According to the Green Digital Finance Alliance (GDFA), the implementation of nudging techniques and incentives on digital platforms has the potential to significantly alter consumer behavior, particularly among those adept with technology. This shift could serve as a catalyst for widespread climate change mitigation, potentially reducing public transport emissions by 8.6%.
A recent report by the GDFA—a public-private partnership co-founded by the UN Environment Programme and Ant Financial Services in 2017—examines how digital technologies can enhance financing for sustainable development. It highlights Alipay’s Ant Forest initiative as a leading example of this transformation toward environmentally friendly behavior.
Coinciding with the UN Secretary-General’s call to action for a citizen-centric financial system driven by fintech, the report demonstrates how Ant Forest aims to inspire users to engage in low-carbon activities, including online utility payments and walking as a mode of transport.
### Individual Carbon Accounting
Alipay’s Ant Forest has pioneered the analysis of behavioral data from 550,000 users, rewarding them with points equivalent to the carbon footprint reductions achieved through eco-friendly actions. Users can visualize their ‘green energy’ as virtual trees within the gamified Alipay app.
During its pilot phase, activities that earned users green energy points included:
– Offline mobile payments (e.g., purchasing movie and train tickets online) – 5 g of CO2
– Online utility payments (water, electricity, gas) – 262 g of CO2
– Using public transportation – 80 g of CO2
– Walking – N/A
– Making appointments online (e.g., paying traffic fines) – N/A
– Electronic Toll Collection payments – N/A
Since its launch, Ant Forest has expanded to GCash Forest in the Philippines, amassing 3.5 million users.
### The Potential of Green Mobile Platforms
Marianne Haahr from GDFA emphasizes that green mobile platforms hold significant potential for fostering citizen engagement in carbon reduction. Additionally, they can overcome obstacles to scaling sustainable finance and spark innovations that unlock sustainable investment opportunities in the economy.
Haahr highlights that access to green finance is largely limited to large corporations or sovereign entities through green bonds and ESG investments, which, despite their growing popularity, account for only a small fraction of overall financial flows. Currently, only about 2% of the trillion-dollar bond market is classified as green, and less than 1% of exchange-traded funds are labeled ESG. High transaction costs and the smaller size of many green assets hinder their integration into capital markets, compounded by a lack of quality data on green and ESG investments.
### Scaling Assets
Haahr notes that green mobile platforms can mitigate these challenges by significantly reducing transaction costs associated with green bond issuance, making it feasible to raise capital for smaller green projects. They can leverage their data capabilities to bundle multiple smaller assets into a singular green investment vehicle while tracking and verifying both capital use and impact outcomes.
This is especially relevant for financing small and medium-sized enterprises (SMEs), where green mobile platforms might offer users the chance to invest in small digital green bonds backed by collections of green SMEs or even establish a green SME exchange.
Additionally, mobile technology can resolve low incentives for SMEs to enhance energy efficiency or reduce carbon footprints by introducing predefined green behavioral KPIs, adjusting capital costs based on performance, or encouraging sustainable practices through initiatives similar to Alipay’s Ant Forest.
### Incentivizing CO2 Feedback
The report anticipates that projects like Ant Forest could engage a user base three times larger than the current population of the United States in seven high-emission countries. Such participation could lead to an emission reduction of up to 8.6% related to public transportation if similar green initiatives were implemented globally between 2020 and 2030.
Alex Pentland from MIT underscores the capability of digital platforms to exponentially scale green behaviors through automated, personalized CO2 feedback, gamification, and community-driven recognition, thereby establishing sustainable practices as social norms.
Rather than merely measuring the carbon impact from production, Alipay’s model looks at emissions at the point of release. The report speculates that this could create significant incentives for user engagement, especially in regions like India and Brazil, leading to the planting of over 600 million trees.
### Common Frameworks and Future Prospects
Haahr concludes by discussing the potential for creating a common framework for carbon budgeting among citizens, comparable to existing carbon emissions trading schemes designed for industries. Such a system could allow individuals to monetize their carbon savings by trading these as credits on digital platforms, benefiting lower-income populations who typically have smaller carbon footprints.
Another potential model involves integrating citizen digital carbon accounting into tax systems, where taxes would automatically rise if emissions exceed a predefined limit.