# Measurement is key if the circular economy is to attract more ESG investment
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-07-20
Category: INVESTING
Category URL: https://financedigest.com/category/investing
Meta Title: Measuring Carbon Footprint of Pre-Owned Electronics in ESG
Meta Description: Learn how to attract ESG investment by measuring the carbon footprint of pre-owned electronic devices. Discover the impact of recycling on the environment.
URL: https://financedigest.com/measurement-is-key-if-the-circular-economy-is-to-attract-more-esg-investmenthtml

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_By_ **_Kerry Chen,_** _CEO of ATRenew_

_The ability to measure the carbon footprint of pre-owned electronic devices is vital if the circular economy is to attract more ESG investment_

The past few years have seen record amounts of [ESG investing](https://www.financedigest.com/how-green-are-your-investments-why-esg-data-integration-is-key-for-financial-services-firms.html "“How green are your investments?” – Why ESG data integration is key for financial services firms") worldwide. In [2021 US$649 billion was invested in ESG-focused funds](https://www.reuters.com/markets/us/how-2021-became-year-esg-investing-2021-12-23/#:~:text=A%20record%20%24649%20billion%20poured,10%25%20of%20worldwide%20fund%20assets.), a record amount making up 10% of worldwide fund assets. This is expected to rise significantly over the coming years, [hitting US$53 trillion by 2025](https://www.bloomberg.com/professional/blog/esg-assets-may-hit-53-trillion-by-2025-a-third-of-global-aum/), a third of global Assets Under Management.

These [funds have found their way](https://www.financedigest.com/6-ways-to-fund-university.html "6 Ways to Fund University") into a variety of ESG-focused areas, from green energy and carbon capture and storage to greening supply chains. Regulators are also taking note, applying more scrutiny on what is and isn’t truly ESG compliant, with the European Union creating [green investment rules](https://www.reuters.com/markets/commodities/eu-plans-finish-green-investment-rules-gas-nuclear-next-year-2021-12-20/) for the oil and gas sector, for instance.

As this scrutiny grows, especially during recent periods of market turbulence, [investors will become much more wary of where they invest](https://www.financedigest.com/why-are-investors-checking-out-of-uk-buy-to-let-and-checking-in-to-hotel-investment.html "WHY ARE INVESTORS CHECKING OUT OF UK BUY-TO-LET AND CHECKING IN TO HOTEL INVESTMENT?") their funds. This presents an opportunity for those in the circular economy space, yet in order to attract a slice of ESG funds, we need to be able to measure the [benefits of recycling and the second-hand economy](https://www.financedigest.com/a-two-way-street-chinese-investment-in-the-uk-will-benefit-both-economies.html "A TWO WAY STREET: CHINESE INVESTMENT IN THE UK WILL BENEFIT BOTH ECONOMIES"), and specifically the amount of carbon that is produced and saved.

**[Measuring the environmental impact](https://www.financedigest.com/how-to-define-success-and-measure-the-impact-of-digital-transformation.html "How to define success and measure the impact of digital transformation") of unused electronics**

While mobile phones themselves cause a small portion of carbon emissions the numbers are huge with [7.26 billion mobile phones](https://www.bankmycell.com/blog/how-many-phones-are-in-the-world) in use globally. Furthermore, the energy and emissions generated to manufacture the devices is more significant requiring long and deep [supply chains](https://www.financedigest.com/in-the-supply-chain-clean-data-is-the-fuel-of-the-future.html "In the supply chain, clean data is the fuel of the future") as well as copious raw materials that needs to be mined and extracted – often in environmentally sensitive parts of the world.

Added to that, mobile phones are constantly changing with consumers [upgrading to a newer model every few years](https://www.financedigest.com/an-apple-a-year-half-of-iphone-users-will-upgrade-to-the-iphone-7.html "AN APPLE A YEAR: HALF OF IPHONE USERS WILL UPGRADE TO THE IPHONE 7"), generating significant amounts of unused electronics. In 2019 it was estimated that mobile phones [contributed 10% of discarded electronics globally at 50 million tons](https://infomineo.com/how-smartphones-are-contributing-to-climate-change/#:~:text=Research%20on%20the%20annual%20carbon,per%20day%2C%20for%20a%20year.), much of which ends up in poorer parts of the world to be stripped, generating environmental and human hazards.

This provides a ripe [opportunity for entrepreneurs](https://www.financedigest.com/why-entrepreneurs-can-transform-the-crisis-into-business-opportunities-to-create-more-impactful-and-long-lasting-ventures.html "Why entrepreneurs can transform the crisis into business opportunities to create more impactful and long-lasting ventures") and companies to come in and change things. Technology already exists – and is being used – that is able to process used mobile phones, check them for defects and send them [back out into the second-hand market](https://www.financedigest.com/analysis-bond-traders-get-their-swagger-back-in-rate-obsessed-markets.html "Analysis-Bond traders get their swagger back in rate-obsessed markets") to be sold.

However, right now the [“greenness” of the circular economy](https://www.financedigest.com/italys-a2a-trims-green-investment-plan-citing-economy-volatile-markets.html "Italy’s A2A trims green investment plan citing economy, volatile markets") remains a relatively abstract concept—neither practical nor quantifiable. In order for growth to happen, [investment is needed](https://www.financedigest.com/5-reasons-why-women-need-to-get-into-property-investing.html "5 Reasons why women need to get into property investing") and therefore proper measurement is vital. There are a number of ways this can be done.

**From original manufacturer to end user**

The Life Cycle Assessment (LCA) method [analyses the carbon reduction](https://www.financedigest.com/seenthis-launches-emissions-dashboard-to-enable-advertisers-to-analyse-data-reduction-and-emission-savings-on-campaigns.html "SeenThis launches Emissions Dashboard to enable advertisers to analyse data reduction and emission savings on campaigns") of every second-hand mobile phone sold. Given most materials in second-hand mobile phones are recycled, the cradle-to-grave [carbon footprint](https://www.financedigest.com/ecb-can-cut-carbon-footprint-by-shedding-bonds-of-biggest-polluters.html "ECB can cut carbon footprint by shedding bonds of biggest polluters") of second-hand phones overlaps with that of new mobile phones. In order to address the issue of double-counting, the [carbon footprint](https://www.financedigest.com/coca-cola-digital-ad-campaigns-use-seenthis-streaming-technology-to-avoid-excessive-carbon-footprint.html "Coca-Cola Digital Ad Campaigns Use SeenThis Streaming Technology to Avoid Excessive Carbon Footprint") of second-hand mobile phones should be calculated as a certain fraction of that of a new phone.

Additionally, the quality of the secondhand phone affects its ‘greenness’. An older model that is resold should be considered greener than a more recent model that is resold, as it is more akin to ‘turning waste into treasure’. Related to this is the length of [time it takes to sell](https://www.financedigest.com/best-selling-books-of-all-time.html "Best selling books of all time") a mobile phone, with an idle phone released years ago but recently sold being greener than a secondhand phone released recently and sold recently.

By calculating the cradle-to-grave [carbon footprint of second-hand phones from the initial manufactured through to secondhand processing and reselling we are able to generate accurate data on carbon emissions](https://www.financedigest.com/playground-xyz-study-finds-carbon-emissions-from-digital-ads-fall-by-63-on-average-when-measured-and-optimized-for-attention-time.html "Playground xyz study finds carbon emissions from digital ads fall by 63% on average when measured and optimized for attention time"). This is then measured against its ‘greenness’ based on how recently it is sold and the quality of the phone.

**Creating a** [level playing field](https://www.financedigest.com/using-agility-to-resist-economic-instability-and-level-the-playing-field.html "Using agility to resist economic instability and level the playing field")

Standardization is key, too. Around the world what constitutes ‘green’ varies considerably, with different standards applied in different countries. While we don’t expect one [set of standards to govern](https://www.financedigest.com/factbox-uk-government-sets-out-priorities-in-queens-speech.html "Factbox-UK government sets out priorities in Queen’s speech") every country, it is important that nations set clear and easy-to-follow regulations that govern the dismantling and/or re-use of idle electronics.

Such standards will help in a number of ways. Firstly, they will encourage original manufacturers to create products that [last longer](https://www.financedigest.com/brand-loyal-brits-have-longer-relationships-with-their-car-than-their-last-lover.html "BRAND-LOYAL-BRITS HAVE LONGER RELATIONSHIPS WITH THEIR CAR THAN THEIR LAST LOVER"), this in turn will make it easier for firms in the circular economy to inspect and process idle electronics, re-selling them back into the marketplace. The number of unusable or broken electronics will decrease.

Furthermore, from an ESG perspective, regulatory standards will help create transparency and trust, [attracting more investors](https://www.financedigest.com/5-ways-that-start-ups-can-attract-investors.html "5 Ways That Start-Ups Can Attract Investors") into this space. If firms are able to prove that they adhere to a robust set of regulations, investors will have more confidence and be more willing to [invest in their growth and success](https://www.financedigest.com/battling-uncertainty-is-the-key-to-property-investment-success.html "Battling uncertainty is the key to property investment success").

Accurate measurements and data not only help those of us in the Circular [Economy to do a better job](https://www.financedigest.com/younger-chinese-are-spurning-factory-jobs-that-power-the-economy.html "Younger Chinese are spurning factory jobs that power the economy"), but it instills confidence and trust and therefore, investment. It is vital that we pay attention to ESG reporting mechanisms and measurement and moving forward all of us in the Circular [Economy space need to have big data](https://www.financedigest.com/stocks-yields-fall-data-suggests-u-s-economy-cooling.html "Stocks, yields fall; data suggests U.S. economy cooling") at our core. If we do, I foresee significant growth in the [years ahead](https://www.financedigest.com/three-waves-of-fintech-disruption-leading-trends-for-the-year-ahead.html "Three waves of Fintech disruption: Leading trends for the year ahead").

**_About Author:_**

_Kerry Chen is the CEO of ATRenew. Headquartered in Shanghai, ATRenew Inc. (ATRenew) (NYSE: RERE) operates a leading technology-driven pre-owned [consumer electronics transactions and services](https://www.financedigest.com/best-paying-jobs-in-finance-consumer-services.html "Best Paying Jobs in Finance Consumer Services") platform. The mission of ATRenew (which stands for “All Things Renew”) is to give a second life to all idle goods, reflecting their commitment to building an enterprise with ESG embedded in its genes. ATRenew’s open platform integrates C2B, B2B, and B2C capabilities to empower online and offline transaction services of pre- owned electronic products._


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