ESG CONSIDERATIONS IN METAVERSE

4 min readJan 10, 2022

Written by Dr. Kate Kwan, ACH Worldwide Limited

Metaverse

In July 2021, the magic word — “Metaverse” has suddenly come into the spotlight when Mark Zuckerberg, CEO of Facebook announced his plans to shape the company into a Metaverse company and in October rebranded Facebook into META.

Metaverse is not an invention by Facebook, it has been well-known from science fiction “Snow Crash” in 1992 [1], and some even refers it as an idea from the movie “Matrix” to the extent that accessing the internet will no longer be dependent on mobile phones but can be done using one’s own body.

Diagram 1: Science Fiction — Snow Crash by Neal Stephenson published in 1992

Metaverse is a new digital world for people to have an immersive experience. People can exist as digital characters (avatars) that can travel in a 3-dimensional digital space to join gatherings, exercise, shop, gamble and even play in the Metaverse. Merchants can set up e-shops in the Metaverse, hire shopkeepers and sell goods as well as services to avatars-human beings. Companies and organizations can schedule meetings in the Metaverse regardless of their actual locations [2].

ESG in Considerations

With much excitement in moving into the new era of Metaverse, it must be accompanied with related considerations on Environmental (E), Social (S), and Governance (G).

Environmentally, with heavy network traffic and data processing it would increase electricity consumption. ETLA Economic Research has estimated that the power consumption of the ICT industry could increase to upto 14% of the global annual power consumption in a decade’s time. [3]. This estimate is based on existing technologies and has not taken into account the increase in data and power consumption from new technologies in AI, IoT, VR, Metaverse etc.

On the other hand, there will be fewer material wastage as virtual buildings and infrastructure are being built in the virtual world, as opposed to the abundant consumption of resources and building materials in the physical world. As meetings and social activities are being held in the Metaverse, less traveling is expected and thereby reducing carbon emissions from physical commute via different transportation means. Transport accounts for around 20% of global carbon dioxide emissions (24% if only considers CO2 emissions from energy) and road travel accounts for 75% of transport emissions [4]. Benefits on the environment from the development of Metaverse should hopefully be able to offset the drawbacks.

Diagram 2: Global CO2 Emissions from Transport [4]

Based on global transport emissions in 2018, which totaled 8 billion tonnes CO2.

Socially, Metaverse can break down social silos given the virtual world is theoretically be opened to everyone. Platforms that provide the Metaverse are likely to accumulate enormous volumes of data about the behavior of their users. Customized user experience can be made for users from different income group, age, gender, skin color, and accessibility. This kind of segregation of perceived reality could strengthen societal silos. Everyone could become or feel “equal” in Metaverse. This builds on the assumption that the aforementioned various groups could enter the Metaverse without much constraints such as ability and resources (5G, VR, computers). Again this would take time to populate. Currently, only about half of the world’s population have access to internet [5]. As the population in the Metaverse grows, it prospers the growth and development of the virtual world.

As the development of metaverse is still in an early stage, it will take time for governments to set specific rules and regulations on the governance of Metaverse. Currently, companies developing Metaverse should set their best practices, strategies for responsible technology and data collection. Instead of creating a virtual world of evils, we hope to have a perfect world of sustainable Metaverse.

Live long and prosper [6].