Luohan Academy

Circular Economy Solutions for Net Zero Through Digital Innovation

Event materials

  • Session Summary

The circular-economy concept facilitates needed resource efficiencies and is critical to achieving net zero, where the amount of greenhouse gases entering the atmosphere becomes equal to the amount of gases being removed. A shift to a circular economy centers on reducing, recycling, repairing, remanufacturing, and other means to expand and extend the lifecycle of products, promising to create new job opportunities in the process. Despite these clear benefits, implementation has not lived up to potential. Meanwhile, digitalization is playing an increasing role globally and offers unique solutions and possibilities for the circular economy. 

On September 22nd, the Luohan Academy hosted Circular Economy Solutions for Net Zero through Digital Innovations as part of the World Economic Forum's Sustainable Development Impact Summit 2021. The session comprised a panel of four thought leaders from diverse backgrounds and was moderated by Wei Liu, a senior scientist at the Academy.

Peter Lacy, Chief Responsibility Officer and Head of Sustainability at Accenture and a pioneer in circular economy business strategies, delivered both good and bad news. His book Waste to Wealth (2015) estimated at least a $4.5 trillion economy opportunity through 2030 for businesses. To Lacy, the circular economy is critical in allowing for economic growth and job creation, appropriately de-coupled from negatively using scarce and harmful resources. His new book The Circular Economy Handbook (2020) gets specific about realizing the opportunity, focusing on five business models and 23 enabling technologies profitable for almost all businesses. With this good news, Lacy laments the sad reality that the world has barely budged on measures toward the circular economy. A lack of urgency, awareness, and coordination are all issues, but not a lack of technologies, business models, or capital, Lacy said. 

Long Chen, President of the Luohan Academy, focused his remarks on two concrete examples of digital technologies enabling circular economy systems. The first is Idle Fish (Secondhand Trading Takes Off in China as Apps such as Alibaba's Idle Fish Make Recycling Easier), the leading second-hand market in China with almost 300 million users averaging 1 million daily transactions. Idle Fish grew rapidly because of smart platform design – social functions for users to connect, trust and verification systems, third-party appraisers and even "courts" to handle disputes. Professor Chen's second example is Ant Forest (How Alipay Users Planted 100M Trees in China), an Alipay-powered app encouraging green behaviors such as taking public transit. Users earn "green energy" which accumulate toward virtual trees that result in real trees being planted by Ant across China. Launched in 2016, Ant Forest boasts 600 million users and 326 million trees planted. Platform design again featured in its popularity – providing easy measurement and tracking of green behavior and combining social features to share and compete with friends. To Chen, the successes of Idle Fish and Ant Forest show digital technology's potential to advance circular economy and decarbonization applications in the real world.

David Rejeski from the Washington, D.C.-based Environmental Law Institute was one of the first scholars to recognize the potential impact of digital technologies, writing early papers on the environmental impact of e-commerce. Despite tremendous growth in the last 20 years, scholars have not greatly advanced our understanding technology's holistic environmental impact. It's easy to calculate the direct footprint of manufacturing smartphones or running data centers but difficult to measure indirect impacts of their use. Rejeski proposes more research in two areas. The first area is the question of total impact. For example, does ride-sharing actually result in more or less total resource consumption? The second area is basic science. While he agrees with Lacy that existing technologies can cover the next 10 years, technology can take decades to reach mass adoption. The initial research behind mRNA vaccines began in the 1970s, and the first GPS satellite was launched in 1969. The world needs to continue to fund research that will cover us 20+ years out, Rejeski said. 

Izabella Teixeira, co-chair of the UNEP International Resource Panel and former Environment Minister of Brazil from 2010 to 2016, offered her unique perspective from the political world. As minister, she played a key role in the Paris Agreement, personally leading Brazil's delegation. She noted that political leaders are constrained both by gaps in knowledge and local priorities. Moreover, policy was historically developed and implemented in silos. For example, biodiversity and water might be separate silos. The circular economy is a stellar opportunity that crosses silos and intersects scientific, policy, and business worlds. But to achieve goals, Teixeira said, recommendations must be concrete, backed by real data and real-world experiences. They must be amenable to local situations. This is particularly true for emerging economies which do not have the luxury of theory, according to the former minister. 

In the discussion portion, the panelists shared some points of consensus on what needs to be done. They agreed on raising more awareness of the real opportunities in the circular economy for countries and businesses. They concurred on the need for concrete plans that consider local priorities and increased cooperation between countries, not just ideas from the West but between "North and South, East and West" and across interconnected global value chains. More research on the link between digital technologies and the environment are necessary. Finally, the panelists also agreed that an exploration of technology-enabled, market-based solutions could help to realize a more circular and sustainable economy.

The session was the Luohan Academy's second event dedicated to digitalization and environmental sustainability following Frontier Dialogue: A Digital Pathway for Net Zero. The Academy continues to work with our partners and community to explore digitalization's role in bettering the environment.


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