Innovative ESG Management Strategies Utilizing Digital Twins

With the recent rapid climate changes and the increasing impact of corporate activities on society and the environment, it has become essential to consider non-financial factors, including social and environmental activities, in evaluating companies. In 2015, the United Nations Development Summit established the Sustainable Development Goals (SDGs) aimed at achieving harmonious development of the economy, society, and ecosystem worldwide by 2030. Particularly, 'Environmental, Social, and Governance (ESG)' has become a crucial concept for the Sustainable Development Goals. Consequently, many global companies are striving to improve their ESG performance through digital innovation, and one of the key technologies being utilized for this purpose is the digital twin. This article explores the benefits and utilization strategies of digital twins for ESG management.

What is ESG Management?

ESG(Environmental, Social, Governance) is a set of criteria used to measure a company’s impact on society and the environment, as well as to assess its transparency and accountability. ESG factors are utilized to evaluate a company’s ethical practices and overall sustainability. The three components are as follows:

Environmental

This aspect evaluates the impact of a business on the environment and the measures taken to manage environmental risks. The assessment includes factors such as:

• Carbon emissions and climate change planning
• Waste management and recycling practices
• Energy usage management and conservation efforts
• Compliance with environmental policies

Social

This component focuses on evaluating the impact of a company on culture and society, including:

• Employee diversity and inclusion
• Health and safety standards for employees
• Community engagement and social impact initiatives
• Data privacy protection for customers and other stakeholders
• Responsible sourcing and fair policies within the supply chain

Governance

This aspect assesses how a company manages its processes related to management, decision-making, and reporting, including:

• Board structure, including diversity
• Board independence
• Anti-corruption policies and practices
• Transparency in financial reporting and auditing

These criteria help in evaluating a company's commitment to ethical practices and sustainable growth.

Digital Innovation for Achieving ESG Goals

Through digital innovation, companies can efficiently and effectively collect and analyze large volumes of data, track, and improve various indicators related to their social and environmental impact. Technologies such as cloud computing can enhance resource usage efficiency, thereby reducing overall energy consumption. By leveraging technologies that support remote work, such as digital twins, companies can increase overall operational efficiency and reduce carbon emissions from on-site travel.

Digital tools enable the visualization of various data, which can be shared with stakeholders, providing transparency and visibility into business operations and offering new insights. Additionally, digital tools allow for the secure storage and management of critical data, enabling companies to make informed decisions based on accurate data when developing policies and strategies.

Digital Twins for ESG Management

A digital twin is a virtual model that replicates real-world objects, properties, environments, and more, and has rapidly advanced with the development of IoT, cloud computing, and AI technologies. The concept of digital twins was pioneered by the American electronics company General Electric (GE) and is utilized in various fields such as manufacturing, aviation, construction, healthcare, energy, and urban planning. By using digital twins, data can be collected to simulate situations that might occur in the real world, allowing for the prediction of outcomes in advance.

Digital twins are gaining significant attention from many companies for their potential in ESG management. According to Capgemini's "Digital Twins Survey, 2021," 57% of the surveyed companies (800 organizations) believe that digital twin technology is crucial for ESG management. The use of digital twins offers benefits such as reduced prototype production, minimized errors in production processes, and improved equipment efficiency, ultimately optimizing energy consumption and reducing greenhouse gas emissions. Global management consulting firm Accenture predicts that widespread adoption of digital twins could reduce carbon emissions by 7.5 million tons by 2030. As such, the implementation of digital twins is recognized as a valuable tool for enhancing existing business infrastructure and production processes to meet ESG requirements.

Benefits of Digital Twins for ESG Management

1. Enhanced Environmental Monitoring and Management

   Digital twins enable real-time monitoring and simulation of environmental data, supporting companies in minimizing their ecological footprint. By creating virtual replicas of physical assets and processes, companies can predict and mitigate potential environmental impacts, optimize resource usage, and ensure compliance with environmental regulations.

2. Improved Social Impact Analysis
   

   Digital twins can simulate the social impact of business operations and projects. This includes assessing the effects on local communities, optimizing workforce management, and ensuring better health and safety conditions. Companies can use these insights to make informed decisions that benefit both their business and the communities they operate in.

3. Strengthened Governance and Transparency
   

   Implementing digital twins can enhance transparency and accountability in corporate governance. By providing a comprehensive, real-time view of operations, digital twins facilitate better risk management, improve decision-making processes, and ensure compliance with regulatory requirements.

Digital Twin Beamo for ESG Management

The digital twin Beamo is a 360-degree photo-based digital twin solution that provides vivid on-site situations and information without the need to visit distant or difficult-to-access locations physically. By utilizing Beamo, companies can reduce the time and costs associated with site visits and minimize carbon emissions from travel, thereby practicing ESG management.

Beamo functions by mounting a 360-degree camera and a smartphone on a tripod and carrying it around the site, where it automatically captures images. Even non-experts can start using it immediately after just ten minutes of training, making it an easily adoptable solution for companies pursuing digital transformation.

Companies can share the 360-degree views of the site created with Beamo with various internal and external stakeholders, ensuring smooth communication and transparency in project operations. By integrating IoT sensor data within the digital twin, companies can monitor and optimize energy and resource consumption for facilities and equipment. Additionally, identifying and preventing potential hazards within the digital twin enhances employee safety.

Harnessing Digital Twins for Enhanced ESG Management and Corporate Sustainability

Digital twins are a crucial technology for realizing ESG management, offering various benefits such as optimized energy consumption, efficient resource management, and reduced carbon emissions. Solutions like Beamo, in particular, reduce the need for site visits, lower carbon emissions, and enhance operational transparency and efficiency through data-driven decision-making. Such digital innovations strengthen corporate sustainability and contribute to achieving ESG goals.