functionally as processed and updated by features of the ledger
(the "smart contract") but also as resource management toolbox, interpreted and refined by the
artificial intelligence which increasingly optimizes the capacity to meet SDG objectives, especially the
critical needs of the global population.

These characteristics of resource servitization based on UNRMS show how it meets the International
Accounting Standards (IAS) criteria for what an intangible asset is, as defined by three key attributes:

• Identifiability

39
https://www.raylo.com/
40
Cimprich, A., Young, S.B., Schrijvers, D. et al. The role of industrial actors in the circular economy
for critical raw materials: a framework with case studies across a range of industries. Miner Econ
(2022). https://doi.org/10.1007/s13563-022-00304-8
 • Control (power to obtain benefits from the asset)
• Future economic benefits (such as revenues or reduced future costs)41.

Identifiability is determined by assigning a unique ID (token) as the tangible asset is first registered in
the system. Control is given by the distributed nature of the ledger to the data's transparency to the
user and smart contracts that essentially automate the management of the benefits inherent in the
access to and use of those resources (the service value or outcome). Future economic benefits are
secured first by the public good distribution principle, which overrides the importance of the market
price when affordability criteria otherwise prevent fair access, but also because the inherent nature
of UNRMS to drive the goal of zero waste throughout all management of all resources, irrespective
of what phase they are in of the circular economy at any given time or place.

While the resource servitization UNRMS model will be available in both on-demand (pay as you go)
and subscription models, the dual transactional functions of "uploading" data and "downloading"
services and service instruments are the same. The subscription model, enabling continuous and
uninterrupted access to and use of UNRMS, adds significantly higher value. In particular, it is design
and operation balance the conventional retrospective "rear view mirror" tracking, tracing and
recording of the distribution and use of resources and associated costs and benefits (the diachronic
axis) with an increasingly smart synchronic resource management capability, which both plans ahead
strategically to predict and support supply chain security objectives but also to manage real-time
interventions is a response to unforeseen or unpredictable critical needs.

The subscription model is also likely to ensure the long-term financial viability of the resource
management itself, at least based on a market analysis of subscription vs more conventional
businesses. In the United States, from 1 January 2012 to 30 September 2017, comprehensive studies
reveal that subscription businesses grew revenues about eight times faster than S&P 500 company
revenues (17.6 per cent versus 2.2 per cent) and about five times faster than US retail sales (17.6 per
cent versus 3.6 per cent)42.

There is also a correlation between subscription business growth and GDP growth. The subscription
business growth and GDP slowed around the end of 2016 and the beginning of 2017: US GDP growth
peaked in Q3 2016 at 2.8 per cent and sank to just 1.2 per cent in Q1 2017. At the same time, the
subscription business growth rate peaked in Q3 2016 at 21.6 per cent, then cooled to an average
annual growth rate of 14.3 per cent.

Recurring revenue-based businesses in the Subscription Economy are not guaranteed success. Still,
suppose they focus relentlessly on extending average customer lifetimes by integrating UNRMS fully
into governmental and private sector resource planning, management, and use while minimizing
churn rates and making a complementary usage-based (on-demand) billing option available. In that
case, it will likely achieve the same or even faster growth and better retention rates than those
covered in the US case study outlined above.

41
Formal definitions of “intangible assets” for accounting purposes have become more sophisticated
and complex that as first defined by IAS, see (see
https://www.iasplus.com/en-gb/standards/ias/ias38), but as core principles they remain both clear
and robust and hence are referenced here.
42
Tzuo, T., & Weisert, G. (2018). Subscribed: Why the subscription model will be your company's
future and what to do about it. Penguin
Transition from a linear to a resource servitization model
The linear business model assumes that resources are abundant and cheap and that products can be
sold and disposed of without much regard for their environmental and social impacts. The linear
model follows a "take-make-waste" logic, where resources are extracted, processed, manufactured,
distributed, consumed, and discarded. The linear model is often associated with a product-centric
approach, where the value proposition is based on the features and functions of the products rather
than the outcomes or benefits they provide.

The "as a Service" model, on the other hand, is based on the assumption that resources are scarce
and valuable and that products can be designed and delivered in a way that minimizes resource
consumption and waste and maximizes customer satisfaction and loyalty. The "as a Service" model
follows a "reduce-reuse-recycle" logic, where resources are optimized, products are shared,
serviced, and upgraded, and waste is recovered and recycled. The "as a Service" model is often
associated with a service-centric approach, where the value proposition is based on the outcomes or
benefits the products provide rather than the products themselves.

Transitioning from a linear model to an "as a Service" model can bring many advantages, such as
increased customer satisfaction, revenue, and competitiveness, reduced environmental impact and
resource consumption. However, transitioning from a linear model to an "as a Service" model poses
significant challenges and risks, such as high upfront investment and operational costs, complex
contractual and regulatory arrangements, cultural and organizational changes, and customer
acceptance and trust. Therefore, transitioning from a linear model to an "as a Service" model
requires a holistic and systemic approach involving multiple stakeholders and perspectives and a
continuous process of innovation and adaptation.

Previous experiences of several traditional companies that transitioned to an "as a Service" model
are informative. When an established company starts shifting its revenue mix from an asset
purchase model to a subscription model, it experiences a string of quarters where top-line revenues
shrink as revenues from large, pay-up-front deals are replaced by recurring subscriptions without the
big up-front payment. At the same time as revenues dip, the company must invest in many of the
new capabilities and structures required for profitable "as a Service". The traditionally profitable and
stable mix of more revenue than costs is replaced with a tumultuous period of costs exceeding
income.

Some companies face this situation of falling revenues by having a transitional hybrid model of
traditional commodity or product and subscription models. The hybrid model gives the company
some time to build its subscription base. As subscriptions increase, revenues will be back on track,
and the company can entirely shift to a 100 per cent "as a Service" model. The successful transition
time for several industries was a few quarters or about one or two years or less.

As many experiences accumulate, several companies learn lessons and manage the transitions less
painfully. It has been observed that better planning for a smooth transition could be possible for
resource servitization companies. Shifting the focus from selling commodities to delivering solutions
that satisfy customer needs and create value can greatly enhance resource efficiency, environmental
performance, value creation, and innovation. This can be achieved through resource servitization.
Some of the best practices for planning a successful transition to an "as a Service" model are:

 Establish a clear vision and strategy for the transition and communicate it to all
stakeholders, including customers, employees, partners, and investors.
 Assess the business's and the market's current state, and identify the gaps and opportunities
for improvement and innovation.
 Design and test the new "as a Service" offerings and business models, and validate them
with customer feedback and data analysis.
 Develop and implement the new capabilities and structures required for the "as a Service"
model, such as new processes, systems, skills, and culture.
 Monitor and measure the performance and impact of the "as a Service" model, and adjust
and optimize it as needed.
Resource servitization: Implications and recommendations for
sustainable resource management

This report explored the concept and application of resource servitization, transforming product-
oriented businesses into service-oriented ones, where the value proposition is based on the
outcomes or benefits that the resources provide rather than the resources themselves. Resource
servitization is a paradigm shift that can support the transition to a more sustainable and circular use
of natural resources, in line with the 2030 Agenda and the Paris Agreement.

The report also presented some opportunities and challenges in implementing and integrating
resource servitization, using UNFC and UNRMS as tools and frameworks. UNFC and UNRMS are
complementary systems developed by UNECE to support the sustainable management of natural
resources. UNFC is a globally applicable standard for classifying resource projects based on their
environmental, social, and economic viability, technical feasibility, and confidence in estimates.
UNRMS is a comprehensive resource management system that builds on UNFC and provides a
framework for integrated and sustainable resource management.

The report identified the gaps and opportunities for improvement and scaling up resource
servitization models. It provided some general and specific recommendations for policymakers,
industry actors, and other stakeholders to support the transition to resource servitization and
achieving SDGs and the Paris Agreement. The report highlighted the challenges and barriers that
resource servitization faces in different contexts and markets, such as high upfront investment and
operational costs, complex contractual and regulatory arrangements, cultural and organizational
changes, and customer acceptance and trust.

The report has suggested strategies and solutions to overcome these challenges and barriers, such
as shared infrastructure planning, central reporting and data provisioning, strategic environmental
assessments, talent pipeline development, and more circular economy research. The key messages
are:

 UNFC and UNRMS can work together to promote the sustainable and circular use of natural
resources, in accordance with the 2030 Agenda and the Paris Agreement.They provide a
common language and framework for resource classification, accounting, reporting, and
management and facilitate the integration and comparison of different types of resources,
such as minerals, petroleum, renewable energy, bioenergy, hydro, geothermal, solar, wind,
injection projects, anthropogenic resources, and groundwater.
 Resource servitization represents a transformative shift from a commodity-based to a
service-oriented economy, where resources are packaged as solutions that address
customer and societal needs. By emphasizing solution delivery rather than just commodity
sales, resource servitization contributes to improved resource efficiency, environmental
performance, value creation, and innovation. Digitalization, automation, and data analytics
open up a plethora of opportunities and benefits that can be leveraged through resource
servitization. This approach enables the creation of new capabilities and solutions for both
resource management and service delivery, driving sustainable growth and value creation.
 Resource servitization can also foster collaboration and co-creation among various
stakeholders, such as producers, consumers, regulators, and researchers, and generate new
ideas and solutions for resource management. Resource servitization can be applied to
 various types of resources and implemented in different contexts and markets, such as
agriculture, automotive, healthcare, robotics, building technology, workplace technology,
transportation, and energy.
 Resource servitization poses challenges and opportunities for policymakers, industry actors,
and other stakeholders, who must adapt and innovate to the changing circumstances and
evolving best practices. Resource servitization requires a holistic and systemic approach
involving multiple stakeholders and perspectives and a continuous process of innovation and
adaptation. Resource servitization also requires a supportive and enabling policy and
regulatory environment that incentivizes and facilitates resource servitization and
innovation.

Policy drivers: Regulation of resource servitization

The SDG-derived policy drivers adopted in this report to guide delivery and effective regulation of
resource servitization as applied to natural resources share a crucial assumption. That is, the
purpose of adopting resource servitization as a framing condition of resource management policy is
to facilitate and enhance the efforts invested by individual nations to improve their overall
management of natural resources to benefit their citizens in the face of a severe global challenge.
This is to be achieved by enhancing:

a) Social, environmental and economic performance in national resource management, in

particular ensuring the security of access to critical resources, such as food, energy and
water.
b) Equitable distribution of benefits to national citizens from valorization and use of these
resources by third countries or external investors.
c) Enhancing governance, accountability and stakeholder confidence in natural resource
management.

Given the wide variations in needs and priorities between different countries and within them, there
is no universal solution that is equally applicable in every country. Each country's approach should
be guided and shaped by the general principles of the laws concerning natural resources, which
determine how people can variously access but also maintain the services of the natural
environment, irrespective of what these services are, for both economic and societal benefit. Hence,
for the energy sector, the general principles of good regulation must apply such that energy
regulation is not solely determined and enforced by energy-specific aspects of the law but by the
general principles of sustainable development43. Blockchain technology is a nascent technology that
is evolving every day. It holds enormous transformative potential in many fields and "could
transform how our economy works". The challenge will be to strike the right balance between
ensuring the system's governance, safety and resilience while not infringing on the innovation and
development of this fast-evolving capability44.

While regulating resource servitization promotes good practices, which can be adopted globally, the
approach should balance the need for nations to be free to produce and exchange goods and

del Guayo I, ‘The Evolution of Principles of Energy Law (a Review of the Content of the Journal of
43

Energy & Natural Resources Law, 1982-2022)’ (2022) 40 Journal of energy & natural resources law
43.
44
Kakavand, H., Kost De Sevres, N., & Chilton, B. (2017). The blockchain revolution: An analysis of
regulation and technology related to distributed ledger technologies. Available at SSRN 2849251.
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2849251
services in the natural resource sector. This is because, as Adam Smith argued, the sign of a properly
functioning market system is to maximize material benefits to society's lowest members 45. It follows
that policy drivers aimed at regulating resource servitization must be perceived as fair to all
stakeholders in the value chain and demonstrably fair in both practices and outcomes to remove any
mercantilist tendencies by nations, or worse still, resource weaponization.

In regulating the recovery and valorization of natural resources, practices vary widely from country
to country; what is considered good or "critical" in one country may not necessarily be regarded as
good or "critical" in another. To accelerate the energy transition and safeguard climate action targets
within the circular economy, practices considered "good" or resources are assessed as critical by
objective. Independently verifiable metrics or experts must demonstrate that they are aligned to
universally acceptable ways of creating value from all resources, notably the most vital. This
requirement applies regardless of whether a country is the source of the much-needed raw material
or a consumer of the end product. For this to happen, fairness, equity, and mutual benefit should
inform the practices under resource servitization.

The following are general drivers of policy meant to achieve this.

 Locating, mapping and inventorying the resources needed for sustainable development
should be promoted by all countries. This should include mapping essential raw materials
required for the energy transition, without which the pace of the change to meet the climate
action target will be hindered;
 Study and identify the existing resource value chain to prevent wastage of resources (closing
resource loops) and diagnose and repair supply chain vulnerabilities and gaps. Similar
services in some circumstances can be amalgamated by region, resulting in significant
efficiency gains, heightened resilience, and reduced costs while still ensuring fair
competition among countries producing the same raw material or offering similar services;
 Maximizing the value of resources at the source while optimizing local content requirements
(LCRs) should be promoted46. Regions with existing expertise in processes and services that
add value to raw materials can provide these by partnering with countries that have these
raw materials. Both partners can collectively strengthen the supply chains to the third
countries with value-added service-enabling components, equipment or capabilities. This
will ultimately reduce production costs globally and enhance secure supplies;
 Transfer of required technology to where it is most needed in the value chain for mutual
benefit should be promoted. This requires affordable access or even sharing of patent rights
together with "climate-smart" efficient technology systems that maximize the lifecycle value
of resources and reduce wastage within the circular economy;
 A harmonized system of rewarding resource-rich countries to create incentives for an
accelerated energy transition should be promoted. This can be promoted through a
regionally coordinated tax regime for essential raw materials for the transition or carbon
credit to GHG emission bans and quotas to the accelerated energy transition contributors;

45
Adam Smith. "An Inquiry into the Nature and Causes of the Wealth of Nations." OUP Oxford, 2008.
https://www.google.co.uk/books/edition/An_Inquiry_into_the_Nature_and_Causes_of/
SwFYIf_E1CIC?q=&gbpv=1#f=false
46
For advice on policies concerning local content requirements (LCRs) see OECD
https://www.oecd.org/trade/topics/local-content-requirements/
  Enhance the dynamic integrative capabilities for meeting the goals desired in all partners to
the critical public-private partnership required (Governments, industry and capital
allocators).

Good practices in resource servitization

Resource servitization is the transformation of product-oriented businesses into service-oriented
ones where the value proposition is based on outcomes or benefits. This process can bring
advantages such as increased customer satisfaction, revenue, and competitiveness and reduced
environmental impact. However, it poses challenges such as high upfront costs and complex
contractual arrangements, requiring a holistic and continuous approach involving innovation and
adaptation. Some of the good practices for resource servitization are:

 Establish a clear vision and strategy for the transition to resource servitization and
communicate it to all stakeholders, including customers, employees, partners, and investors.
A clear vision and strategy can help align the goals and expectations of the stakeholders and
provide a roadmap and guidance for the transition. Clear communication can help build trust
and transparency and foster collaboration and co-creation among the stakeholders.
 Conduct a comprehensive assessment of the business's current position and the market
landscape to identify areas for improvement and innovation. A thorough evaluation can help
understand the strengths and weaknesses of the existing business model and the needs and
preferences of customers and the market. A gap analysis can pinpoint areas where the
business can enhance its performance, competitiveness, and create new value propositions
and business models.
 Design and test the new "as a Service" offerings and business models and validate them with
customer feedback and data analysis. A design thinking approach can help generate and
evaluate different ideas and solutions for resource servitization, and a prototyping and
testing approach can help refine and improve them. A customer-centric approach can help
ensure that the new offerings and business models meet the customer needs and create
value. A data-driven approach can help measure and optimize the outcomes and impacts of
the new offerings and business models.
 Integrate and deploy new capabilities and structures tailored for the "as a Service" model,
encompassing revamped processes, systems, skills, and organizational culture. Implement a
change management strategy to smoothly navigate the shift from a product-based to a
service-based model, effectively addressing any resistance or hurdles. Utilize a capability
development approach to acquire and strengthen the requisite skills and competencies for
the service-based model, including service design, delivery, and innovation. Cultivate a
service-oriented mindset and culture among employees and the organization through a
culture transformation initiative.
Establish a comprehensive monitoring and measurement system to track and evaluate the
performance and impact of the "as a Service" model. Implement a performance management
approach to track key indicators and metrics, such as service portfolio, revenue, profit, service
quality, customer satisfaction, loyalty, resource efficiency, environmental performance, value
creation, and innovation. Regularly review and analyze performance data to identify areas for
improvement and optimization. Embrace a continuous improvement approach to continuously
refine and enhance the service-based model, ensuring its sustainability, scalability, and overall
success.

Outcomes and lessons learned

The outcomes and lessons learned from resource servitization in various sectors around the world
point to the value of transforming to a resource servitization model:

 In the energy sector, resource servitization can help improve energy efficiency,
environmental performance, value creation, and innovation by shifting the focus from selling
energy to delivering solutions that meet customer needs and create value. For example,
Rolls-Royce pioneered its famous "Power by the Hour" engine maintenance service concept,
where airlines pay for the availability and performance of the engines rather than the
ownership and maintenance. Similarly, Michelin redefined the service-oriented model to
help trucking companies reduce fuel consumption by offering a service based on achieving
predefined fuel consumption targets, tracked through telematics and IoT and assessed in
real-time with data analytics. However, energy sector resource servitization also faces
challenges and risks, such as high upfront investment and operational costs, complex
contractual and regulatory arrangements, customer acceptance and trust, and
environmental impact and sustainability.
 In the IT sector, resource servitization can help diversify and differentiate the offerings,
create long-term relationships with the customers, and contribute to the circular economy
and the sustainable development goals, by shifting the focus from selling software to
delivering solutions that meet customer needs and create value. For example, some
software companies offer software as a service (SaaS), where customers pay for the access
and use of the software rather than the ownership and installation of the software⁴.
However, IT sector resource servitization also faces challenges and risks, such as cultural and
organizational changes, customer acceptance and trust, security and privacy issues, and
compatibility and interoperability issues.
 In the media sector, resource servitization can help enhance content quality and diversity,
increase customer satisfaction and loyalty, and generate new sources of revenue and cost
savings by shifting the focus from selling publications to delivering solutions that meet
customer needs and create value. For example, some publishers offer content as a service
(CaaS), where customers pay for the information and insights they access rather than the
publications and subscriptions they buy. However, resource servitization in the media sector
also faces challenges and risks, such as cultural and organizational changes, customer
acceptance and trust, quality and diversity issues, and competition and disruption issues.
 In the retail sector, resource servitization can help promote resource efficiency and
sustainability, reduce logistics and inventory costs, and increase customer satisfaction and
loyalty by shifting the focus from selling products to delivering solutions that meet customer
needs and create value. For example, some retailers offer fashion as a service (FaaS), where
customers pay for the access and use of clothing and accessories rather than their
ownership and maintenance. However, resource servitization in the retail sector also faces
 challenges and risks, such as high upfront investment and operational costs, customer
acceptance and trust, quality and reliability issues, and logistics and inventory issues.
 In the transport sector, resource servitization can help improve mobility and convenience,
reduce environmental impact and fuel costs, and create new value chains and markets by
shifting the focus from selling vehicles to delivering solutions that meet customer needs and
create value. For example, some transport providers offer Transport as a Service (TaaS),
where customers pay for the mobility and convenience that the transport modes provide
rather than the ownership and operation of the vehicles. However, resource servitization in
the transport sector also faces challenges and risks, such as high upfront investment and
operational costs, complex contractual and regulatory arrangements, customer acceptance
and trust, and environmental impact and sustainability.
 In the manufacturing sector, resource servitization can help optimize resource use and
allocation, enhance product quality and reliability, and increase customer satisfaction and
loyalty by shifting the focus from selling products to delivering solutions that meet customer
needs and create value. For example, some manufacturers offer manufacturing as a service
(MaaS), where customers pay for the production and delivery of customized products rather
than purchasing and storing standardized products. However, resource servitization in the
manufacturing sector also faces challenges and risks, such as high upfront investment and
operational costs, complex contractual and regulatory arrangements, cultural and
organizational changes, and customer acceptance and trust.

Identifying, codifying and applying lessons learned is at the heart of the harmonized resource
servitization system to accelerate the energy transition. In particular, case studies and pilot projects
are required to successfully deploy the resource servitization principles to identify bottlenecks, gaps
and systemic vulnerabilities in projects and programmes designed to accelerate energy transition
progress and deliver beneficial interventions in meeting the 1.5◦C climate action target within the
circular economy. Selected examples of such lessons learned include the following:

 Neglecting, ignoring or even forcible overriding local communities and stakeholders,

especially those at risk of displacement from or dispossession of their land, typically leads to
catastrophic failures of the social contract on natural resources and demonstrably
undermines broader sustainable development, particularly in countries rich in natural
resources. Communities refuse new investments, revolt against existing operators or
investors, or even form local militias to enforce their demands. Working with the local
communities through corporate social responsibility ESG and broader social licensing
procedures and paying local stakeholders a fair share for their work should be able to secure
and retain support for sustainable development or, better still, engage local stakeholders to
participate directly in the development process;
 Lack of transparency and restricted access to data limits the actual potential value of a
resource, as in-depth and collaborative analysis cannot be done. Countries must share data
and work collaboratively to achieve climate action targets through sustainable development;
 The unregulated and not permitted mining sector reduces government benefits and
increases the cost of a smooth transition. This is mainly because a poorly regulated sector
promotes illicit financial flaws as resources are traded informally;
 Lack of enforcement of minimum labour standards and health and safety and environmental
(HSE) standards for the resource sector leads to unfair treatment, particularly in developing
countries with critical resources for the transition;
  The disparity in the economic status of nations, as identified in the Kofi Annan Report 47, all
too often leads to both selfish and wrong deals in the exploitation of resources, as there is
no proper mechanism to allow for adequate bargaining power between developed and
developing nations when it comes to critical resources. "[...]it is time to ask why so much
growth has done so little to lift people out of poverty and why so much of Africa's resource
wealth is squandered through corrupt practices and unscrupulous investment activities". As
the UN Policy Brief, May 2022, clarifies, this problem remains and is far from confined to
Africa.

The systematic application of UNFC and UNRMS within the resource servitization paradigm can
address many of the above-mentioned concerns.

Recommendations
Businesses can evolve from being product-oriented to service-oriented by adopting resource
servitization. This approach focuses on the outcomes or benefits of resources, rather than the
resources themselves, to create value propositions. In essence, the value of the service is derived
from the benefits it provides, rather than the features of the product. Resource servitization can
support the transition to a more sustainable and circular use of natural resources, in line with the
2030 Agenda and the Paris Agreement. Resource servitization entails several difficulties and
potential hazards, including substantial initial expenses and ongoing operational costs, intricate
regulatory and contractual agreements, organizational and cultural adjustments, as well as client
approval and trust. A comprehensive and integrated methodology involving various stakeholders
and perspectives is essential for resource servitization. Additionally, a continuous process of
innovation and adaptation is required to achieve this goal.

It is urgent to optimize the management of endowments of natural resources to deliver on climate

change and sustainable development. The World Bank estimates that cumulatively over 3 billion
tons of minerals and metals will be needed to deploy wind, solar and geothermal power and energy
storage required for achieving a below 2°C future48. These demands are aggravated by the rapid
increase and the urbanization of the world's population, which stresses grid-based power,
availability of clean cooking fuels and other raw materials required to ensure energy and resource
efficiency. Current patterns of resource use will not be able to meet the demand reasonably.

Rapid progress to a circular economy is seen as helpful. However, resource efficiency improvements
are stagnating, and the amount of materials recycled remains at a dismal rate of about 8 per cent.
The resource servitization paradigm involves moving from current commodity and product-based
business models to an outcome-focused subscription-based industry. Such a model will ensure the
most efficient use of energy and resources. Resource servitization is a new paradigm shift required
to decouple the use of energy and resources and sustainable development.

Social resistance to resource development is rising globally. Issues of indigenous people, human
rights and transparency are becoming the core of the social contract on natural resources.
Responding to climate change issues is also closer to new social aspirations, which need upscaling

Kofi Annan, Africa Progress Report 2014 https://www.reuters.com/article/us-africa-inequality-

47

annan-idUSBREA470JQ20140508
48
World Bank (2020) Minerals for Climate Action: The Mineral Intensity of the Clean Energy
Transition https://pubdocs.worldbank.org/en/961711588875536384/Minerals-for-Climate-Action-
The-Mineral-Intensity-of-the-Clean-Energy-Transition.pdf
innovative technologies. The resource servitization model offers several opportunities to transition
to a more responsible, acceptable and resilient model, as shown in this document.

UNRMS, a comprehensive framework for sustainable resource management, upholds twelve

fundamental principles that provide direction. Principle 5, service orientation, highlights the
production of resources primarily as societal solutions. This service-oriented approach fosters
resource servitization, a promising business model. Stakeholders can implement resource
servitization in a phased approach, gradually transforming their operations.

Some modest beginnings are visible in resource servitization, but the concept holds much promise
and is still in its infancy. As in other industrial sectors, resource sectors are expected to be drastically
transformed by "as a service" models. Such a change could be a welcome game-changer for an
industry constantly plagued by "boom and bust" commodity market cycles. Moreover, it could
integrate with new platform approaches through blockchain and attract ESG funding.

Governments need to be aware of the policy and regulatory support required to tap into the new
opportunities opened by "as a service" models. A transition to the resource servitization model
should be promoted to bring wide-ranging benefits to all citizens in the face of a severe global
challenge. UNFC and UNRMS applications can radically support resource management
transformation and provide a smoother framework for the resource servitization model transition.

Implementing the UNFC and UNRMS resource servitization model includes better assessing the
resource base by valorizing all intangible assets, increasing resource efficiency, optimizing local
content requirements, and easily accessing climate and ESG-related financing. UNRMS application
and a transition to the resource servitization model will also enhance the social contract.

Enabling a UNFC-UNRMS Resource Servitization model should be based on identifying, codifying and
applying lessons learned. Case studies and pilot programmes with the participation of the industry
should be required to have a resource servitization economy in place. Policymakers, industry and
financial players are recommended to adopt the UNRMS principles and requirements and use the
concepts, guidelines and best practices mentioned in this document to implement a robust resource
servitization model. Implementing the model through national or regional working groups is
suggested, which will discuss, develop and promote potential new economic paradigms.

UN Policy Brief Recommendation 11 urges:

"Establish clear national visions, strategies, and industrial policies to support a

just energy transition and attain a circular economy […]".

Based on the findings and contributions of this report, we provide some general and specific
recommendations for policymakers, industry actors, and other stakeholders to support the
transition to resource servitization and the achievement of the Sustainable Development Goals
(SDGs) and the Paris Agreement. The recommendations are:

 For policymakers:
o Develop and implement a supportive and enabling policy and regulatory
environment that incentivizes and facilitates resource servitization and innovation.
This may include providing financial and technical assistance, creating standards and
guidelines, establishing platforms and networks, and promoting awareness and
education.
 o Align the policy and regulatory frameworks with the global goals and commitments
of the SDGs and the Paris Agreement, and ensure coherence and consistency across
different levels and sectors.
o Engage and collaborate with industry actors and other stakeholders, and foster
dialogue and partnership for resource servitization and sustainable resource
management.
o Accelerate the transition from linear to circular while considering the social,
environmental and economic repercussions from a short, medium and long-term
perspective.
o Converge short-term, profit-driven business accounting and a sustainable
macroeconomic accounting by a strict "polluter pays throughout the value chain"
regulatory framework.
o Mandate the use of blockchain, verifiable digital identifiers and similar distributed
ledger technologies to enable efficiently, climate-smart, responsible tracking and
traceability of all resources, especially those critical to the delivery of the SDGs.
o Track, trace and eliminate illicit flows of materials and related funds concerned with
the use of natural resources, a purpose to which blockchain is technically ideally
suited.
o Converge all these policies into a new UN-supported resource management model
as the core unit of benefit to the consumer.
 For industry actors:
o Adopt and implement resource servitization as a strategic option for enhancing
competitiveness and customer satisfaction, and a potential paradigm shift for
achieving sustainable resource management.
o Leverage the opportunities and benefits of digitalization, automation, and data-
driven insights, which enable new capabilities and solutions for resource
management and service delivery.
o Collaborate and co-create with customers and other stakeholders, and generate
new ideas and solutions for resource servitization and sustainable resource
management.
o "Bake in" resource use efficiency by eliminating all avoidable losses and wastes,
extending primary and secondary service lives and upcycling residual materials to
new building blocks.
o Accelerate adoption of applications such as "digital twins", machine learning and AI
to complex production systems to stimulate a quantum jump in productivity,
resource use efficiency and a reciprocal quantum reduction in energy intensity
 For other stakeholders:
o Stimulate awareness at both individual and community levels of the need for and
benefits of behavioural modification for all "instinctively responsible" consumers in
the circular resource flow cycle.
o Base capital allocation and investment decision-making on double materiality
principles, normalized ESG metrics and SDG-compliant reporting standards and
practices.
o Support and participate in the transition to resource servitization and sustainable
resource management, and contribute to the circular economy and the sustainable
development goals.
 o Provide and access information and feedback on the performance and impact of
resource servitization and sustainable resource management, and ensure
transparency and accountability.
o Advocate and demand resource servitization and sustainable resource management,
and influence the behaviour and decisions of policymakers and industry actors.

All the above should be reflected and enshrined in CE plans to be developed at the national, regional
and local level – vertical circularity – and are to be also mainstreamed in all policy areas to make
them circular (e.g., circular transport, agriculture, tourism, energy etc.) as well as in the business
sector through the Circular ESG – horizontal circularity.

These recommendations are not exhaustive, but indicative of some of the possible actions and
measures that can be taken to support the transition to resource servitization and sustainable
resource management. We hope that this report will inspire and inform the relevant stakeholders to
take action and collaborate for a more sustainable and prosperous future for all.

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Lah, T., & Wood, J. B. (2016). Technology-as-a-service playbook: How to grow a profitable
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Parker, G. G., Van Alstyne, M. W., & Choudary, S. P. (2016). Platform revolution: How networked
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Tzuo, T., & Weisert, G. (2018). Subscribed: Why the subscription model will be your company's
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