Digital Technology Shaping Green And

DIGITAL TECHNOLOGY SHAPING GREEN AND SUSTAINABLE LIFESTYLES: EXPLORING ALIPAY ANT FOREST DIGITAL TECHNOLOGY SHAPING GREEN AND SUSTAINABLE LIFESTYLES: EXPLORING ALIPAY ANT FOREST Data-Pop Alliance Data-Pop Alliance is a collaborative laboratory created by the Harvard Humanitarian Initiative, MIT Connection Science, and Overseas Development Institute. DPA brings together researchers, experts, practitioners, and activists to change the world with data through three pillars of work: diagnosing local realities and human problems with data and AI; mobilizing capacities, communities, and ideas towards more data literate societies, and transforming the systems and processes that underpin our societies and countries. In 2016, Flowminder Foundation joined as the fourth Core Member.

Green Digital Finance Alliance The Green Digital Finance Alliance is a unique public private partnership co-founded by UN Environment and ANT Financial Services launched in Davos in 2017 to leverage digital technologies and innovations to enhance financing for sustainable development. The GDFA catalyzes market innovation and policy action that leverages digital finance to, on the one hand, address the barriers to scaling sustainable finance and, on the other hand, promote innovation that un- locks sustainable investments in the real economy.

UNEP Inquiry The Inquiry into the Design of a Sustainable Financial System has been initiated by the United Nations Environment Pro- gramme (UNEP) to advance policy options to improve the financial system’s effectiveness in mobilizing capital towards a green and inclusive economy—in other words, sustainable development. Established in January 2014, it published the first edition of ‘The Financial System We Need’ in October 2015, with the second edition launched in October 2016. The Inquiry has worked in 20 countries and produced a wide array of briefings and reports on sustainable finance.

3 Table of Contents

Introduction 5

I. The case of Alipay Ant Forest: mitigating climate change through individual behavior changes 6 A. How does Ant Forest work? 6 B. Impacts to Date: Exponential Growth and Environmental Focus 7 1. Avoided carbon emissions 7 2. Afforestation activities 8 C. Further Impacts: Ant’s contribution to Ecological Poverty Alleviation 9

II. Making it happen: institutional and policy enablers for citizen action towards carbon reduction 11 A. Green Finance 11 B. Green FinTech 12

III. Scaling abroad? The potential for citizen action towards carbon reduction in other markets 14 A. Estimating Market Potential 14 B. Estimating emissions reduction potential 15

IV. Main Findings 17 Annex A - A study of impacts: modeling methodology 18

V. References 20

4 Introduction Recent climate emergencies paint a clear picture: based actions for climate mitigation cannot, by a world in need of urgent action. With global any means, substitute much needed industry temperatures already 1°C above pre-industrial and economy-wide efforts, they can significantly levels, and with no clear ‘one-size fits all’ mitigation contribute to these efforts through mobilizing measures, it is not only necessary, but required, to tangible and widespread collective impacts. In mobilize widespread individual behavioral changes fact, unlocking bottom-up citizen action for towards more sustainable lifestyles. Digital plat- climate change mitigation may be the avenue forms are uniquely poised as mechanisms to help needed to help governments run the “last mile” achieve this change, particularly as they can incen- and reach the last percentages needed to achieve tivize widespread action and nudge individuals carbon neutrality by 2050. towards more sustainable, larger-scale behavioral This report analyzes Alipay’s Ant Forest trajectory changes. as a green digital innovation that has achieved Alipay Ant Forest, launched by Ant Financial in exponential growth over the past three years. It 2016, is a green initiative embedded on Alipay’s first describes the green initiative and how users digital lifestyle platform that is doing just that. By have interacted with the platform to accumulate providing users with a tool to help measure their green points and plant virtual, and real trees. It personal carbon footprints, recording avoided takes stock of the impact Alipay Ant Forest has emissions derived from individual behavioral already achieved in China, and then explores Ant changes. Alipay Ant Forest is incentivizing citizens Financial’s vision of expanding these impacts to become active agents in nature-based and on poverty alleviation through conservation individual behavior solutions to combat climate efforts, otherwise coined as “ecological poverty change. To date, this mobile based innovation alleviation”. The second section unpacks has over 550 million users who have participated different policy and regulatory enablers that in the green initiative to accumulate virtual have made an application like Alipay Ant Forest points, which in exchange, have led to planting both relevant and necessary within China’s more than 122 million real trees in northwestern domestic context and points out to interesting China, spanning an area of over 1.68 million mu. take-aways for international policymakers. Last, the report models the implications that scaling a This innovative application is showing how platform like Alipay Ant Forest could catalyze in green digital technologies can increasingly play additional countries, in terms of potential market an important role in helping countries achieve size, and emissions avoided through individuals’ their emissions reduction targets - indeed, while behaviors. This analysis estimates that up to 8.6% policies and locked-in industry infrastructure of emissions tied to public transportation could may take decades to change, individual behavior be avoided in the seven countries modeled over shifts can begin immediately. While people- the 2020-2030 period.

5 I. The case of Alipay Ant Forest: mitigating Image 1: Screenshots of the Alipay Ant Forest Interface climate change through individual behavior changes

A. How does Ant Forest work? Alipay’s Ant Forest is a green initiative that aims to unlock the power of individual behavior change and bottom-up approaches for climate change mitigation and poverty reduction. The platform was launched in 2016 and has since become China’s largest digital innovation aimed at reducing carbon emissions, promoting reforestation, and advancing poverty alleviation efforts. Through an interactive interface embedded in Alipay, the world’s leading open digital lifestyle platform, users gain “green points” by opting for green behaviors, understood as eco-friendly behaviors that result in avoided carbon emissions (Ant Financial 2019). Users plant and nurture a virtual tree with earned green points, which Ant Financial will then plant in real life. In the last three years Alipay Ant Forest has been online, it has attracted over 550 million users, roughly around 7% of the world’s population. Alipay Ant Forest is open to the public and anyone can download the platform and join. This green initiative encourages users to engage in low-carbon activities in their daily life, such as paying utility bills online and commuting to work by walking or cycling rather than driving. Source: Yuxi Liu 2017, “Design for social good”. These behaviors are counted and converted into “green energy” that users can then spend As these points accumulate, users can plant and to grow virtual trees in the platform, which is water their virtual tree, as well as interact with embedded within the Alipay app. Simply put, friends to gain more points. A key incentivize actions that are green, are then rewarded with for Alipay Ant Forest users is the application’s points proportional to the carbon footprint interactive “game-like” design: users can water avoided by these activities (Ant Financial 2019). their friends’ trees and donate their points to This represents a significant innovation in the help them grow, or conversely, collect from field of carbon accounting, as the impact of friends if their points are not collected on time. carbon emissions is usually measured from a To an extent, the platform “gamifies” the positive production standpoint, assessing the amount of externalities of green behaviors by persuading CO2 released into the environment at the point individuals to become increasingly conscious and of emissions (Moran et al. 2018). Alipay Ant attentive to their points. This involves a different, Forest’s platform could be the first step towards albeit effective strategy, whereby an intangible individual carbon accounting (ESC, 2018). incentive (green points) is made tangible by Ant Financial, leading to a feeling of self-efficacy

6 regarding climate mitigation measures (Lehner and Simlinger 2019). The user bears no cost in gaining the points, other than the one associated with their green consumption patterns. Once the virtual tree is fully grown after sowing, watering and caring for the tree, Ant plants a real tree in partnership with the Society of Entrepreneurs and Ecology Foundation (SEE) and other NGOs in desertified areas of western China. To date, Alipay Ant Forest has recorded strong results, demonstrating the possibilities that nudging individuals towards more sustainable behaviors may have towards climate mitigation. Six months after the platform was launched, it was already used by 200 million people. By March 2020, this number has grown to more than 550 million users (Ant Financial In the pilot phase of Alipay Ant Forest, the 2020). As Ant Forest continues to grow, Alipay is following activities awarded individuals green leveraging the popularity of its platform to scale energy points: its green initiative beyond emissions reduction to promote and fund poverty alleviation measures Off-line mobile in China. payments (e.g, buying movie 5 g of CO2 Walking NA tickets and B. Impacts to Date: Exponential Growth and train tickets Environmental Focus online Making 1. Online Avoided carbon emissions appointments payment of online (i.e, Alipay Ant Forest is a tool to promote citizen utilities (water, 262 g of CO2 NA payment of engagement in climate change mitigation by electricity, and traffic violation promoting low-carbon lifestyles among its users. gas bills) Initially, the platform presented nine activities fines) that granted individuals ‘green energy points’, Electronic Toll Public tapping into two types of emission reduction 80 g of CO2 Collection NA transportation possibilities1: transportation and paper use2. payment

1 Alipay Ant Forest rewards actions belonging to two distinct categories: emissions avoided in the transportation sector, mainly by reducing fossil fuel consumption, and emissions avoided by opting for paper alternatives, particularly the “reduction of industrial energy consumption during the use and production of paper”. Nine different activities were chosen that could be accounted for within these categories, for example, the online payment for water supply, electricity and gas bills belongs to both categories, walking on the other hand, only on the transportation category. Based on these calculations, Ant Forest has a data acquisition algorithm that ensures that necessary data for every participant behavior is measured and awarded, with prior consent of users. Ant Financial recognizes that this calculation methods provide a good foundation for measuring individual carbon emissions avoided, not reduced, as it only measures behaviors that are rewarded and not the net reduction of emissions by users. 2 Tenhunen and Penttinen (2010), for example, assess the carbon footprint of paper vs. electronic invoicing, and detect a percentage of carbon emissions avoided by switching to e-invoicing.

7 In 2018, Alipay Ant Forest expanded to include reforestation activities a tangible effect of user’s nine new low-carbon scenes, including the behaviors. exchange of second-hand goods through 3 platforms like Xianyu , bicycle ride-sharing, UN Champions of the Earth consumption of energy-efficient appliances and online registration, among others. In September 2019, Ant Forest was recognized with the “Champions of the Earth” award, the For each activity, a baseline scenario “that reason- United Nations highest environmental honor. ably represents greenhouse gas emissions that Under the “Inspiration and Action” category, would occur in the absence of the activity” was Ant Forest was highlighted as a green initiative identified, according to Alipay Ant Forest’s calcu- that “fundamentally [redesigns] how we inter- lation methodology. The difference between act with the planet” by leveraging technology this baseline and the emissions of encouraged to harness positive change (Inger Andersen, activities allows the calculation of carbon emis- Executive Director UNEP). Particularly, the sions being avoided. These calculations were award praises Ant Forest as China’s ‘largest done with the support of the China Beijing Envi- private sector tree-planting initiative’. ronment Exchange, and are based on existing methodologies such as the Clean Development Source: “Chinese Initiative Ant Forest wins UN Champions Mechanism and the Chinese Certified Emission of the Earth award”, UNEP (19 Sep 2019) Reduction (CCER). In turn, this contributes to user’s loyalty and 2. Afforestation activities awareness of the fact that their virtual trees are In addition to encouraging green lifestyles, in fact being planted. By giving users a concrete Alipay Ant Forest conducts large-scale tree milestone in their quest towards sustainability planting activities, long considered a priority in - the possibility of planting a tree - people can China. As of March 2020, 122 million trees have feel they are not merely interacting with a digi- been planted in partnership with local non-prof- tal platform, but actually contributing to making it organizations4 as a result of Ant users’ carbon China greener. reduction activities (Xuanyi 2020). Image 2 – Alipay Ant Forest: From Seedlings to Trees via Satellite Imagery Additionally, as of October 2018, and in partnership with the National Forest and Grassland Administration and the China Green Founda- tion, users can receive an official certificate and count their fully-grown virtual trees towards the country’s legal obligation for citizens “to plan three trees each year” (CHINA Plus 2018). Ant has further leveraged the popularity of their afforestation efforts by making them even more tangible to users by installing remote sensing cameras in the areas where trees are planted. Users’ access to these images, as well as to satellite imagery, not only confirms Ant’s pledge to plant the virtual trees in real life, but it makes Source: Provided by Ant Financial

3 Xianyu is an online marketplace for the exchange of second-hand goods. 4 China Green Foundation, SEE Foundation, ELION Charitable Foundation, Alashan Ecological Foundation

8 C. Further Impacts: Ant’s contribution to Eco- side local communities living in the protected logical Poverty Alleviation areas to advance sustainable rural development activities, such as the commercialization of Alipay Ant Forest has gradually expanded eco-products, and to promote sustainable use beyond environmental protection, branching of resources through conservation and research into more areas of social impact. It is current- activities. To this moment, it has led to the crea- ly testing whether its mobile platform could tion of 400,000 ‘green’ jobs, through two models promote poverty alleviation measures by lever- of economic poverty alleviation: “public welfare aging the environmental biodiversity of the protected areas” and “ecological economic areas where current afforestation programs forests” (UNFCCC, 2020). take place in. The initial idea is to work along-

Pingwu County Pilot - Commercialization Avenues for Small-Scale Honey Farmers An example of Ant’s incursions into economic poverty alleviation include the Pingwu County pilot, a rural cooperative in West China that was established in 2018 for the environmentally-friendly production of honey. For this pilot, Alipay Ant Forest offers users the possibility to protect one square meter of land with their green energy points and also helps local famers sell sustainably produced honey through Taobao, an e-commerce Marketplace. To date, Taobao has hosted more than 150,000 livestream sales, where sellers show customers through live video their products for marketing and commercialization purposes for agricultural workers, enabling the development of new services to connect interested buyers with sellers in rural areas (Chou 2019b). Eco-friendly products could also find sales channels through Alipay Ant Forest and reach more potential buyers.

Linking biodiversity conservation with poverty Biological Diversity, 1992 & Millennium Ecosys- alleviation presents a global challenge; a recur- tem Assessment, 2005). Indeed, recent measure- rent debate in the environmental sector, and ments suggest that areas within China with more a latent concern of developing countries, has than 30% of forest cover have a 20% lower GDP been how to overcome the apparent dichoto- per capita than the national average (Zheng et my between conservation and economic devel- al. 2019). At the global level, although with some opment. While no causal link has been widely exceptions, it seems to be the same: “there is acknowledged between biodiversity degradation mounting evidence to suggest that, at a variety or conservation and poverty, the international of scales and in many different ways, biodiversi- community has established as a goal that biodi- ty and poverty do coincide” (Secretariat of the versity conservation efforts should also contrib- Convention on Biological Diversity 2010). ute to overall poverty alleviation (Convention on

9 Eco-economic forest model: growing rich forests on the red ground Another new model being explored by Ant is the eco-economic forest model. Under this prop- osition, the objective is to plant forests with ecological and economic value for poor areas in the Central and Western regions. The model starts with large-scale planting of sea buckthorn (Hippophae rhamnoides) and abides by the principle of “adjusting to local conditions and suitable trees”. On one hand, this type of tree contributes to wind and sand prevention and helps conserve water and soil, contributing to the ecological sustainable development of this regions. On the other hand, the commercialization of products based on sea buckthorn – particularly of its fruit, which is rich in vitamin C and can be used to produce and process high-end food and health products – creates jobs for people in need. The output value of an acre of sea buckthorn land is as high as 1,000 yuan, and the income of farmers in poor areas harvesting sea buckthorn is more than 5 times higher than that of sowing land. The re-investment of a portion of the revenues from these products contribute to the protection and conservation of these forests. Thus, in this way, this model promotes development in poor areas, while prioritizing ecological protection in a virtuous circle of economic development5. On November 19, 2018, the first eco-economic forest species went live on Alipay’s Ant Forest. 3.14 million users exchanged green points to grow more than 23,500 mu of sea buckthorn in a day. On December 19, 2019, the first ecological product “MA Sea Buckthorn” beverage, developed on the basis of this model, was officially launched for sale, with 100,000 pieces sold in more than 100 minutes. Each bottle of “MA sea buckthorn” priced at 9.9 yuan, except for the cost of raw material harvesting and manufacturers’ production and processing, the rest will all be donated to the special fund established by the China Foundation for Poverty Alleviation for ecological and environmental protection in the central and western regions and poverty alleviation.

Conservation practitioners and researchers protected area jobs, and agroforestry (Secre- have been working to imagine new instruments tariat of the Convention on Biological Diversity and models to foster conservation while also 2010; Fatoumata Diallo 2019). The possibility of supporting the economic development of the leveraging innovations based on digital technol- inhabitants of biodiversity rich areas. Several ogies towards the eradication of poverty, such as initiatives have emerged within China to attain Alipay Ant Forest’s vision on ecological poverty this objective, such as non-timber product alleviation, present the opportunity to improve commercialization, community forestry, nature- the lives of people in areas where Ant conducts based tourism, payment for ecosystem services, its efforts.

5 Sea buckthorn is an authentic Chinese native plant. 80% of sea buckthorn forests are distributed in 12 provinces (regions) of China, especially in key areas such as Hebei, Inner Mongolia, Shanxi, Shaanxi, Gansu, and Qinghai. A three-year-old Hippophae rhamnoides root system can extend up to 5-6 meters. The area of sand fixation and soil retention exceeds 10 square meters, which can reduce surface water and soil loss by 75% and reduce wind erosion by 85%.

10 II. Making it happen: institutional and A. Green Finance policy enablers for citizen action towards Green finance, officially defined as “financial carbon reduction services provided for economic activities that are supportive of environment improvement, Besides the unique design and features of Alipay climate change mitigation and more efficient Ant Forest, China’s growing leadership in envi- resource utilization”, is one of the areas where ronmental protection have made the applica- government directives have played an important tion not only relevant, but seen as a necessary role in incentivizing sectoral change towards and worthwhile endeavor to combat climate climate mitigation (“Guidelines for Establish- degradation. The country’s consolidated efforts ing the Green Financial System” 2016). National to achieve greener development for China have commitments to green the economy have driven materialized through guidelines, regulations innovation-based transformations, often precip- and strategic policies aimed to incentivize and itating change upon companies and organiza- align changes amongst the private sector, local tions, others working alongside relevant actors governments and national ministries towards to carve a path towards change. greener growth. Amongst priority objectives of Chinese environmental policies are emis- Elevating green finance as a key policy commit- sion reduction, natural resources conservation, ment (see figure 2 below for a timeline of actions) renewable energy resources, and the promotion has made possible the development of a finan- of a circular economy (The State Council of the cial market cognizant of environmental and People’s Republic of China 2016). social risks. In fact, China is the first country in the world with a clear national policy directive China’s recognition that its transformation to “create an all-encompassing green financial towards an “ecological civilization” requires system” capable of bridging the funding gap economic and social transformation, and that needed to achieve green development (“Estab- economic growth and environmental protec- lishing China’s Green Financial System” 2017). tion can go hand in hand, has driven a national Furthermore, the ability to put in place pilot change strategy through structural adjustments projects on green finance further confirms the to achieve green growth. From declaring an inter- government’s intentions to continuously find nal war on pollution, establishing green finance ways to promote green finance. as an international priority during its presidency Green Finance Pilot Zones of the G20, and becoming one of two countries contributing the most to greening efforts world- In 2017, the State Council announced it would wide, China, in spite of being the largest green- set up five pilot zones to test green finance house gas emitter globally, is pursuing tangible reforms and innovations in the provinces of changes and innovations to remedy and combat Zhejiang, Jiangxi, Guangdong, Guizhou, and climate change. Xinjiang. Different ministerial agencies were tasked to develop a plan for these areas, includ- While there is no specific empirical way to prove ing modern agriculture and clean energy through whether a particular policy has had a significant green finance, infrastructure in big data informa- effect on aiding Alipay Ant Forest’s success, this tion sharing, ecological environment and pover- section covers the policy, regulatory and institu- ty alleviation through green finance (Paulson tional enablers in the fields of green finance and Institute 2019). These pilot zones provided insti- green fintech that have shaped China’s green tutions with a range of incentives to test whether development, and thus the normative backdrop new or existing mechanisms could be successful in which Alipay Ant Forest has achieved the in financing and advancing various climate miti- impact described in earlier sections. gation strategies (Reuters 2017).

11 According to the Paulson Institute (2019), it is expected that the innovations tested during the pilots will be applied nationally “to unify green finance standards and improve the commercial sustainability of green finance”. To date, the most “fruitful case” is that of the Zhejiang province pilot for its “key success pillars in place including a sound governance system to encourage green finance development, a growing demand for green industry and an established working rela- tionship with China’s Green Finance Committee for technical support”. These pilots were extended into a second phase in 2019, after initial successful results (Jia 2018).

B. Green FinTech China’s top-down approach to engineer a green economy has also coincided with the development of the fintech (short for financial technologies) industry, defined as “companies that combine financial services with modern, innovative technologies” (Dorfleitner et al. 2016, 2017). According to the Digital Disruption (2016) report, fintech companies thrive in China due to the high penetration of digitization, quick growth of internet users, and prudent yet inclusive regulatory frameworks than in other countries. In fact, China is home to four of the five largest fintech companies in the world (Gulam- huseinwala, 2016). In a context of high political support for internet-based finance (Ngai et al. 2016), Chinese technology giants have created “all-encompassing platforms with the aim of embedding their services – financial and non-financial solutions – into customers’ lives”. (“The Figure 2. Above contains a timeline of some of the policies Rise of FinTech in China” 2016). As they dive and regulations that have been influential in determining into new technology frontiers like blockchain or China’s financial system transition. Though they are not artificial intelligence, fintech companies are also explored in depth, this figure illustrates the continuous starting to explore how they could contribute to change in regulations and policies, illustrative of the government’s continuous top-down approach to greening green finance. Recent pilots around the world the financial sector. are showing how this sector has the potential to develop new business models that “can both reduce the cost and improve the prospects of achieving the objectives of the Paris Agree- ment and the SDGs, [...], including supply chain

12 transparency, identity and financial inclusion, property rights, expansion of renewable energy, decentralization of electrical power systems, carbon credit trading and improved access to climate finance” (Nassiry 2018). In fact, Ant Financial can be considered as a fintech company that has both contributed to the expansion of financial services for customers, but has also played an important role in shaping and innovating the current green finance environment (Qi 2018). Drawing from this mix of green financial system guidance and fintech promotion, China has managed to create an appealing environment for innovation on green fintech. Yet it is expected for the regulatory environment to evolve in the near future for this new industry (Ngai et al. 2016). Understanding this enabling environment is crucial to fully capture, besides the appeal of the Ant Forest platform, how and why this platform is an important endeavor of Ant Finan- cial’s. Particularly, taking a look at how over the past four years different guidelines, regulations and strategic policies have been introduced, and how private companies and individuals alike can contribute towards nationwide priorities.

13 III. Scaling abroad? The potential for citizen on the impact that scaling green initiatives like action towards carbon reduction in Alipay Ant Forest to other countries of the world other markets could have - both in terms of number of users andavoided emissions - highlights the potential of digital platforms for individual-based climate In June 2019, the first platform designed and mitigation measures. based on Alipay Ant Forest, “GCash Forest” was launched in the Philippines. With the goal of combating deforestation, and similarly, offering A. Estimating Market Potential energy points by rewarding a given set of behaviors, GCash, a leading mobile wallet in the Philip- In under ten years, it can be estimated that the pines is leveraging the Alipay Ant Forest model market size for an innovation such as Alipay to incentivize individual behavior changes for Ant Forest, would roughly be equal to 1,003 climate change mitigation. This first endeavor million users under the “trend” scenario, 1,058 outside of mainland China signals to the scala- million users under “optimistic”, and 945 million bility of Alipay Ant Forest; a model that if widely users under the “conservative” scenario - these replicated, could result in important citizen-led three scenarios were constructed to describe climate mitigation actions. at, above and below the baseline calculated. In any of these cases, the market size is roughly Given Alipay Ant Forest’s trajectory and results to equivalent to three times the current popula- date, it is worth examining the impact that could tion of the United States, a sizeable number of result from scaling this initiative to other coun- individuals that would voluntarily change their tries in the world. To do so, a multiple regression behaviors in order to reduce their carbon emis- model was built to estimate the potential market sions and contribute to tree-planting activities. size and results of a platform like Alipay Ant All else equal, the yearly rate of growth would be 6 Forest in seven other countries : India, Germany, 7 million new users. Brazil, Japan, South Korea, the United Kingdom and the United States. This model estimates In fact, as can be seen in Figure 4 below, the the market size, potential emissions avoided as largest share for new, potential users of a plat- a result from individual behavior changes (see form geared towards incentivizing citizen action Annex 1 “A study of impacts - methods and limita- for carbon reduction could be concentrated in tions for modeling” for a detailed description of the India, Brazil and the United States. methodology). Providing a preliminary estimate

Figure 3. Total users (Population (millions) 2020-2030) Figure 4. Share of emissions reduction by country

6 It is worth noting that the countries in the study were chosen given their status as large greenhouse gas emitters, regional diversity, variety in development level, and availability of carbon emission data, providing thus an interesting panorama for what scalability of a green mobile initiative to promote citizen action could look like in other places of the world.

14 B. Estimating emissions reduction potential was estimated that for the period from 2020 to 2030, 8.4 million tonnes of CO2 emissions could According to Alipay Ant Forest’s pilot results, be avoided in these countries, with an average users avoided 4.9 kilos of CO2 equivalent annual value of 0.8 million tonnes8(see Figure 5). missions per person, per year, as a product of the green behaviors they adopted. This is equivalent (see Figure 5). It is worth noting that this model to 0.064% of per capita emissions in China or to only takes into consideration the behaviors and 0.086% of per capita emissions in China’s trans- number of users under limited low-carbon activ- portation sector7. ities during the first nine months9 since Alipay Ant Forest’s launch, reason why these estimates Under this baseline scenario and based on popu- may be underestimating the magnitude of lation projections for the countries studied, it potential avoided emissions.

Figure 5. Emission Reduction Potential Per Country (tCO2e) Total South United United Year Brazil Germany India Japan Emissions Korea Kingdom States Reduction

2020 63,065.97 28,056.17 123,904.18 118,725.50 14,475.82 19,985.53 381,916.69 750,129.86

2021 65,372.33 26,671.26 126,574.66 121,714.17 14,865.90 18,860.82 381,117.53 755,176.67

2022 67,631.80 26,499.74 130,300.57 115,784.28 16,229.42 19,021.38 385,827.53 761,294.72

2023 67,458.77 25,669.72 134,492.94 113,516.44 16,727.86 18,164.35 380,840.73 756,870.80

2024 70,245.56 25,853.70 139,855.03 111,270.09 16,498.92 17,688.85 374,063.87 755,476.03

2025 71,347.58 24,949.23 147,131.12 108,069.36 16,278.27 17,295.20 371,897.85 756,968.61

2026 73,830.88 23,896.52 149,408.54 107,875.62 16,380.33 16,767.93 373,017.44 761,177.26

2027 75,012.92 23,764.10 168,606.77 102,945.76 16,751.77 16,409.37 362,784.37 766,275.07

2028 75,520.07 23,363.94 187,486.96 106,029.05 15,823.23 15,206.39 349,049.75 772,479.38

2029 80,920.17 24,592.79 189,740.50 110,350.90 16,051.04 15,396.95 352,893.83 789,946.18

2030 82,309.23 23,107.03 200,237.36 105,699.83 15,318.84 14,035.21 343,903.83 784,611.33

Total 792,715 276,424 1,697,738 1,221,980 175,401 188,831 4,057,313 8,410,405

7 Muntean, M., Guizzardi, D., Schaaf, E., Crippa, M., Solazzo, E., Olivier, J.G.J., Vignati, E. Fossil CO2 emissions of all world countries - 2018 Report, EUR 29433 EN, Publications Office of the European Union, Luxembourg, 2018. Otherwise known as EDGARv5.0. 8 This uses the factor of 0.064% reductions per capita, modeled based on Ant Forest baseline during its pilot phase 9 At this time, green energy points were awarded for only nine actions, including: electronic payment of metro tickets, electronic toll collection, hospital registration fee, electronic train tickets, electronic payment of household utilities, electronic payment of movie tickets, traffic fines and penalties, other offline payments and walking.

15 Furthermore, given that most of the actions Drawing these comparisons makes clear that the awarded through Alipay Ant Forest relate to modal shifts encouraged by Alipay Ant Forest shifts in transportation patterns, one can view represent a significant proportion of annual emis- these emission reductions in light of the volume sions per passenger tied to public transportation of emissions corresponding to local public trans- emissions. Particularly for the United States and port in each of the countries. In order to do so, Brazil, it can be noted that the emissions avoid- research was undertaken to identify the percent- ed because of platforms like Alipay Ant Forest, age of total national emissions generated by constitute a significant share of public trans- public transportation in order to calculate the portation emissions. This comparison signals to number of CO2 emissions generated per passen- the fact that simple shifts in behavior patterns, ger in one year. This calculation was done under particularly in carbon intensive industries (as is two scenarios: 1) assuming single and, 2) assum- transportation) do significantly impact national ing roundtrip travel per capita on every day of emissions, but this impact is even more obvious the year. when looking at specific sectors.

Figure 6: Modal shift measures: Alipay Ant Forest emission reductions as a proportion of public transportation* related emissions (per capita, annual)

South United Assumption Brazil Germany Japan United States China Average Korea Kingdom

Single trip 9.20% 1.10% 5.10% 1.10% 1.80% 9.90% 2.10% 4.30% Round trip 18.30% 2.10% 10.10% 2.20% 3.60% 19.80% 4.20% 8.60%

10 For these calculations, the emissions per passenger trip in public bus transportation were taken, when available. This choice was made in light of the volume of emissions that this mode of transportation represents in China, as well as on the modal shift measures in transportation awarded through Ant Forest. However, it is worth noting that the magnitude of these percentages depend on the extent to which buses are the main modes of transportation in countries’ public transportation schemes.

16 IV. Main Findings The overall enabling environment towards innovation in China, characterized through its multiple policies focused on greening the Green mobile platforms are poised as power- financial sector, have developed the condi- ful mechanisms to inform and encourage tions for green fintech to emerge at scale in citizen action towards carbon reduction. China. A policy approach defined by direct Alipay’s Ant Forest has incentivized over 550 guidance to financial sector players, and govern- million people to adopt greener, more sustain- ment-sponsored experimentation via green able behaviors and to become active agents of finance pilot zones has contributed to China’s nature-based solutions through its mobile plat- leadership in green finance. China’s fintech sector form, resulting in avoided emissions estimated has emerged from an enabling environment, at over 11 million tons of CO2 (Xuanyi 2020). contributing to the consolidation and growth of Providing individuals with tangible and visual multiple fintechs, amongst these green fintechs. information on the carbon emissions associated with everyday activities has a positive impact in Up to 8.6% of emissions tied to public trans- encouraging green behaviors. portation could be avoided in the seven countries modeled in this study if similar green Digital technologies are providing new initiatives were to be implemented over the avenues for citizens to become active agents 2020-2030 period. Exploring the potential for nature-based solutions to climate change. impacts that scaling a platform like Alipay Ant Alipay Ant Forest’s interactive design for environ- Forest could have on additional countries makes mental protection play a crucial role in breaching clear the potential impact of green initiatives to the attitude-behavior gap to generate individual incentivize individual actions for climate change actions for climate change mitigation. Behavior mitigation. Particularly, this model estimates change is more likely when individuals feel their that the largest share of potential users of a actions have a visible and tangible impact. Alipay mobile application to incentivize citizen action Ant Forest users’ ability to see their trees grow towards carbon reduction, could be concentrat- amidst a forest planted by other users, contrib- ed in India and Brazil, and that over 600 million utes to the recognition that individual actions trees could be planted. However, to incentivize are significant, but also, that seemingly isolated a shift towards lighter carbon lifestyles, there is actions contribute to larger collective impacts. a need to adapt the design of green initiatives There are opportunities to bridge the dichoto- to the specific behavioral patterns of citizens of my between conservation and poverty reduc- each of the countries. tion in China by leveraging private sector innovations towards social good. Mobile applications, amongst these green fintech applications, have the opportunity to contribute to the economic empowerment and ecological conservation of rural communities by enabling and providing access to the digital market and their user base. As a point of convergence for actors interested in pairing environmental protection and poverty alleviation, platforms like Alipay Ant Forest have the potential to link individuals who want to support biodiversity conservation efforts, with rural communities looking for commercialization avenues for sustainable products.

17 Annex A - A study of impacts: modeling Alipay Ant Forest’s first six-months of opera- methodology tion11, in order to make projections for each of the countries being studied. These, coupled with The model is focused on providing a preliminary World Bank population projections, the Emis- idea on the impact that scaling green initiatives sion Database for Global Atmospheric Research like Alipay Ant Forest to other countries of the (EDGAR)12, and Data Reportal - a repository on world would have - both in terms of number mobile application and platform user growth of users, avoided emissions, and reforestation - were used as the main data sources13 for the potential. To estimate these figures, the model model. built extrapolates the results obtained during

Figure 2. Methodological process for the scaled emissions model14

scenario mimics Alipay Ant Forest’s user growth and was extrapolated to the other countries of during its first six months as a baseline, while study assuming that it would be fixed through- the “conservative” and “optimistic” scenarios are out the years. estimates on margins 5% greater and lesser than this baseline. Limitations of the model Second, to estimate the carbon emissions avoided by users in each of these countries, the model The model does not take into account the assumes a trajectory equal to that of Alipay Ant potential weight of extrinsic and intrinsic moti- Forest during its first six months of operation. vations to adopt environmental behaviors based This baseline is understood on a per capita basis, on the national context, such as the impact of

11 Due to data availability, disaggregated information was only available during the pilot’s six months. At this time, green energy points were awarded for only nine actions, including: electronic payment of metro tickets, electronic toll collection, hospital registration fee, electronic train tickets, electronic payment of household utilities, electronic payment of movie tickets, traffic fines and penalties, other offline payments and walking 12 In this report fossil CO2 emissions include sources from fossil fuel use (combustion, flaring), industrial processes (cement, steel, chemicals and urea) and product use. Please note that in the analysis presented in this report no short cycle carbon CO2 is included in any sector for EDGAR data. EDGARv5.0 uses international activity data, mainly energy balance statistics of IEA (2017) for 1970-2015 to estimate CO2 from fossil fuel consumption. These emissions are extended (FT approach) to 2016 and 2017 using BP statistics. The respective sectoral breakdowns of emissions for 2015 are extrapolated to 2016 and 2017. Updates for 2016 and 2017 for cement, lime, ammonia and ferroalloys production are based on USGS statistics, urea production and consumption are based on IFA statistics, associated gas used from flaring from GGFR/NOAA, steel production from world steel and cement clinker production from UNFCCC (2018b). For the other sectors with lower contributions to the global CO2 emissions, the time series in ED- GARv4.3.2 have been extended for the period 2013-2017 using proxy data and relative changes in activity data compared to 2012, reported in recent data sources. 13 The following datasets were used to build the model: 14 Total historical fossil CO2 emissions in MtCO2 by country from 1970 to 2017. 15 Total historical fossil emissions in MtCO2 for the transport sector by country from 1970 to 2017. 16 Per capita emissions expressed in tCO2/cap/yr from 1990 to 2017. 17 Smartphone penetration of each country expressed as a percentage for the years 2017 and 2013. 18 Smartphone purchases expressed as a percentage of the population using smartphones for 2013 and 2015.

18 Ant’s gamification effect as an incentive to utilize the app. Furthermore, the propension to use social media and apps differs, and e-commerce and smartphone usage doesn’t fully capture this variance. In other words, the adoption of internet-based channels and media differ dramati- cally, particularly of mobile banking solutions. Accessibility, availability, and affordability of technologies, as well as cultural context, ought to be considered in order to achieve more nuanced results. The assumptions the model is based on are too broad to reach conclusive results, thus, this model only provides estimates both for market size and emissions reduced. Second, the model doesn’t take into consideration the intrinsic market development in each of these countries, but makes the assumption that the market size for green mobile initiatives would equal the market size of mobile payment applications generally. Although it is clear, to an extent, what drives a user in China to use Alipay Ant Forest, there is no way to predict whether individuals in other markets would be as enthused and engaged by a similar application. Both the press- ing nature of climate change in China, as well as the “virality” caused by the gamification and social network features of the platform may not be as effective in other countries.

19 Relational data from Ant Forest’s emissions model. 20 This mathematical model was based on Eck et al. 2017 and Fox 2018. The adjusted R-squared for this model was 0.9865, indicating that 98.6% of global transportation emissions are explained by the emissions in the countries analyzed.

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