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  • Writer's pictureShreya Tandon

ESG's Importance in Developing a Metaverse Strategy

Updated: Oct 8, 2022

The metaverse is a new layer of the internet that is rich in virtual and augmented worlds. Simultaneously, the environmental, social, and governance (ESG) movement is proposing new criteria by which investors will analyze corporations, analyzing corporate performance in accordance with ESG principles. Companies creating metaverse plans would be wise to address the potential impact of new technologies on ESG goal execution, as well as how to give proof on each metric.

The Environmental Consequences of Metaverse Adoption Immersive experiences are available in the metaverse. Users may design their own worlds and even pick how natural laws apply in certain universes. However, no matter how alien these apps appear to the user, they rely on vast computational operations with real-world implications.

Investors are increasingly demanding environmentally friendly businesses. However, data center processing consumes energy, which increases carbon footprints. Artificial intelligence and cryptocurrency, for example, are key metaverse technologies. According to one recent study, training a single AI model may produce up to 626,000 pounds of CO2 equivalent. 1 That is approximately five times the typical American car's lifetime emissions. According to one study, "a typical Ethereum transaction requires 60% more energy than 100,000 credit card transactions, whereas a typical Bitcoin transaction consumes 14 times more energy." 2 While data centers and cryptocurrencies are drastically altering to lower their carbon footprint, environmental problems remain and must be addressed.


Virtual reality and augmented reality, on the other hand, are great for distant work and collaboration. When deployed properly, they may significantly minimize transportation-related carbon emissions from a national or worldwide workforce. Furthermore, several businesses are developing "digital twins" of their warehouses or manufacturing floors. Companies that can replicate industrial activity on a large scale can simplify operations to produce more with less natural resources, decrease industrial waste, and limit industrial accidents.

The Social Impact of Metaverse Adoption

Investors also demand that firms be socially responsible, notably with regard to labor. "Digital twins" can have a significant influence on workplace safety, which is an important component of social stewardship. One company, for example, constructed a digital doppelganger of its factory floor in the metaverse after producing millions of automobiles with numerous variations. The organization was able to visually replicate what it's like to have 300 automobiles going on a conveyor belt and establish which pathways throughout the facility are the safest for employees to take during a shift by doing so.

Simultaneously, businesses will need to take deliberate measures to ensure that their metaverse properties are inclusive, safe, and promote organizational values. Companies have learned through a torrent of Americans with Disabilities Act litigation involving websites and applications that virtual properties must account for very real impediments that some users will face and enable suitable adaptive technologies. To avoid increasing the digital gap, disparities in access to new technologies among various populations must be addressed. The capacity to modify avatars will raise fresh questions about diversity and inclusion. Finally, because some metaverse technology incorporates haptics (the sensation of touch), limiting the possibility of metaverse sexual harassment will be critical.

The Governance Implications of Metaverse Adoption

All of these threats and possibilities must be managed. Investors demand that management be accountable, transparent, diversified, and experienced from the top down. As part of metaverse risk governance, several organizations are appointing a Chief Metaverse Officer or its equivalent. Others distribute responsibility for metaverse adoption across current stakeholders. For most businesses, any method may be justified as long as the advantages and downsides are addressed thoughtfully and appropriately.


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