Müge Dedeoğlu

21902375

GE 420 Midterm Assignment

Digitalization and Sustainability

Digitalization is one of the important forces that shape the way people live, work, and
connect. Digitalization is transforming data, information, and businesses into digital formats.
Since most digital companies are using Artificial Intelligence (AI) for their digital technology,
AI and its impact on sustainability will be discussed with digitalization in this article.
Especially, the digital transformation rapidly increased after COVID-19 emerged. [1] Digital
transformation was necessary because of the lack of physical interaction between the people
in society. Moreover, due to COVID-19, the companies were not able to generate sufficient
profits and they experienced a decline in terms of economic sustainability; however, the ones
with digitalization managed the crisis more efficiently. [1] The economic instability led to
political instability. The political and economic instability was one of the main forces for the
companies to implement digitalization for the sustainable actions. Solarvis claims that the
main forces the companies implement sustainability is industry leadership, profit, and
investors. Since their investors are all solar panel firms, they need to act sustainably. [11]
Digitalization was referred to as sustainable and green at first times, but as time passed, it has
been observed that there are negative effects on sustainability as well.

There are non-negotiable benefits of digitalization on sustainability. Digital

technologies can collect vast amounts of data and identify accurate resource consumption
amount, energy usage amount, and social well–being data. [2] This can lead to an increase in
awareness in companies, and also society. The transformation of data into digital makes it
more transparent. Transparency enables stakeholders to engage with the company more and
enables them to join the decision-making process. The stakeholders can give their ideas to the
company more straightforward in the digital world. For example, customers can convey their
ideas to companies through the Internet. Stakeholder engagement is another socially
sustainable act of digitalization. Solarvis states that the investors are one of the main decision-
makers in the company. [11] Transparency also provides accurate data; therefore, it makes the
public and companies more responsible for their consumption and production which is related

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to UN's 12th goal. In environmental sustainability, digitalization has potential and can make
things better for the world’s climate action which is the UN's 13th goal. Smart parking that
includes various technologies, parking sensors, and data analytics enabled a 30% reduction in
greenhouse gas emissions in cities, a 10% reduction in traffic, and an increase of 2% in local
GDP. An emergent need for global greenhouse gas emission reductions is essential to avoid
reaching the critical 1.5°C breaking point in global warming. [7] DeepMind, an artificial
intelligence created by Google, has played a significant role in decreasing the energy needed
for cooling by 40 percent. [1] The company, Solarvis, which is interviewed in this article is a
good example of the UN's 7th goal of affordable and clean energy. Since they use solar panel
energy, they are making the energy more affordable for the companies. [11] UN’s 9th goal
states that economic growth exceeded the growth of CO2 emissions, thanks to the adoption of
clean digital technologies and a decrease in industrial production. [7] In addition,
digitalization makes the company proactive because the company can predict what will
happen by analyzing historical and real-time data and calculating them accurately with digital
tools. Therefore; they can react to risks before it happens. Since the company can predict the
trend and decrease the risk for their future, the company becomes more sustainable. [2] Social
inclusivity is another positive aspect because it lets anyone in the world participate. [4]
Furthermore, more companies are starting to imply the UN's 17th goal. Solarvis is making
sustainable actions by creating partnerships with other companies and they are working with
other software to secure privacy by using digital technologies. [11]

The first thing that comes to mind when people think about digitalization’s positive
effects on sustainability is less usage of paper. Nonetheless, using paper in some amount can
be better than the detrimental effects on sustainability of extreme digitalization. First problem
of digitalization is privacy issues and data misuse. [2] Due to digital transformation, most
information and important data is placed on digital system or internet. The errors on the
systems can cause dysfunctions in system or leakages of private data on the Internet. First of
all; it reduces public trust, customers do not choose the company anymore and the economics
of company decreases. Secondly, dysfunctions can result in worse consequences for
sustainability. Due to immature or biased data, AI can give unethical recommendations. [6]
For example, if a company which plans to reduce emission makes mistake while creating the
system, it may result in opposite of reducing. Therefore, digital applications require
heightened cybersecurity measures and data governance. [5] Furthermore, one of the most
critical conditions for sustainability is that it should be accessible and available to everyone.

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Equality is essential and needs to be maintained. Even though social inclusivity is mentioned
above, there is a fact that some poor countries don't even have access to the internet and don’t
even know digital businesses exist, which eliminates equality and reduces the sustainability of
digitization. [3] The digital divide is the name of these inequalities in the digital world. [9]
UN’s 10th goal, reduced inequalities, is both applicable and not applicable because of the
contradiction in this subject. [7] It is also proven that some AI tools are biased against skin,
gender, and race. [4] This discrimination of the tools undermines public trust in the company.
It does not comply with the UN’s 5th goal, which is gender equality. [7] The negative
environmental impact of digitization, especially AI, also needs to be discussed. The digital
transformation can lead to an increase in carbon footprint and energy consumption in the
company because the sensors that are added in digital systems use energy, and artificial
intelligence tools are increasing the carbon footprint. [1] Using AI for digital businesses has a
drawback: it has a huge carbon footprint. To put it in perspective, training just one AI model
can release as much carbon dioxide as five cars produce in their entire lifetimes. [5] This
problem gets worse as AI models get more complex, especially if we keep using the same
energy sources. People are researching ways to measure the environmental impact of software
applications, but these methods haven't been developed enough for AI yet. [5] AI heavily
relies on data, which indirectly contributes to the overall carbon footprint of the IT industry.
AI also needs large datasets and big data centers that require extreme energy. Data centers
create e-waste, and research and training in AI are also creating e-waste. E-waste can lead to
adverse health effects and environmental pollution. [10] Studies have shown that the
manufacturing and use of information and communication technology (ICT) have
significantly increased climate change impacts and material footprints. This is due to the
energy consumption associated with ICT and the growing dominance of Big Tech companies
like Google, Amazon, Facebook, and Apple. [4] Another fact is digital devices are made by
extracting valuable mines and mines are one of the main reasons for the war between
countries. [10] This is another disruption for the UN’s Justice and Peace Goal. [7] For
economic sustainability, AI and digital technologies decreasing the employment rate since the
need for human labor is low in the digital world. This is another negative impact because it
doesn’t fit to the UN’s 8th goal. High levels of unemployment have a detrimental impact on
economic growth. [7] Circular economy is a sustainable act that aims to create a closed-loop
system where products, materials, and resources are continuously reused, refurbished,
remanufactured, and recycled. However, digitalization is not circular at all because most
devices, AI products and digitals are simply extracting minerals, using technology, and

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throwing them away; they are not refurbished, recycled etc. [8] Another fact is that digital
devices are made by extracting valuable mines, and mines are one of the main reasons for the
war between countries. [10] This is another disruption for the UN’s Justice and Peace Goal.
[7]

Most companies ignore the dependency and link between digitalization and
sustainability; therefore, analyzing their relationship can be beneficial. There are four
categories of business activities concerning sustainability and digitalization: Some companies
primarily focus on financial goals, with limited digitalization and sustainability
considerations. Traditional financial objectives mainly drive these activities, and they have
established business activities. These companies will begin to fall behind over time. Other
companies have established sustainability initiatives with a strong emphasis on sustainability
and minimal digitalization. These initiatives are becoming increasingly important but remain
non-digital and non-practical in today’s industry. Many firms have launched digitalization
initiatives, significantly increasing their dependence on digital tools and technologies.
Unfortunately, sustainability is not a strong focus in these initiatives. Therefore, these types of
businesses are not being well remembered and are lagging in industry leadership. However,
there is a high potential for companies to benefit from combining high levels of digitalization
and sustainability. These initiatives can lead to efficiency improvements and innovative
business development. Companies like Siemens, for example, have successfully implemented
solutions that optimize energy consumption and costs through intelligent digital technology
by combining high digitalization and sustainability. [1] This type of innovation is a very good
example of economic and environmental sustainability since it is cheap and green. The right
use of technologies such as AI, ML, IoT, quantum computing, and virtuality will change all
science disciplines, society, and economies. [9]

The European Green Deal focuses on how digital infrastructure, such as data, artificial
intelligence, and digital technologies, can help understand and address environmental issues,
expanding their capacity to contribute to environmental protection, for instance, through AI
systems for remote monitoring of pollution and resource optimization. On the other hand, the
Green Deal does not address environmental challenges. The other regulation, The Artificial
Intelligence Act (AIA), is a proposed regulatory framework by the European Commission
which aims regulating the use of artificial intelligence (AI) within the European Union. The
AIA is focused on removing the privacy and ethical issues. Privacy issues are another subject
that impacts sustainability negatively; this regulation regulates these issues. However, how

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green AIA remains controversial. [12] Regulation of the European Parliament and the
Council states that they will promote and support the creation of codes of conduct that aim to
encourage AI systems' voluntary adherence to various requirements, such as environmental
sustainability, accessibility for individuals with disabilities, involving stakeholders in AI
system design and development, and fostering diversity within development teams, using
clear objectives and measurable key performance indicators to assess their success. [14]
SASB standards about software restrict total energy consumed, and water consumed by
companies and try to prevent privacy issues. It regulates the environmental footprint of a
software company and tries to create a workplace that has a diverse and skilled force. [15]
With the framework of Turkiye, there are not enough regulations for digitalization and
sustainability; however, The National Artificial Intelligence Strategy emphasizes that artificial
intelligence should not harm the environment and should contribute to environmental
sustainability. [13] IREC Certificate is a certificate in which the companies prove they are
producing clean energy. [11] This is very challenging for digital companies because they are
using energy in their data centers a lot.

We can conclude that digitalization has the potential for overcoming environmental
challenges and digitization can be a big step for sustainability if it is used properly. However,
the material basis and disadvantages are heavier than the efficiency of digitization on
sustainability.

Suggestions:

Extreme digitization should be stopped and companies should start to implement sufficient
digitization. The overuse of AI and digitalization can create inaccurate data or e-waste.

New regulations and laws need to be published by the governments to prevent privacy issues
and increases in carbon emission or energy usage. Governments must start to consider the
impacts of digitalization because digital technologies have become one of the most utilized
tools by companies.

Public promotion of sustainability must increase because society doesn't have awareness
about sustainability enough and one of the main concerns for today's world is digital
addiction. Digital companies have potential because their tools like IOT, and AI can create
accurate data for carbon emission, water, and energy usage and companies can inform people.

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Customers also need to be responsible for searching for alternative sustainable options such as
Solarvis which provides affordable solar energy methods.

To prevent privacy issues, digitals and AI should get more training but the training needs to
be done with sustainability methods.

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References

[1] Lichtenthaler, U. (2021). Digitainability: The combined effects of the Megatrends

Digitalization and Sustainability. Journal of Innovation Management, 9(2), 64–80.
https://doi.org/10.24840/2183-0606_009.002_0006

[2] Seele, P., & Lock, I. (2017, February 15). The game-changing potential of digitalization
for sustainability: Possibilities, perils, and pathways. Sustainability Science, 12(2), 183–
185. https://doi.org/10.1007/s11625-017-0426-4

[3] Stepanova, I., Vorotnikov, A., & Doronin, N. (2020). The potential of digital platforms for
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[4] Bohnsack, R., Bidmon, C. M., & Pinkse, J. (2021). Sustainability in the digital age:
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https://doi.org/10.1002/bse.2938

[5] Nishant, R., Kennedy, M., & Corbett, J. (2020). Artificial Intelligence for Sustainability:
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[6] Gupta, S., Langhans, S. D., Domisch, S., Fuso-Nerini, F., Felländer, A., Battaglini, M.,
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[7] The Sustainable Development Goals Report 2023: Special edition. (2023). The
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[8] YouTube. (2021). Smart green world? Making digitalization work for sustainability |
Tilmann Santarius | TEDxTUBerlin. YouTube. Retrieved October 27, 2023, from
https://www.youtube.com/watch?v=lNkaGLMIm_Q.

[9] YouTube. (2020). Sustainability In The Digital Age | Dirk Messner | TEDxBonn.
YouTube. Retrieved October 27, 2023, from https://www.youtube.com/watch?
v=VpFgNZSwm-A.

[10] Osburg, T., & Lohrmann, C. (2018b). In Sustainability in a digital world new
opportunities through New Technologies (pp. 37–51). essay, Springer International
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https://link.springer.com/book/10.1007/978-3-319-54603-2.

[11] Dedeoğlu, M., & Yıldırım, S. (2023, October 26). Interview with Solarvis about
Sustainability and Digitalization. personal.

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[12] Pagallo, U., Ciani Sciolla, J., & Durante, M. (2022). The environmental challenges of AI
in EU law: Lessons learned from the artificial intelligence act (AIA) with its drawbacks.
Transforming Government: People, Process and Policy, 16(3), 359–376.
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[13] Ulusal Yapay Zekâ Stratejisi (UYZS) 2021-2025 - cbddo.gov.tr. (n.d.-b).

https://cbddo.gov.tr/SharedFolderServer/Genel/File/TR-UlusalYZStratejisi2021-
2025.pdf

[14] Lex - 52021PC0206 - en - EUR-lex. EUR. (n.d.). https://eur-lex.europa.eu/legal-

content/EN/TXT/?uri=celex%3A52021PC0206

[15] Download SASB standards. SASB. (2023, July 24). https://sasb.org/standards/download/