Net-zero roadmaps, SBTi commitments, Scope 1 and 2 reductions, and the first attempts to tackle Scope 3 are rapidly becoming licence-to-operate issues rather than branding exercises. At the same time, the regulatory environment is accelerating: dozens of disclosure frameworks, national circular economy roadmaps, and sector-specific rules on waste, plastics, and product responsibility.

How can manufacturers transform sustainability from a cost or compliance burden into a driver of growth, differentiation, and resilience?

At Sustainability in Service 2025 – Power of 50, Swapnil Choudhari with Electrolux Professional revealed that sustainability must be embedded end-to-end, from board-level strategy to aftermarket and service operations. In fact, the service and aftermarket organisation now sits at the core of any credible circular economy and net-zero strategy.

From Linear Value Chains to Circular Value Hills

Industrial business models are generally built on a straightforward linear logic. Raw materials and purchased components are acquired at a certain cost, transformed into products, sold into the market, and used by customers until the end of life, at which point the value drops to zero as products become waste.

This value hill peaks at the point of sale and then declines steadily during use, before collapsing when assets are discarded. In a purely linear model, aftermarket and service functions are often incentivised to monetise the decline, as more failures can mean more spare parts, more call-outs, and more billable hours.

Rather than accepting the value hill as inevitable, the opportunity is to close loops before products become waste, by repairing, refurbishing, remanufacturing, redeploying, and reusing materials in ways that preserve economic value while reducing environmental impact.

The critical question for industrial organisations is not whether to be circular in principle, but where and how to close loops in practice:

• Which interventions (repair, reuse, remanufacturing, recycling) make the most sense economically and environmentally?
• How can circular strategies be integrated into service and aftermarket offerings, rather than bolted on as side projects?
• How can sustainability initiatives directly support revenue growth, cost reduction, and customer loyalty?

Aftermarket and service organisations become central. They hold the data, the customer proximity, and the operational capabilities that make circularity commercially viable.

The Regulatory Imperative: From Measurement to Market Advantage

The scale of the waste challenge is staggering. Global municipal waste is estimated in billions of tonnes per year, and even this figure understates the problem by largely ignoring industrial and metal waste. Hazardous waste per capita can run into hundreds of kilos annually in advanced economies. Complex, painted, or composite materials often end up as unrecoverable sludge rather than reusable resources.

In response, regulation is tightening. Within Europe alone, there are roughly 100 regulations spanning dozens of jurisdictions that govern sustainability disclosures and performance. National circular economy roadmaps are under development globally, and restrictions on single-use plastics and product responsibility are already reshaping multiple industries.

The regulatory wave has two implications for industrial manufacturers:

1. Measurement is no longer optional. Companies will be required to quantify not just their direct emissions and energy use, but also the lifecycle impacts of products in use and at end of life. Aftermarket and service data on failure rates, component lifetimes, maintenance interventions, and asset utilisation become essential inputs.

2. Compliance alone will not be enough. Organisations that can translate regulatory pressure into new value propositions, business models, and brand differentiation will outpace those that treat sustainability as a reporting exercise.

The strategic response is to leverage existing capabilities in a smarter way that creates value for stakeholders. For most manufacturers, those capabilities already reside within service, aftermarket, and product support operations. The task is to reframe them through a circular and commercial lens.

Minimising the Loop: A Pragmatic Approach to Circularity

Circular economy is often illustrated by the “R” strategies: refuse, reduce, reuse, repair, refurbish, remanufacture, repurpose, recycle, recover, and so on. While this is conceptually useful, it can be paralyzing in practice. Not every organisation can invest across all possible loops.

A more pragmatic approach is to minimise the loop by prioritising interventions that:

• Preserve as much of the original product value as possible;
• Require the least additional energy and resources;
• Align most naturally with existing service and aftermarket capabilities.

In practical terms, this often means:

• Designing equipment to be repair-friendly to maximise first-time-fix rates and extend asset life;
• Reusing components where safe and viable, rather than defaulting to replacement;
• Refurbishing and remanufacturing selected product categories to create second-life portfolios;
• Using data from connected assets to optimise maintenance intervals and prevent failure.

Each time value is preserved earlier in the loop, the economic and environmental returns are typically higher. But these decisions cannot be made in isolation by sustainability teams alone. Service, aftermarket, R&D, and product management teams have to work together, aligning technical feasibility, business cases, and customer needs.

Redefining the Economics of Service: From Failure Revenue to Circular Business Models

A recurring concern in the service community is the perceived trade-off between sustainability and profitability. If products last longer, fail less often, and require fewer spare parts, traditional service revenue models come under pressure.

It is especially acute in organisations where KPIs focus on spare parts turnover, repair volume, and labour utilisation. In such models, circularity and improved reliability can appear to cannibalise service profit pools.

Addressing this requires a fundamental shift in how service is conceptualised and incentivised:

• Moving from selling failures to selling availability, performance, and outcomes;
• Treating remanufacturing, refurbishment, and second-life offerings as core revenue streams rather than side activities;
• Monetising uptime, energy efficiency, and regulatory compliance as value propositions.

For example, when an organisation establishes a structured remanufacturing or second-life programme, service teams are no longer limited to break-fix activities. They become integral to:

• Identifying which returned machines and components are suitable for remanufacture;
• Assessing and grading the value of used parts and assemblies;
• Supporting new sales models where refurbished equipment is offered to different customer segments;
• Creating long-term service contracts around second-life assets.

Similarly, in product-as-a-service or equipment-as-a-service models, revenue is decoupled from individual component failures and tied instead to usage, uptime, or outcomes. Predictive and prescriptive maintenance capabilities enabled by connected assets directly support both sustainability and profitability by:

• Reducing unplanned downtime for customers;
• Optimising maintenance intervals to extend component life;
• Minimising waste and unnecessary replacements;
• Enhancing the business case for energy-efficient and resource-efficient operation.

It is critical to ensure that service KPIs and incentives reflect the logic by measuring customer lifetime value, contract margins, asset utilisation, and circular value generation, rather than simply counting parts sold.

Integrating Data, Design, and Service for Sustainable Performance

As assets become increasingly connected, data is a powerful lever for both sustainability and commercial performance. In a B2B context where minutes of downtime can have significant financial implications, smart appliances and IoT-enabled equipment offer several advantages:

• Maintenance can be triggered based on actual usage and condition, rather than fixed intervals, reducing unnecessary interventions and resource use.
• Failures can be predicted and prevented, protecting customer revenue and strengthening trust.
• Maintenance windows can be scheduled at times that minimise operational disruption, reducing the economic impact of service activities.
• Energy and water consumption can be monitored and optimised, contributing directly to customers’ ESG targets.

However, to fully realise these benefits, R&D, sustainability, and service functions must collaborate closely. Design decisions, such as modularity, ease of disassembly, and chosen materials, affect repairability, remanufacturability, and recyclability. Service insights from the field inform which components fail, how equipment is actually used, and where circular interventions are most feasible.

In this integrated model, service organisations become both:

• Outward-facing, as providers of uptime, circular solutions, and sustainability-enabling services for customers;
• Inward-facing, as strategic advisors to the board and product teams, informing business model innovation, KPI design, and investment priorities.

Embedding Circularity in Strategy and Metrics

For circularity and sustainability to become truly commercialised, they must be embedded into the core of corporate strategy, starting at the board level and flowing down through the value chain.

This means rethinking how value is defined and measured. Beyond traditional financial indicators, industrial organisations need to integrate:

• Revenue from new circular and service-based business models (e.g., remanufactured product lines, product-as-a-service offerings);
• Cost savings generated by extending product life, improving first-time-fix rates, and reducing material and waste handling expenses;
• Contributions to customers’ ESG and regulatory compliance goals as part of the value proposition;
• Reductions in Scope 1, 2, and 3 emissions linked directly to aftermarket and service initiatives, not only to energy sourcing or manufacturing efficiency.

Aftermarket and service leaders are uniquely positioned to influence these metrics. They see how products perform in real conditions, understand customer pain points around regulation and sustainability, and manage the operational levers that determine whether assets are discarded or given a second life.

Forward-Looking Implications for Industrial Leaders

For senior decision-makers in industrial and manufacturing businesses, several strategic implications stand out:

1. Treat aftermarket and service as strategic engines for sustainability, not as peripheral support functions. Their capabilities are central to any credible circular economy strategy.

2. Align sustainability initiatives with clear business value. Aim for solutions that simultaneously reduce waste, strengthen customer loyalty, open new revenue streams, and enhance brand equity.

3. Minimise the loop. Focus on the shortest, least resource-intensive interventions before investing heavily in more energy-intensive recycling or recovery strategies.

4. Redesign service economics. Move away from revenue models that depend on failure and waste, and towards models that monetise uptime, performance, circularity, and ESG outcomes.

5. Embed data and connectivity into both products and business models. Use IoT and analytics to optimise maintenance, energy use, and asset life, and to provide measurable sustainability contributions to customers.

6. Integrate functions. Ensure R&D, sustainability, and service work in tandem, with shared KPIs and joint responsibility for circular outcomes.

Industrial companies that succeed in this shift are already demonstrating that sustainability and profitability are not opposing forces. Reducing Scope 1 and 2 emissions, cutting product use-phase emissions, and building circular business models is not just about meeting regulatory expectations, but about building more resilient, differentiated, and future-ready industrial enterprises.