Green Transformation (GX) is a transformation of economic and social systems towards a decarbonized society, fostering innovation and new investment. Digital Transformation (DX) serves as an essential partner in improving the efficiency and effectiveness of GX, and the combined evolution of GX and DX is expected to become the dominant trend in future business practices. Information and communication technology (ICT) supports data analysis and efficiency improvements in areas such as climate change mitigation, climate change adaptation, the circular economy, and nature positive initiatives. ICT technologies that contribute to solving environmental challenges include AI, digital twins, remote sensing, IoT, robotics, and blockchain. The application of ICT in GX is expected to promote efficiency, accuracy, monitoring and forecasting, optimization, automation, and information sharing.

1. Introduction

Green Transformation (GX), a reform of the economic and social system aimed at achieving a decarbonized society, is positioned as both an environmental measure and an industrial policy for Japan to survive in the global market. Innovation and new investment are encouraged by businesses and others under the auspices of the government. Digital transformation (DX) is a key element in making GX more efficient and effective, and for enterprises, moving forward with DX and GX as a single entity will become the mainstream of future business. In this paper, we will provide a bird’s eye view of the prospects for GX through the utilization of information and communication technology (ICT).

2. The Role of ICT in Addressing Environmental Issues

Society and the economy are fundamentally dependent on the natural environment. In the 20th century, social and economic systems were structured around the unilateral extraction of benefits from nature. However, 21st-century systems must establish global mechanisms that promote the sustainable use of natural resources while using knowledge, technology, and assets to protect and conserve the environment (Fig. 1). In this transformation, ICT plays a crucial role. For example, in terms of economic activity, optimal decision making through the use of AI and digital twins can facilitate a system in which technology and funds are channeled into environmental protection. From a societal perspective, ICT can visualize, simplify, and automate actions, fulfilling people's desire to protect the environment and fostering initiatives that promote environmental responsibility. In addition, ICT enriches communication, creates collaborative spaces that transcend borders and time zones, and helps harness collective intelligence to address environmental issues.

In addressing environmental challenges, ICT follows a significant flow: visualization, analysis, and prescription. In the visualization phase, we can quantify the current situation by visualizing the environmental impact of data and linking that data. In the analysis phase, technologies such as AI are employed to process this data, enabling the identification of causal relationships and predictions about future developments. In the prescription phase, all types of processes are automated by DX, enabling efficient and effective environmental impact reduction measures.

3. The Expected Role of ICT in Each Area of GX

ICT is expected to play a critical role in various aspects of GX, including climate change mitigation, climate change adaptation, and the circular economy.

3.1 Climate Change Mitigation

The Paris Agreement, established under the United Nations Framework Convention on Climate Change (UNFCCC), provides a global framework for reducing greenhouse gas (GHG) emissions. Its goal is to limit the increase in global average temperatures to well below 2°C above pre-industrial levels, with a more ambitious goal of limiting the increase to 1.5°C. In support of this global initiative, Japan has pledged to achieve carbon neutrality by 2050. ICT-enabled solutions are expected to play a critical role in mitigating climate change, particularly in addressing energy management challenges. For example, the World Economic Forum (WEF) estimates that integrating ICT into mitigation strategies could potentially reduce greenhouse gas emissions from high-emitting sectors such as energy, materials, and mobility by 20% by 2050.¹⁾ In particular, AI will greatly assist mitigation efforts in the energy, GHG monitoring, manufacturing, materials development, food production, and transportation sectors. For example, in the power sector, AI-based weather forecasts will be able to predict the output of variable power sources, such as solar and wind, and optimize the operational planning of power systems based on these forecasts. It will also be possible to remotely monitor anomalies in the power transmission infrastructure for these renewable energy sources.²⁾

In the development of materials that support technologies that enable renewable energy and storage batteries, materials informatics can be used to accelerate the development of new materials. By allowing AI models to learn from a large database of previously tested materials, it is expected that they will learn the quantitative relationship between atomic structure and physical properties, accelerating materials development while maintaining and improving international intellectual property competitiveness.

3.2 Climate Change Adaptation

The year 2024 was the hottest year on record, with global temperatures exceeding 1.5°C above pre-industrial levels - the threshold set as a target in the Paris Agreement. Scientists warn that temperatures exceeding 1.5°C to 2°C above pre-industrial levels could cross the tipping point and lead to a domino effect of accelerated climate change. Even with ambitious mitigation efforts, the increasing severity of typhoons and extreme flooding cannot be stopped. For this reason, implementing climate adaptation measures alongside mitigation strategies is essential to building a more resilient society in the face of escalating climate-related disasters. ICT plays a crucial role in climate adaptation, offering several critical capabilities.³⁾ First, it is possible to efficiently and accurately collect data that will form the basis for predictions and countermeasures. This includes using satellites to collect data about the entire planet and specific regions, using IoT to collect local data, and using AI to analyze and use data. Second, it can lead to better decision making in disaster response.⁴⁾ This includes AI-based predictions of future climate change impacts, AI-based prioritization of adaptation measures, and early warning systems in the event of a disaster. Third, disaster response can be optimized in real time. This includes identifying shipping routes that reduce the risk of climate change and optimizing evacuation routes during climate disasters. Finally, ICT promotes behavioral change by increasing stakeholder engagement in adaptation efforts. Technologies such as augmented reality (AR) and virtual reality (VR) can simulate the effects of climate change, turning abstract concepts into intuitive experiences that encourage proactive action.

3.3 Circular Economy

The circular economy, which integrates primary (arterial) and recycling (venous) industries, is being promoted not only as an environmental policy but also as a resource strategy. In Japan, the Basic Act for Establishing a Sound Material-Cycle Society has laid the foundation for various recycling laws and regulatory frameworks. In recent years, the EU has strengthened regulations to secure critical minerals and other essential resources through domestic recycling and other efforts. The common approach in circular economy policy is the Digital Product Passport (DPP), which is designed to track and manage product information throughout its lifecycle. This approach extends beyond EU-based companies to Japanese companies that export products to the EU, with both direct and indirect impacts on industry in Japan. In terms of the use of ICT for a circular economy, there is potential to use AI, digital twins, simulation technology, visualization, data linkage, among other technologies.⁵⁾ For example, AI and digital twins can be used in product design to assess recycled material strength and to design products with resource circularity in mind. At the sales stage, the environmental attributes of products can be demonstrated by visualizing the use of recycled resources, and these attributes can be shared through data linkage.⁶⁾ At the collection stage, AI and other ICT-driven solutions optimize collection efficiency and reduce the cost of collecting used products. At the recycling stage, using AI and other ICTs in waste management can identify optimal recycling methods based on material characteristics and to improve sorting and recycling technologies.⁷⁾

3.4 Nature Positive

The term "nature positive" refers to nature capital restoration, which aims to halt and reverse the loss of nature and ecosystems. The TNFD Final Proposal v1.0, a framework for companies to assess and disclose the impacts of their economic activities on the natural environment and biodiversity, was released in September 2023. With growing investor interest in environmental, social and governance (ESG) factors, corporate disclosure of nature-related risks and opportunities is expected to increase. As a result, nature-based initiatives are becoming an important management issue to address alongside climate change. We can use ICT such as AI, IoT, remote sensing, bioacoustic technology, robotics, blockchain, and social platforms⁸⁾ to advance nature positive initiatives. The following are some examples of areas where these ICTs can be used. First, there is the management of the natural environment. In the agricultural sector, for example, smart agriculture using ICT can improve crop yields and productivity while minimizing the impact on the environment.⁹⁾ Second, ICT can be used to efficiently and accurately measure natural conditions. For example, through biodiversity surveys, monitoring, and verification, it is possible to assess the current state of local ecosystems. It is also possible to analyze the impact of climate change on habitats and monitor changes in the state of ecosystems. Third, it is possible to visualize the value of nature. For example, the value of maintaining forests can be valued as carbon credits, and ICT can be used to distribute this value. In addition, by linking data using blockchain, it is possible to track the impact of the product supply chain on the natural environment, the amount of resources used, and the routes taken. Fourth, it is possible to share knowledge and information related to conservation among stakeholders. For example, it is possible to create communities for information sharing and mutual learning on the internet.

4. Conclusion

The use of ICT in GX is expected to significantly improve efficiency, accuracy, monitoring, forecasting, optimization, automation, and information sharing in addressing environmental challenges. In recent years, addressing environmental challenges has become a critical management priority for companies. Companies are required to comply with policies that support GX and meet the expectations of markets that emphasize ESG criteria by using all available technologies and systems, including ICT, to actively address these challenges. On the other hand, the increase in energy demand for data centers due to the spread of AI is being recognized as a future social issue. ICT companies are working to create social value beyond this issue and are making efforts to further increase their contribution to solving environmental issues, while also promoting measures such as the greening of data centers.¹⁰⁾

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