When it comes to sustainability, the Internet of Things (IoT) stands out as a beacon of promise and paradox. As we chart a course towards a more sustainable future, IoT technologies emerge as both a key ally and a formidable challenge. How to advance sustainability goals while mitigating environmental footprints in the age of IoT? What are the strategic implications for corporations?Promises of IoT contribution to solving environmental issues are numerous. The Internet of Things (IoT) has a significant positive impact on sustainability by improving water management, energy efficiency, and combating climate change. IoT devices help optimize water usage in agriculture by collecting real-time data for efficient irrigation, leading to water savings and increased crop productivity. Additionally, IoT technology enhances energy efficiency by automating sensors, algorithms, and communication networks to anticipate electricity demand, promote renewable energy use, and reduce CO2 emissions. Furthermore, IoT contributes to sustainability by monitoring air and water pollution, promoting the use of electric vehicles, and enabling early detection of environmental hazards like forest fires. Overall, IoT plays a crucial role in advancing sustainability goals by fostering resource efficiency, reducing waste, and supporting eco-friendly practices across various sectors.
However, the Internet of Things exerts a strong direct pressure on the environment. First, the production of connected devices and sensors requires water, metals, rare raw materials and energy to manufacture and transport them, … Second, connecting the device to the cloud requires also energy and material. Third, storing the data in data centres, though more efficient for the environment than personal computers, requires massive water and energy. Last, running algorithms on the data to make predictions or decisions also has a major impact. The International Energy Agency says data centres, cryptocurrencies and AI accounted for almost 2 per cent of global power demand in 2022 — and this could double by 2026 to nearly match the electricity consumption of Japan. One preprint suggests that, globally, the demand for water for AI could be half that of the United Kingdom by 2027.
In addition, the positive impact of the Internet of Things (IoT) on sustainability can be offset by rebound effects, where the benefits of efficiency improvements are counteracted by increased consumption or other unintended consequences. Rebound effects can occur directly, where the use of IoT solutions increases due to their accessibility, or indirectly, through efficiency improvements leading to increased consumption. For example, despite energy efficiency gains in transportation and other sectors, overall energy consumption and pollution increased due to factors like a rise in the number of cars, illustrating a rebound effect. Moreover, the concept of induction effects highlights how new technologies can lead to increased resource consumption beyond just rebound effects, emphasizing the need for a comprehensive analysis of environmental implications when considering technological advancements. These rebound effects and induction mechanisms underscore the importance of balancing efficiency strategies with sufficiency strategies to achieve sustainability goals effectively.
5 propositions to overcome the challenge. IoT applications contribute solving environmental issues but some benefits are offset by rebound effects and the direct negative impact of the IoT value chain is significant. Securing how IoT can have a global positive environmental impact isn’t an easy problem to solve. At a corporate level, in the research by Nishant, Kennedy and Corbett (2020) about AI and sustainability, 5 propositions are made to overcome the challenges:
- adopt a multi-level view to capture the complexity of the real world (and limit rebound effects for example),
- use a system dynamics perspective to capture interactions and feedback loops among the technology, users and other stakeholders,
- follow a design thinking approach to minimize potential unintended consequences and improve the effectiveness of AI solutions,
- understand psychological and sociological underpinnings of human response for effective long-term solutions,
- examine the economic value of AI for sustainability to develop our understanding of how AI differs from conventional IT.
Strategic implications.
The dual-edged nature of IoT’s impact on sustainability—its potential to advance sustainability goals on one hand, and its environmental footprint and unintended consequences on the other—requires a nuanced strategy. Corporations must embrace a holistic approach that goes beyond the mere implementation of IoT solutions for efficiency gains. This approach should include investing in the development of more sustainable IoT devices, from their production to end-of-life, ensuring that these devices are not only energy and resource-efficient but also designed for longevity and recyclability.
Furthermore, strategic corporate responsibility involves the deployment of IoT technologies in a manner that carefully considers and actively mitigates rebound and induction effects. This means integrating IoT solutions with a clear vision of promoting sustainable consumption patterns and not merely displacing environmental costs. For example, leveraging IoT to enhance the efficiency of energy use in operations should be complemented by measures that ensure these savings are not offset by increased energy demand elsewhere in the system.
To navigate these challenges successfully, corporations should foster strong collaborations with stakeholders across the value chain, including technology developers, regulatory bodies, and end-users, to co-create standards and practices that prioritize sustainability. Additionally, companies must invest in data analytics capabilities to deeply understand the environmental impacts of their IoT deployments and to innovate in ways that genuinely reduce their ecological footprint.
In sum, the strategic implications for corporations involve embracing a leadership role in sustainable innovation, where the focus is not only on harnessing IoT technologies to improve operational efficiency but also on contributing to a sustainable future by addressing the complex interplay of technology, consumption, and environmental stewardship. This requires a forward-looking strategy that anticipates and navigates the challenges of technological advancement, ensuring that sustainability is embedded in the core of business operations and corporate ethos.
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