Digital ecosystems are reshaping how businesses operate and address global challenges. They combine technology, partnerships, and shared resources to improve efficiency and create solutions for resource management and sustainability goals. However, they also bring challenges, including energy consumption, environmental impact, and cybersecurity risks.

Key takeaways:

• Digital ecosystems can optimize resources, support circular economies, and improve supply chain transparency.

• Technologies like AI, IoT, and blockchain play critical roles but come with energy and resource challenges.

• Generative AI, while advancing automation, has a high environmental cost due to energy demands.

• Data centers' energy use is expected to rise sharply, potentially reaching 7% of global electricity by 2050.

• Businesses integrating digital ecosystems with sustainability strategies see higher revenue growth and operational efficiency.

The article emphasizes balancing technological progress with environmental responsibility, collaboration, and expert guidance for long-term success.

Digital sustainability: Ecosystem approach in business

Research Findings on Digital Ecosystems and Sustainability

Recent studies highlight how digital ecosystems can drive sustainability, aligning with the Digital-Sustainability Ecosystem framework. The United Nations has linked digital technologies to 70% of Sustainable Development Goal (SDG) targets [2]. However, while these systems offer significant benefits, they also bring environmental challenges. Below, we explore how digital ecosystems contribute to sustainability and the hurdles they present.

5 Ways Digital Ecosystems Support Sustainability

Digital ecosystems transform how organizations operate and collaborate, driving sustainability through several key mechanisms:

• Resource efficiency: Digital tools allow organizations to achieve more with fewer resources. For instance, energy companies use smart grid technology to optimize electricity distribution, support renewable energy production, and minimize waste [2].

• Dematerialization: Technologies like the Internet of Things (IoT) enable businesses to monitor energy usage and identify inefficiencies without adding physical infrastructure [2].

• Circular economy enablement: Digital platforms encourage resource reuse. For example, e-commerce and social media channels provide spaces for consumers to trade or resell unused items, reducing waste [2].

• Innovation acceleration: Artificial intelligence (AI) is improving industrial processes by cutting energy consumption and enhancing decision-making. This helps both businesses and policymakers advance sustainable practices [2].

• Digital collaboration: Tools like smart packaging with QR codes and blockchain systems improve supply chain transparency, promoting responsible production and consumption [2].

While these advancements are promising, emerging technologies like generative AI also introduce new environmental challenges.

Generative AI: A Double-Edged Sword

Generative AI offers groundbreaking potential but comes with steep environmental costs. On one hand, it’s projected to play a significant role in automating digital ecosystems, with data centers expected to meet over three-quarters of global power demands by 2027 [1][4].

On the other hand, the energy required to train AI models is immense. Training GPT-3, for example, consumed 1,287 megawatt hours of electricity and produced about 552 tons of carbon dioxide [5]. The rapid release of new AI models exacerbates this issue, as resources are spent on training systems that quickly become obsolete. A single generative AI training cluster can consume seven to eight times more energy than standard computing tasks, and even a simple ChatGPT query uses five times more electricity than a basic web search [5].

Energy and Water Costs of Digital Systems

The environmental footprint of digital ecosystems goes beyond electricity consumption, extending to water use and other resources. Data center electricity demand is expected to double from 2022 to 2026, reaching over 1,000 TWh, and could rise to 3,750 TWh by 2050 - 7% of global energy consumption [1].

Cooling these centers requires vast amounts of water - approximately two liters per kilowatt-hour. For example, Google used 5.2 billion gallons of water in 2023 alone. Between 2021 and 2022, Google’s water usage increased by 20%, while Microsoft’s rose by 34% [5][6][7].

"The demand for new data centers cannot be met in a sustainable way. The pace at which companies are building new data centers means the bulk of the electricity to power them must come from fossil fuel-based power plants."
– Noman Bashir, Computing and Climate Impact Fellow at MIT Climate and Sustainability Consortium (MCSC) [5]

Device manufacturing also plays a major role, accounting for 80% of the carbon footprint of digital technologies. Data centers and networks contribute 16% and 5%, respectively. In France, 79% of the environmental impact of digital technology comes from device production [8].

Globally, data centers are responsible for 45% of greenhouse gas emissions within the information and communications technology (ICT) sector. The tech industry as a whole contributes 2–3% of global emissions. Alarmingly, the environmental impact of digital technologies is projected to increase by 45% by 2030 and could triple by 2050 [8][9].

Impact on Business Models

Digital ecosystems are transforming the way businesses operate, reshaping core models by integrating sustainability into their frameworks. These ecosystems are not only creating new revenue streams but also offering a competitive edge in an increasingly digital world.

Business Opportunities

The financial potential of leveraging digital ecosystems for sustainability is impressive. Companies that align their ecosystems to deliver value across their networks - customers, suppliers, competitors, and distributors - report enterprise value gains 7 percentage points higher than the global average. For a business with a US$1 billion return on investment, this translates to an additional US$70 million in value [11].

Digital platforms enhance efficiency by seamlessly connecting supply with demand while also promoting positive social and environmental outcomes [10]. This connectivity has enabled businesses to diversify revenue streams and innovate their models. Organizations with a strong ecosystem focus outperform others by 20 percentage points in customer personalization and are 20 percentage points more likely to expand into new markets or industries [11].

Several companies illustrate the success of ecosystem-driven innovation:

• PayPal: Its Commerce Platform supports over 100 currencies, simplifying compliance, reducing fraud, and opening up new income opportunities [11].

• Walmart: The retailer's online marketplace capitalizes on relationships with suppliers, distributors, and customers, generating revenue through ad sales, financial services, healthcare, and food services, all while boosting online sales [11].

• Procter & Gamble: By collaborating with external innovators - including scientists and engineers - the company has increased its R&D productivity by nearly 60%. This approach has led to the creation of products like Olay Regenerist, Swiffer Dusters, the Crest SpinBrush, and the Mr. Clean Magic Eraser [11].

The circular economy is another area ripe for growth, with projections showing it could expand from US$696 billion in 2024 to US$2.88 trillion by 2031 [15]. Digital technologies play a key role in this transition, enabling circular practices and paving the way for fresh value propositions. However, these opportunities come with their own set of challenges.

Risks and Challenges

While digital ecosystems offer immense potential, they also bring risks that demand careful management. Around one-third of platform ecosystems fail due to poor oversight, highlighting the need for strategic planning and execution [11].

Data security and privacy are major concerns. Organizations managing large volumes of environmental and social data face increasing cybersecurity threats, particularly targeting critical sustainability infrastructure. These threats can lead to severe consequences, such as environmental harm and public safety risks [13].

Ethical issues also arise, especially with AI systems. Algorithmic biases can distort environmental analyses and lead to unfair resource distribution [13]. Additionally, coordinating multiple digital partnerships often requires the development of new governance models to handle the complexity.

Systemic risks tied to digital dependencies and supply chain vulnerabilities are another challenge. Geopolitical tensions, state-sponsored cyberattacks, disinformation campaigns, and supply chain disruptions test the resilience of digital ecosystems [12]. A failure in one part of the system can cascade throughout the network.

"Digital Ecosystem Resilience is fundamentally about ensuring digital systems can withstand shocks and continue to function effectively." – Sustainability Directory [12]

Even as digital tools bring environmental benefits - like Google's machine learning algorithms, which have cut data center energy use by 40% [14] - the supporting infrastructure still consumes significant energy and resources. The rapid pace of technological advancements can also lead to increased digital waste due to premature obsolescence [13].

To navigate these risks and seize the opportunities digital ecosystems offer, businesses should consider working with sustainability consultants to develop resilient strategies.

Case Studies: Technology-Driven Collaborative Ecosystems

Building on earlier discussions about how digital ecosystems reshape business models, real-world examples demonstrate their ability to deliver measurable environmental and economic advantages. By leveraging IoT, AI, and blockchain, these ecosystems are proving to be powerful tools for sustainability.

Examples of Successful Ecosystem Applications

These case studies show how digital ecosystems translate into tangible sustainability outcomes across various sectors.

Energy Management and Smart Infrastructure
Green Haven Hotel implemented an energy management platform that uses real-time analytics and automation, cutting energy consumption by 25% and reducing CO₂ emissions by 250 tons annually [16]. On a larger scale, San Diego's smart grid initiatives achieved a 20% reduction in greenhouse gas emissions over five years, while Amsterdam's upgraded electric grid improved energy efficiency by 17% [16].

Supply Chain Optimization and Waste Management
Real-time data analytics is transforming supply chains and waste management. For instance, Unilever has cut greenhouse gas emissions by 37% since 2010 by optimizing its supply chain with advanced analytics [16]. Ecube Labs' smart waste solutions have increased collection efficiency by 30% and boosted recycling participation rates by over 40% in just one year [16]. Meanwhile, Maersk and IBM's blockchain platform, TradeLens, ensures tamper-proof data flow and enhances supply chain transparency, protecting commercial confidentiality [19].

Agriculture and Resource Management
Precision monitoring and automated irrigation, powered by smart sensors, have reduced agricultural water usage by up to 50% [16]. In Taiwan, IoT-AI systems in milkfish polyculture farms have optimized water conditions, reduced fish mortality, and increased productivity [17].

Predictive Analytics and Market Intelligence
AI is also being used to predict market trends. In 2019, London-based startup Arkera utilized AI to analyze social media, parliamentary transcripts, and local news, successfully predicting the Brazilian legislature's approval of pension reforms weeks ahead of the vote. This insight allowed hedge funds to act early, resulting in significant financial gains [19].

Comparison of Collaborative Models

These comparisons emphasize the importance of tailoring digital strategies to specific sustainability objectives. For example, smart building technologies can cut energy use by 30–50% [16]. Factories using real-time energy monitoring have reduced electricity costs by 20% in their first year, while sensor integration in inventory systems has lowered overhead by 15% [16]. In renewable energy, solar farms equipped with smart sensors have improved efficiency by 15%, and wind turbines have seen a 20% increase in uptime thanks to predictive maintenance [16].

"AI provides foresight. IoT supplies insight. Blockchain ensures integrity. Together, they form a digital ecosystem that enables a closed-loop, low-impact model of operations - aligning with the circular economy and decarbonisation agendas."

• Fredie More Franco Pablo [18]

When adopting digital ecosystems, organizations should align their strategies with sustainability goals, assess their current infrastructure, and allocate resources wisely. Evidence suggests that combining multiple technologies often yields the best results, though this approach demands careful planning and execution.

Recommendations for Organizations

The research findings and case studies highlight actionable strategies for organizations aiming to balance digital growth with sustainability goals. Achieving this requires careful planning, active stakeholder involvement, and guidance from experts who understand the intricate link between technology and environmental responsibility.

Invest in Energy-Efficient Infrastructure

As digital infrastructure grows, energy efficiency must remain a priority. Consider this: data centers have expanded by 12% annually since 2017, and AI technologies consume 33 times more energy than specialized software. For perspective, a single ChatGPT request uses 10 times the electricity of a Google search [23]. Conducting a digital audit is a smart first step to identify energy-draining devices and establish clear optimization metrics [21].

Take inspiration from Google Cloud. Back in 2017, it became the first major company to match its energy use with 100% renewable energy. By 2023, it committed to running its global data centers entirely on carbon-free power [21]. Organizations can follow suit by adopting energy-efficient devices, encouraging employees to power down unused equipment, and implementing Digital Asset Management systems to consolidate files and reduce storage needs [22].

Designing with efficiency in mind can also yield major environmental benefits. For instance, adopting a mobile-first design can reduce the data users need to download, while optimizing web pages to load faster and use less energy [20][22]. Even small actions have an impact - if every American sent one fewer email, it could save about 18,100 tons of carbon annually [21].

Build Collaboration and Transparency

Digital ecosystems thrive when trust and collaboration are at their core. Companies that foster strong partnerships within these ecosystems are better positioned for success. Transparent communication and consistent stakeholder engagement help align diverse interests around shared sustainability goals [26].

Breaking down internal silos and forming partnerships across industries can unlock new expertise, markets, and innovative solutions [27]. Open communication and shared objectives strengthen these relationships, improving resource management, reducing waste, and advancing circular economy models [25].

Consider real-world examples like Madaster, a platform that assigns unique identities to building materials, enabling tracking, valuation, and reuse over a building's lifecycle [24]. Similarly, Provenance uses blockchain technology to trace product origins and impacts, fostering secure and collaborative supply chains [24]. Establishing shared infrastructure, agreed standards, and principles for data exchange further reinforces trust and collaboration across ecosystems [26].

Work with Expert Consultants

Navigating the complexities of digital sustainability often requires external expertise. Over 70% of corporate leaders admit to lacking ESG (Environmental, Social, and Governance) expertise [29]. Expert consultants, such as Council Fire, bring proven strategies and stakeholder engagement techniques that drive eco-digital transformation [28][30].

The financial benefits of expert guidance are clear. Companies leading in eco-digital practices report 8% revenue growth compared to 5% for those lagging behind. Additionally, their earnings before interest and taxes (EBIT) as a percentage of revenue are 12% - 4 points higher than their less proactive counterparts [29]. Beyond financial gains, eco-digital transformations can cut carbon emissions by 30% to 70% [29][31].

When seeking consultants, look for professionals with a track record of success, strong client endorsements, and a tailored approach to your organization’s challenges [28]. Firms like Council Fire specialize in integrating profitability with positive environmental and social impacts through strategic planning and effective communication.

Conclusion

Digital ecosystems hold the potential to advance environmental progress - provided they are thoughtfully aligned with sustainability goals. These networks of interconnected technologies, organizations, and stakeholders can deliver meaningful results when approached with a strategic mindset.

Take Google's machine learning algorithms, for example. They managed to cut data center cooling energy use by 40%. Similarly, Schneider Electric's Singapore facility operates with energy consumption levels seven times lower than comparable sites, thanks to digital optimization [14]. These examples highlight how digital technologies, when designed with sustainability in mind, can lead to transformative outcomes.

However, the challenges cannot be ignored. By 2050, energy consumption from digital ecosystems is expected to hit 3,750 TWh - equivalent to 7% of global electricity use [1]. Generative AI alone is projected to account for over three-quarters of global data center power demands by 2027 [1]. These staggering figures call for immediate and strategic action.

To move forward, innovation must be paired with accountability. Companies need to embrace the efficiency and transparency that digital ecosystems offer while addressing their environmental footprint. This means prioritizing renewable energy, refining AI models for energy efficiency, and fostering collaboration across industries.

Leadership and teamwork across sectors are essential. The most impactful sustainability initiatives arise from partnerships that dismantle silos, share knowledge, and unite diverse interests around shared environmental objectives. For instance, companies like SolarShift demonstrate how digital solutions can support underserved communities while promoting sustainable development [14].

It’s important to recognize that digital ecosystems, by themselves, are neither inherently sustainable nor unsustainable. They amplify the intentions of those who design and manage them. Organizations that integrate sustainability into their digital strategies - through energy-efficient infrastructure and expert planning - position themselves to not only mitigate risks but also create positive environmental change.

"Digital Ecosystem Sustainability is about ensuring our digital world is built and operated responsibly for the long term."

• Sustainability Directory [3]

The opportunity to make a difference is immense, but action cannot wait. As digital technologies continue to reshape our world, the decisions made today - about energy use, collaboration, and responsible innovation - will determine whether these ecosystems contribute to environmental progress or deepen ecological challenges.

FAQs

How can businesses align the environmental impact of digital ecosystems with their sustainability goals?

To reduce the environmental impact of digital ecosystems while working toward sustainability goals, businesses can use digital tools to promote sustainable practices and encourage collaboration. By embedding these ecosystems into their operations, companies can simplify workflows, cut down on resource use, and develop solutions that are mindful of the environment.

Focusing on energy-efficient technologies, improving data management, and using digital infrastructure responsibly are also key steps to lowering carbon footprints. With careful planning and execution, organizations can strike a balance between benefiting from digital advancements and staying aligned with their sustainability targets.

What environmental challenges are linked to the energy use of generative AI systems?

Generative AI systems demand substantial electricity, which can lead to higher carbon emissions and put added strain on power grids. The data centers that support these systems play a significant role in global energy consumption and emissions. On top of that, they often rely on vast amounts of water for cooling, which adds another layer of environmental impact.

Tackling these issues calls for creative approaches, like boosting energy efficiency, shifting to renewable energy sources, and refining AI models to use fewer resources.

How can organizations use digital ecosystems to boost efficiency and achieve sustainability goals?

Organizations can make the most of digital ecosystems by linking their digital tools and platforms into a unified, collaborative network. This connected approach helps streamline operations, make better use of resources, and reduce environmental impact. For instance, integrating data from multiple systems can lead to smarter decision-making, better resource management, and solutions tailored to specific industry challenges - all while promoting sustainable growth.

However, to fully realize these benefits, it's important to tackle challenges like electronic waste and high energy usage. Using energy-efficient technologies and implementing responsible e-waste management strategies can ensure that digital transformation not only boosts operational efficiency but also aligns with environmental goals.