The impact of ICT on sustainable developmenthomepage.cs.latrobe.edu.au/sloke/greenIT/eito_forum_2002.pdf · The impact of ICT on sustainable development ... 2 Forum for the Future

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European Information Technology Observatory · E I T O 2002

2. What is sustainabledevelopment?

Although there are many definitions of sus-tainable development, the most commonlyquoted comes from the Brundtland Commis-sion’s 1987 report, “Our Common Future”.Here, sustainable development is defined as“development which meets the need of thepresent without compromising the ability offuture generations to meet their own needs”.1

This chapter defines sustainable develop-ment as:

A dynamic process which enables all peopleto realise their potential and improve their qual-ity of life in ways that simultaneously protectand enhance the Earth’s life-support systems.2

Implicit here is that economic, social andenvironmental dimensions are equally vital andinter-connected:

– Economic sustainability means economicgrowth without making undue demands onsocial or natural resources.

– Environmental sustainability means not onlyminimising impacts on the environment, butbuilding natural resources and safeguardingthem for the future.

– Social sustainability means building, and notundermining, social equity.

This paper has been provided by Forum for the

Future in close co-operation with the EITO Task

Force.

1. General overview

The chapter aims to:

– introduce the concept of sustainable devel-opment;

– examine the impacts and opportunitiescreated for sustainable development by therapid penetration of ICT into society andculture;

– suggest the means for mitigating adverse af-fects and encouraging positive outcomes forall in the penetration of ICT.

An innovative framework has been devel-oped that allows a detailed and comprehensiveanalysis of the environmental, social and eco-nomic effects and opportunities of ICT in thecontext of sustainable development.

The chapter will conclude that in some casesICT is of direct benefit to the goals of sustain-able development, and in others detrimental. Inmost cases, however, the overall effects willonly become clear in the medium to long term.

It is shown that despite its great potential,ICT is not in itself a force for sustainable devel-opment, but has both positive and negative ef-fects. In order to maximise the positive effectsand minimise the negative, the developmentand application of ICT should be guided bypolicy makers in government, business and civilsociety.

The impact of ICT on sustainable development

1 Brundtland Commission,“Our common Future”,1987

2 Forum for the Futuredefinition of sustainabledevelopment.

Together these three spheres of sustainabili-ty are commonly referred to as “the triple bot-tom line”, a term first coined in 1997 by JohnElkington, director of the sustainable develop-ment consultancy SustainAbility.3 As well assetting goals for economic performance, busi-nesses and economies should also set social andenvironmental performance goals. Most impor-tantly, performance in one sphere should notundermine performance in the other two.

2.1. Sustainable development and ICT

The growing acceptance of sustainable de-velopment as a goal and the progress of ICTshare many characteristics as drivers for changewithin modern economies. Both require us torethink the nature of goods and services andboth have the capacity to transform the rela-tionship between governments, companies, citi-zens and consumers. However, there have beensurprisingly few attempts to assess whether thegrowing acceptance of the sustainable develop-ment agenda and the growth of ICT will com-plement or conflict with one another.

2.1.1. Sustainable development and ICT policy convergence

Figure 1 illustrates convergence between thetwo policy agendas for sustainable developmentand the Information Society.

With the Information Society and sustain-able development both policy priorities, integra-tion between the two policy agendas should beinevitable. The Lisbon agenda refers to eco-nomic sustainability and social cohesion, andthe eEurope Action Plan places significant em-phasis on social inclusion in the KnowledgeSociety through investment in people and skills.The conclusions of the Göteborg EuropeanCouncil refer to the need to “promote innova-tion to develop new technologies which usefewer resources and reduce pollution”.

Yet the potential for integration betweenpolicies on sustainable development and thetransition to eEurope remains under-exploited.

ICT presents opportunities to resolve tradi-tional trade-offs between economic growth, theenvironment and social cohesion. Equally, thereis the opportunity to integrate sustainability cri-teria into the Information Society at an earlystage in its development, maximising the socialand environmental opportunities of ICT andmitigating its adverse impacts.

2.1. 2. Challenges in integrating theagendas of sustainable developmentand the Information Society

In assessing the overall sustainability im-pacts of ICT, several challenges must be con-sidered:

– The development and application of ICTthrough the economy and society is as yet atan early stage. It is still only possible to takean educated guess as to the medium- andlong-term effects.

– ICT is pervasive and enabling and, by anymeasure, is advancing rapidly in terms ofpower, performance and affordability. Thesetrends are unlikely to change in the nearterm. ICT drives the advance of other newtechnologies, whose impacts need to be as-sessed separately. Radical new technologiessuch as biotechnology have the potential toentirely change the current terms of refer-ence of the links between ICT, the economy,society and the environment.

– ICT is constantly giving rise to new socialphenomena which need to be factored intothe equation. One example is the develop-ment of online communities.

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Part Two · E I T O 2002 The impact of ICT on sustainable development

3 Elkington, J. “CannibalsWith Forks: The TripleBottom Line of 21st Century Business”,Capstone, Oxford, 1997

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Sustainable development Information Society Figure 1

Sustainable

development and ICT

policy convergenceUN Earth Summit, Rio, 1992

Global action plan agreed by 149 countries endorsing the aims

of sustainable development

Treaty of Amsterdam, June 1997

Member states strengthen commitment to considering environmental and social

cohesion in all policy areas

Helsinki European Council, December 1999

European Commission commits to putting forward proposal “dovetailingpolicies for economically, socially andecologically sustainable development”

Göteborg European Council, June 2001

Environmental dimension added to Lisbon agenda. Sustainable development

defined as central to all

1999

European Commission launches “eEurope” strategy

Lisbon European Council,March 2000

Heads of state agree to make Europe “the most competitive and dynamic

knowledge-based economy in the world,capable of sustainable economic growthwith more and better jobs and greater

social cohesion”

June 2000, eEurope Action Plan 2002 agreed

ICT to drive knowledge economy.Commitment to:

– Better Internet access– Investment in people and skills– Greater use of the Internet

World summit on sustainable development Johannesburg, September 2002

EU to seek a global deal on sustainability. Strategy explicitly mentionspotential for Information Society to “strengthen economic development

with less pressure on the environment, while ensuring access and capacity for developing countries”

b

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b

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– In response to the development of ICT, newregulations are constantly coming into force.By channelling the development of ICT in aparticular direction, regulations may pro-mote or impede synergies between ICT andsustainable development. The effects of newregulation need to be understood and fac-tored into new research being undertaken.

– Despite the growing body of research, manydata gaps still exist and there is much dis-agreement in certain areas.

3. The framework for analysis

Research to date into ICT and sustainabilityhas failed to create a conceptual framework thatpresents an aggregated picture of the impactsand opportunities of ICT and sustainability overtime. Without such a framework, determininghow to maximise the potential opportunitiesand minimise the negative impacts of ICT andsustainable development is problematic.

For the sake of clarity the three-spheres mo-del of sustainability has been used, based onElkington’s triple bottom line as described

above. Since these spheres in reality exist in adynamic relationship, the evaluation stage atthe end of this chapter will be an opportunity tomake broader, overall assessments for sustain-ability as a whole, highlighting the linkagesacross the triple bottom line.

The effects of ICT have also been separatedaccording to the different stages in their devel-opment and deployment. This allows the identi-fication where possible of how a positive oppor-tunity may over time have a negative spill-overor vice versa and hence where action could betaken to maximise the positive outcomes. Ef-fects are divided into first, second and thirdorders, as shown in Table 1.

Within each cell of the framework, key areashave been selected that demonstrate the extentof existing understanding. While positive effectscannot be categorically separated from negative,where possible attempts are made to highlightthe current balance between the two.

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Sus

tain

abili

ty s

pher

e

Impacts/opportunities sphere

First order Second order Third order

The impacts and oppor- The impacts and oppor- The impacts and oppor-tunities created by the tunities created by the tunities created by the physical existence of ICT ongoing use and aggregated effects of and the processes involved. application of ICT. large numbers of people This includes the design, For example, this using ICT over the manufacture, operation includes E-business. medium to long term. and disposal of ICT. For example, this includes

the changing nature ofrelationships betweenbusiness and markets.

Environmental Section 4.1 Section 4.2 Section 4.3

Social Section 5.1 Section 5.2 Section 5.3

Economic Section 6.2 Section 6.3 Section 6.4

Table 1

The framework for

analysis

4. Environmental sustainability and ICT

Table 2 below summarises the environmental effects and opportunities created by ICT.

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First order effects Second order effects Third order effects

Design and manufacture of Increase and decrease in use of De-coupling economic growth and ICT equipment transport energy consumption– ICT production is a relatively – Increase in home deliveries as a – Possibilities of reducing energy

lightweight industry result of E-commerce will have used per unit GDP– Use of toxic components significant environmental impact – New waves of technology are unless well co-ordinated

more energy-efficient – Telework reduces travel miles for employees

– Telematics reduces traffic congestion, journey times and therefore pollution

– Rebound effects from increased leisure travel

Operation of ICT equipment ICT in business systems De-coupling economic growth and carbon emissions

– Energy use even in – B2B E-commerce and ICT- – Possibilities of reducing carbon stand-by mode managed control systems create dioxide emissions per unit GDP

efficiencies and reduce environ-mental impact

Disposal of ICT equipment Virtualisation of material products Changing settlement patterns– Problematic disposal – Possible environmental savings – Conflicting pressures on local – Recycling and safer designs from increased trade in settlement

increasing intangibles – Possible increase in environ-mental pressure on regions

Effects on product lifetimes– Some E-commerce business

models extend product lifetimes– Product development cycles are

often reduced by use of ICT

Distribution and manipulation of environmental information– Significantly enhanced by ICT

Table 2

Environmental

sustainability and ICT

4.1. First order impacts and opportunities

Production of ICT equipment does not placethe same level of demands on natural resources,nor is it as polluting, as many other industries.The design, manufacture, operation and dis-posal of ICT does however have an overallnegative impact on the environment, althoughsome action can be taken to mitigate these im-pacts.

4.1.1. Design and manufacture of ICT equipment

There are elements included in the designand manufacture of ICT that could be seen asunsustainable.

Damaging materials are used in ICT compo-nents, for example:

– The batteries in mobile telephones containtoxic metals such as lithium or cadmium.The ores of such metals must be quarriedand then undergo lengthy and expensiverefinement processes, causing significant en-vironmental disruption.

– Cathode ray tubes contain large amounts oflead, shown to have high levels of toxicity.

– Many devices are coated with flame re-tardants that contain toxic compounds.

The manufacture of ICT equipment is re-source-intensive:

– One study showed that the production of theaverage computer chip requires 45.46 litresof water, used primarily for washing. Onechip plant in the USA uses between 4.5 and13.5 million litres of water a day.4

– A study for the European Union in 19985

suggested that the production of a personalcomputer, including material production,manufacture and distribution, would lead tothe release of 0.19 tonnes of greenhousegases, 36 kg of overall waste, and require 3.6 GJ of energy.

Efforts are being made to minimise theamount of resource needed in the production ofICT. This makes economic as well as environ-mental sense.

– More efficient chips mean more processingpower for the amount of resource/energy re-quired. Every generation of chips reduces insize by approximately a factor of 0.7.6

– Mobile telecoms network operators are in-vestigating the possibility of using renewableor low-impact energy sources to power basestations.

– The manufacture of mobile phones now in-corporates measures such as material identi-fication and easy disassembly, to make recy-cling easier.

4.1. 2. Operation of ICT equipment

Operation of ICT equipment accounts forthe greatest demands on energy and natural re-sources. For example, the use phase of a perso-nal computer in the EU has been calculated toproduce 0.45 tonnes of greenhouse gases, 108kg of waste and 10 GJ of energy per unit7 – sig-nificantly more than in the production process,as Table 3 illustrates.

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4 http://www.news-journalon-line.com/2001/Apr/30/AREA1.htm. Although alarge proportion of thiswater can be reused forother purposes, no micro-chip manufacturers cur-rently recycle water for re-use in the washing process,as the water must be pureand particle-free.

5 Atlantic Consulting (1998),“LCA study of the productgroup personal computersin the EU EcolabelScheme”

6 Schauer, T., “What are theconditions for a sustainableInformation Society?” In: Towards a SustainableInformation Society: Reportof the Conference on 21–22February 2000

7 Atlantic Consulting (1998),“LCA study of the productgroup personal computersin the EU EcolabelScheme”

Production phase Use phase Disposal phase

Greenhouse gases 0.19 tonnes 0.45 tonnes 0.022 tonnes

Waste 36 kg 108 kg 21 kg

Energy 3.6 GJ 10 GJ –

Table 3

Operation of

ICT equipment

When it is considered that PC penetration inthe European Union is currently around 40 %,personal computer use in absolute terms isclearly extremely resource-intensive.8

The impact on energy demands at the firstorder is only likely to increase in the short andmedium term, as ICT becomes more embeddedin society, types of device and the functionsthey perform proliferate, and as penetrationaround the world deepens.

Server farms

“Server farms” – massive banks of computersused to store the information that appears onWebsites – concentrate the use of largeamounts of energy, that would otherwise bemore widely dispersed. While this provideseconomies of scale, a single server farm canconsume as much electricity as a small airportor four large hospitals. Where server farmsare concentrated, as in Silicon Valley or Lon-don, they can be serious drains on local elec-tricity supplies. To combat this, one purpose-built server farm outside London is currentlybeing built with a dedicated 24 MW gas-firedpower station to supply all of its energyneeds. It has been suggested that renewableenergy sources could be used instead infuture projects of this type.9

4.1. 3. Disposal of ICT equipment

The average lifetime of a PC used for busi-ness purposes is three years, and in Europe thereplacement cycle of a mobile phone is 18months. As technology moves on and morefunctions and capacity are offered, the numberof obsolete or undesirable products increases.

In 2000 the European Commission estimat-ed that the EU produces six million tonnes ofWaste Electrical and Electronic Equipment(WEEE) a year. A report by the Industry Coun-cil for Electronic Equipment Recycling10 put theUK figure alone at one million tonnes, 90 % ofwhich was large ICT equipment.

Dealing with electronic waste withoutdamaging the environment is a major challenge.Much ends up eventually in landfill sites, wherepolluting substances used in ICT componentscan leach into the ecosystem.

As long as toxic substances are used in thedesign and manufacture of ICT, the most effec-tive means of preventing them entering the eco-system is through providing take-back and re-cycling schemes. Many parts of ICT waste arerecyclable, but the structures to ensure thatrecycling takes place on a significant level arenot yet widely in place.

Consequently, there have been calls for po-licy initiatives to make recycling of ICT in gen-eral and toxic components in particular, man-datory. Encouragingly, the EU’s WEEE direc-tive, which is expected to become law in 2002,will require producers to ensure that 65–80 % ofelectronic waste is recovered and recycled.

4.2. Second order impacts and opportunities

The application of information and commu-nications technology has a more ambiguous ef-fect on the environment than that of the crea-tion of the equipment. In many areas it maycreate efficiencies leading to “dematerialisa-tion”: a reduction in the quantity of natural re-sources required to support human activity.

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8 http://cyberatlas.internet.com/big_picture/geographics/article/0,,5911_429391,00.html

9 “The Internet’s newborders”, The Economist,11 August, 2001

10 ICER, “ICER status reporton WEEE”, March 2000

4. 2.1. Increase and decrease in the use of transport

There is conflicting evidence of the impactof ICT on travel. Figure 2 shows that, while E-commerce and telework reduce the need totravel and telematics systems may make cartransport more efficient, counter-trends exist,and the balance of benefit to the environmenthas yet to be established.

i. E-commerce and travel

Home shopping over the Internet should re-duce the need for consumers to make car jour-neys to shops. According to the National Eco-nomic Research Associates, home shopping willreduce car-based shopping travel by 5 % by 2005and 10 % by 2010.11 The consequent reduction invehicle emissions would be significant.

However, once the corresponding increasein delivery traffic and extended supply lines arefactored in, the picture is slightly different. Astudy commissioned by the Netherlands govern-ment predicted that if E-commerce makes up11.5 % of retail sales by 2005, road traffic will in-crease by 17 %.

The main variables to consider in the equa-tion are the methods of product delivery, theuptake of B2C E-commerce and the consequentchanges in consumer leisure habits.

As a recent report from the UK govern-ment’s Foresight research programme shows,there is much to be gained from co-ordinatinghome deliveries to minimise the distance trav-elled, for example by utilising local drop-offpoints rather than delivering directly to homes,and through co-operation between different re-tailers.12

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11 “Motors and ModemsRevisited”, NERA, London 2000

12 “@ Your Home”. Accord-ing to a study by theSwedish University ofAgricultural Sciences, co-ordinating the delivery ofstock to 15 different loca-tions using ICT reducedthe total distance travelledby 39 % and the number ofjourneys by 58 % (LennartForseback, Case Studiesfor the InformationSociety, IST, May 2000).

Decrease

E-commerce reduces need to travel to shops

Teleworking reduces need to travel to work

Telematics reduces congestion andshortens journeys

More deliveries

Geographically longer supply chains

Rebound effects

Increase

Benefit to the environment

? ?nm

Figure 2

The effects of ICT

on the use of transport

The net effects on transport will remain un-clear however until B2C E-commerce is pro-perly established. The eEurope Action PlanBenchmarking Report 200113 shows that cur-rently in the EU as a whole fewer than 5 % ofInternet users make online purchases regularly,approximately 1.7 % of the population.

ii. Telework and travel

Remote working using the Internet to accessoffice systems, for example via Virtual PrivateNetworks or using teleconference and videocon-ference technology,14 has been possible for along time. A barrier to widespread take-up hasbeen the lack of broadband access in homes,but in some parts of Europe broadband avail-ability is increasing rapidly.15

When promoted by employers, teleworkinghas been shown to significantly reduce travelmiles. One Swedish company with 200 employ-ees has managed to reduce home-to-work travelby 74,000 km a year.16 One major European -telecommunications company now has 4,000homeworkers who between them save approxi-mately 12.5 million commuter miles per annum– equating to a saving of 1,000 tonnes of carbondioxide emissions.17

iii. Telematics: efficient transport using ICT

One means of ensuring more efficient travelpatterns for all vehicles is the utilisation of tele-matics systems. The term telematics has evolv-ed to refer to in-car systems that combine Glo-bal Positioning Satellite (GPS) tracking andother wireless communications including accessto the Internet. The most significant applicationof this technology is Intelligent Traffic Guid-ance Systems (ITGS). ITGS can plot thequickest or most efficient route from A to B,taking into consideration traffic flow systemssuch as one-way streets or speed controls and,more importantly, avoiding areas of congested

or slow-moving traffic. The effect is to signifi-cantly reduce congestion and travelling time,and therefore vehicle emissions. ITGS wasshown to reduce travelling time in rush hoursby 50 % compared to conventional static naviga-tional systems.18 The Dutch government aims inits programme, “Telematics in traffic and trans-port” to reduce vehicle miles within the Nether-lands by 25 % in the period 1998–2003, in partthrough its use of ITGS.

iv. Rebound effects

The application of ICT in trade, work andtravel systems could on balance cut the de-mands of transport on the environment. How-ever, it is unclear what consumers do with thetime that they save by ordering goods onlinerather than making a car journey to the shops,or what teleworkers do with the time they saveby not driving to work. Is this extra time usedto make additional journeys by car, for leisurepurposes perhaps, that otherwise would nothave been made? Similarly, when drivers seeopen roads and free-flowing, telematics-control-led traffic, will they be tempted to drive more,in the same way that building more roads seemsto create more traffic? These “rebound” effectspose complex research questions that must beanswered before the net contribution that ICTis making to environmental protection can beaccurately judged.

4. 2. 2. ICT in business systems

ICT has had a positive effect on businessefficiency, for example through:

– consolidating supply chains through the useof B2B E-commerce portals;

– use of E-procurement in larger organisa-tions, bringing economy of scale savings;

– use of computer-driven management sys-tems and the implementation of databases;

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13 http://europa.eu.int/information_society/eeurope/benchmarking/index_en.htm

14 Telephone and video-conferencing at BT hascreated savings of 150million miles across allmodes of transport andavoided emissions ofanother 34,000 tonnes ofCO2. For more informationsee James Wilsdon (ed.),“Digital Futures: anagenda for a sustainabledigital economy”, 2001

15 See “The Development of Broadband AccessPlatforms Across Europe”report for the EuropeanCommission, available athttp://www.europa.eu.int/information_society/eeurope/news_library/

16 Lennart Forseback, “Casestudies of the InformationSociety and SustainableDevelopment”, May 2000

17 James Wilsdon (ed.),“Digital Futures: anagenda for a sustainabledigital economy”, 2001

18 Schauer, T., “What are theconditions for a sustainableInformation Society?” In: Towards a SustainableInformation Society:Report of the Conferenceon 21–22 February 2000

– use of telematics in manufacturing pro-cesses;

– use of ICT to monitor office systems such asair-conditioning.

An office supply company established anInternet-based invoicing system and cut theamount of paper it used from 13 million sheetsa year to one million sheets a year.19

Such systems are generally introduced intocompanies because they represent medium-tolong-term cost savings. Often however, costsavings are reflected as environmental savings,as more efficient processes require less energyand create less waste.

For example, an efficiency programme usingheating, ventilation and air-conditioning controlsystems in a New York college saved € 11.2 mil-lion at the same time as cutting energy use by20,000 kilowatts20 and carbon dioxide emissionsby 48,000 tonnes.

4. 2. 3. Virtualisation of material products

The application of ICT can decrease theamount of material products circulating in someareas of the economy. “E-books”, which existonly as downloadable electronic files, are oneexample: Penguin books planned to have 200titles available electronically by the end of 2001.The result could be the use of less paper in thepublishing industry, less glue for binding, lessfiller for glossy pages, less freight on the trans-port network and so on. The technology usedby MP3 files similarly could result in the pro-duction of fewer CDs. Likewise online bankingmeans that printed statements are no longernecessary.

The energy use of the Internet

The Internet is central to hopes for a “weight-less” new economy, but a heated debate ragesover the real energy demands it exacts.

Mark Mills in a Forbes article, “The Internetbegins with coal”21 asserted that use of the In-ternet accounts for as much as 8 % of the to-tal electricity demands of the US, and thattherefore energy capacity in the US needs tobe increased to meet the demands of the neweconomy. Others22 have maintained howeverthat the figure is much lower, at around1–2 %. The only European study to date wasconducted by the Wuppertal Institute in Ger-many in 2000. It estimated that use of the In-ternet accounted for 1 % (4,000 Gigawatts) ofGermany’s electricity demand.23 The instituteis now conducting research to show the ener-gy implications of one hour of Internet use.

The broad range of estimates is due partly toa lack of information about levels of usage.Also crucial is where the boundaries of useare drawn: should analysis stop at the directenergy consumption of PCs, networks andservers, or should it be extended to includesecond and third order effects, where the datais more ambiguous?

However, in practice, the virtualisation ofproducts may be balanced by a counter-processof “devirtualisation” in which E-books and on-line bank statements are printed out and MP3files burned onto CDs. If enough virtual prod-ucts are subsequently devirtualised, the net im-pact on the environment is much greater than ifno virtual products existed in the first place: theresources used in producing the virtual productare added to those used when consumers

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19 Financial Times articleThursday 6 December 2001

20 http://www.nypa.gov/

21 Mark Mills, “The Internetbegins with coal: a prelim-inary exploration of theimpact of the Internet onelectricity consumption”,1999

22 Joseph Romm, “TheInternet economy andglobal warming”, Centerfor Energy and ClimateSolutions, 1999; Koomeyet al., “Initial commentson “The Internet beginswith coal”, 1999

23 Barthel, C., Lechtenböh-mer, S. und Thomas, S.,www.internet.CO2,Wuppertal Institute, 2001

produce the material product themselves in aprocess where the efficiencies of large-scale,centralised production are lost, as illustrated inFigure 3.

4. 2.4. Effects on product lifetimes

Use of ICT in the design and manufacturingprocesses of a wide range of products createsshorter product cycles. New products can be de-signed and produced at a faster rate and so be-come obsolete sooner.

However, ICT also offers the opportunity toextend product lifetimes by facilitating onlineexchanges. For example, online auction sitesare able to put an unprecedented number ofbuyers and sellers in contact with each other.One such site claims 30 million registered usersand 5 million items for sale worldwide at anyone time.

In similar fashion, ICT provides the meansfor producers to match supply and demandmore closely and so reduce wastage throughover-production. Many seats go unoccupied inaeroplanes for example. Some E-commercesites offer these seats at a lower price andthereby increase the running efficiency of theairlines.

4. 2. 5. Distribution and manipulation of environmental information

The distribution and manipulation of envi-ronmental data has been enhanced by ICT. Theavailability of this data has been invaluable inmaking the case for and enabling environmentalaction.

ICT has been used to collect, collate and de-liver the data that provides evidence of environ-mental decline: the amount of rainforest beingcleared in Brazil, the level of greenhouse gas

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Energyconsumption

Material production Virtual production

Positive environmental effects will only accrue from the virtualisation of material goods if theefficiencies of the virtualisation process are not undermined by inefficient “devirtualisation” en masse.

Devirtualisation ofvirtual product

?

Figure 3

Virtualisation of

material products

emissions in Europe, ultraviolet radiation inAntarctica and so on. Making much of this dataavailable on the Web has given a wide commu-nity of researchers and policy makers the re-sources to carry out their work and make thearguments that have put the environment onthe agenda. The understanding of the process ofglobal warming would be dangerously super-ficial were it not for the use of powerful com-puters in developing climate change models, forexample.

ICT has enabled and will enable action to betaken to halt environmental decline. The KyotoProtocol on climate change in 1995 establishedthe principle of global emissions trading, to al-low countries that have not been able to reduceemissions to compensate those that have. Thecomplex calculations necessary for this wouldnot be possible without ICT.

4.3. Third order impacts and opportunities

The aggregated effects of the widespread useof ICT on the environment are difficult to iden-tify and to measure. They depend very much onhow the increasing use of ICT in all aspects ofhuman activity effects consumption and eco-nomic efficiency. As ever, though, isolating theeffects of ICT from those of other social, eco-nomic and technological trends is problematicand prevents us as yet from reaching any formof confident conclusion.

4. 3.1. De-coupling economic growthand energy consumption

Evidence for the de-coupling of economicgrowth and energy consumption is conflicting.One study25 argues that whereas traditionallyGDP growth in the US has been directly corre-lated to growth in energy demand, in 1997 and1998 the US economy grew by 8 % but energydemands grew by only 1 %. If there had been nostructural changes to the economy, a 6 % in-crease in energy demand would have been ex-pected in this period. The authors of the studyattribute the discrepancy to the increasing useof ICT.

However, electricity consumption per capitaincreased in Europe between 1980 and 1998 asTable 4 shows. While energy intensity per unitof GDP generally decreased in developed coun-tries, it is problematic to identify increased useof ICT as the driving factor rather than otherstructural changes in the economy or direct at-tempts to conserve energy.

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24 UN Human DevelopmentReport 2001, HumanDevelopment Indicators, p. 200

25 Romm, “The InternetEconomy and GlobalWarming: A Scenario ofthe Impact of E-commerceon Energy and the Envi-ronment”, 1999

Electricity 1980 1998consumption (kilowatt-hours) (kilowatt-hours)per capita

Austria 4,371 6,175

Belgium 4,402 7,249

Denmark 4,222 6,033

Finland 7,779 14,129

France 3,881 6,287

Germany 5,005 5,687

Greece 2,064 3,739

Ireland 2,528 4,760

Italy 2,831 4,431

Luxembourg 9,803 12,400

Netherlands 4,057 7,322

Norway 18,289 24,607

Portugal 1,469 3,396

Spain 2,401 4,195

Sweden 10,216 13,955

Switzerland 5,579 6,981

UK 4,160 5,327

Table 4

Electricity consumption

per capita 24

4. 3. 2. De-coupling economic growthand carbon emissions

Similarly, although research has predictedthat dematerialisation of the US economythrough the adoption of E-commerce will leadto a net 2 % per annum reduction in CO2 emis-sions between 2000 and 2007,26 rigorous evi-dence for this elsewhere is conflicting. Carbondioxide emissions per unit of GDP, a good indi-cation of the carbon intensity of an economy,have decreased in most European countries bybetween 20 % and 50 % in the past two dec-ades.27 However, it is impossible to determinewhether this has been due to ICT applicationsor a range of other factors.

4. 3. 3. Changing settlement patterns

Processes that derive from the production,use and application of ICT – dematerialisation,telework and E-commerce for example – couldhave a far-reaching effect on patterns of humanand industrial settlement.

Agglomeration

Effective use of ICT means that space can beused more efficiently: with E-commerce,there is less need for physical shops andbanks. Offices need less space and, with lesstraffic, better use can be made of car parksand roads. This leads to a more compactsettlement and fewer demands on naturalresources.

Dispersion

Although no one has suggested that humanscan do away with the need to meet and social-ise completely, most agree that, through mak-ing telework possible, ICT has reduced theneed to congregate. It becomes easier to livein suburbs, the commuter belt or even in aperipheral region and do the same work. Thisprocess may encourage dispersion of activitiesand therefore an increase in demands on nat-ural resources.

The adoption of ICT at a local level pro-duces two conflicting pressures: agglomerationand dispersion.

It remains to be seen which of these pro-cesses is the more powerful, or indeed if eitherprocess has any significant effect while planninglaws in most countries remain strict and focusedon the carefully structured development ofcompact settlements.

On a regional level, it has been conjecturedthat traditional infrastructure such as roads andrailways are less important for economic devel-opment than the presence of ICT network. Theresult may be to reduce the economic impor-tance of geographical location within countriesand regions. E-workers can theoretically be lo-cated anywhere they can access the Internet, ascan ICT companies. The logical extension isthat more environmental pressure is placedaway from the traditional core of economic ac-tivity, with the necessary development of landfor housing and amenities.

There is little evidence at the moment tosupport this conjecture. Indeed, a study byBoldly-go.com in the UK showed that, ratherthan being distributed equally across the coun-try, dot.com companies were concentrated inzones of traditional economic power: 80 % werelocated in the south east of England, with 60 %in London.28

5. Social sustainability and ICT

Table 5 summarises the social impacts andopportunities created by ICT.


While the design, manufacture and opera-tion of ICT has created some jobs in someareas, the uneven distribution of the technology

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26 Romm, “The Interneteconomy and globalwarming: A scenario of theimpact of E-commerce onenergy and the environ-ment”, 1999

27 OECD “Key Environ-mental Indicators”, p. 29

28 James Wilsdon (ed.),“Digital Futures: anagenda for a sustainabledigital economy”, 2001

is seen by many as reinforcing social exclusion,through the operation of the digital divide.

5.1.1. Job creation

The growth rate of jobs in the InformationSociety in 1999 was approximately 8 % in Eu-rope. Each job in the IT industry creates fourjobs in the wider European economy, either up-stream through suppliers or downstream inservice industries which rely on packaged soft-ware.29 New jobs in the ICT sector may havegiven the individuals concerned an opportunityto participate in and contribute to society.

The overall picture is, however, less rosy.The constant upgrading of skills required in thissector to keep pace with changes in technology

favours the highly skilled. As former US LaborSecretary, Robert Reich, argues, “a great pre-mium is placed on people who are innovatorsand a rapidly decreasing value on people whoare in routine production”.30 The rise of theknowledge worker threatens lower skilled work-ers with marginalisation.

5.1. 2. The digital divide

The distribution and use of ICT has beenviewed as a means of narrowing the gap be-tween the world’s rich and poor. However, thedifficulties of establishing universal accesscould serve to reinforce current patterns ofsocial exclusion.

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29 “Benchmarking Reportfollowing-up the “Strate-gies for Jobs in theInformation Society”,Commission Staff WorkingDocument, February 2001

30 Lecture given at theLondon School ofEconomics, 14th May 2001


Job creation Access to information Cultural homogeneity or cultural diversity?

– Jobs created in production of – Health information available – ICT promotes homogeneity and ICT equipment online diversity at the same time

– Government information available online

Digital divide Security challenges Building local communities– Discrepancies in distribution – Risk to users of Internet – ICT may bolster local

of access to ICT – Internet also used by criminal communitiesgroups

Access to better services Building civic culture– Health services, E-learning, – ICT may encourage popular

Government services, participation in community E-commerce and telework create affairsopportunities for social inclusion

New communities online– Internet enables new types

of community

Popular protest online– Internet enables new types

of protest

Table 5

Social sustainability

and ICT

Figure 4 shows that Internet access is the pre-serve of the richest countries in the world andhas made very little impact elsewhere. Table 6

illustrates the scale of difference between Euro-pean Union countries and some of the poorestcountries in the world, in terms of access totelephones. As a general rule, the poorer thecountry, the less ICT is available.

International initiatives such as the G8’sDOT Force31 are seeking to address the discrep-ancies. At the same time, some multinationalICT companies are investing huge sums in ac-cess for the developing world. An initiative byone ICT equipment manufacturer will see thecompany sell, lease or donate over € 1 billionworth of its products to developing countries.According to the World Resources Institute’sDigital Dividend project, there are significantbusiness opportunities in creating appropriatetechnologies for use in the developing world.32

Discrepancies in access to ICT exist withinEurope itself. While 65 % of households in Swe-den and 60 % in the Netherlands have Internetaccess, the figures for Spain and Greece areonly 25 % and 10 % respectively.34 Similar differ-ences exist within countries, both between re-gions and along socio-economic lines. High in-come earners in the EU enjoy three timeshigher Internet usage rates than low incomeearners and traditionally excluded groups suchas the elderly and unemployed, have particular-ly poor access to the Internet.35

The European Union’s eEurope Action Planagreed in 2000 focuses heavily on increasing on-line access by providing a cheaper, faster, moresecure Internet, increasing public access pointsand improving IT skills.36 Within this frame-

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31 http://www.dotforce.org/

32 http://www.digitaldividend.org/index.htm

33 United Nations HumanDevelopment Report 2001.Figures for 2000, p. 40

34 http://europa.eu.int/information_society/eeurope/benchmarking/index_en.htm

35 “Benchmarking Reportfollowing-up the “Strate-gies for Jobs in theInformation Society”,Commission Staff WorkingDocument, February 2001

36 http://europa.eu.int/information_society/eeurope/action_plan/actionplantext/index_en.htm

US High-incomeOECD (not US)

East Europe andCommonwealthof Independent

States

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37 Mainline and cellulartelephone penetration inselected countries, ranked by UN HumanDevelopment Index, see:UN Human DevelopmentReport 2001, p. 60

Country GDP per capita Telephone mainlines/ Cellular mobile(purchasing power 1,000 population subscribers/parity US$, 1999) (1999) 1,000 population (1999)

Luxembourg 42,769 724 487

Ireland 25,918 478 447

Denmark 25,869 685 495

Belgium 25,443 502 314

Austria 225,089 472 514

Netherlands 24,215 606 435

Germany 23,742 588 286

Finland 23,096 552 651

France 22,897 579 364

Sweden 22,636 665 583

Italy 22,172 462 528

UK 22,093 575 463

Spain 18,079 418 312

Portugal 16,064 424 468

Greece 15,414 528 311

Czech Republic 13,018 371 189

Poland 8,450 263 102

Angola 3,179 8 2

Pakistan 1,834 22 2

Bangladesh 1,483 3 1

Yemen 806 17 2

Sudan 664 9 0

Table 6

The digital divide –

telephone penetration

in selected countries 37

Note: These figures do not always correspond with Table 8, The ICT market in Europe, and Tables 91 and 93 of the Statistical outlook.

work, member states have pursued variousinitiatives. For example, the Danish governmentgranted tax exemptions on computers suppliedby employers for use by employees at homeuntil January 2001. This scheme has made asignificant contribution to the very high pene-tration of PCs in Denmark.

In order to fully realise the social opportuni-ties of ICT, greater access to high-speed Inter-net connections is essential. Until large quanti-ties of data can be transmitted quickly at rela-tively low cost, the development of E-health, E-government and telework will be stifled. Ithas been argued that effective universal accessshould be thought of as universal access tobroadband infrastructure at home; at the end of2000, however, only 1.1 % of EU households hadaccess to a high-speed ADSL connection.38

Because penetration of mobile telephonesand interactive digital televisions promises to behigher than PC penetration, these technologiesmay offer hope for more widespread access tothe Internet. There are also those, such as theIntermediate Technology Development Group,that argue that resources might be better devot-ed to cheaper “low” technology with a proventrack record in alleviating poverty.


According to a positive assessment, the on-going use and application of ICT presentsnumerous opportunities for society: improvedwork-life balance, greater access to informationand better services. But the full realisation ofthe second order potential of ICT is still some-way off. Barriers such as lack of access, inade-quate security and low levels of trust stand inthe way of the majority benefiting from theseopportunities.

5. 2.1. Access to information

With fewer resources required to publishand disseminate information on the Internetcompared to any offline medium, the amount ofinformation freely circulating online is con-stantly growing. Information can be dissemi-nated so rapidly that government, business andprofessional bodies can no longer act as gate-keepers to information as they traditionallyhave. This presents a tremendous opportunity.However, sifting what is of use from what isavailable can be a difficult task: the Internetprovides no guarantee of quality or accuracy.

i. Access to health information

Health-related information online comesfrom a range of sources, from patients to for-profit companies and the public sector. At best,it allows individuals to take greater responsibili-ty for their own health, promoting individualwell-being and ideally reducing pressure onpublic health services. This is the thinking be-hind NHS Direct,39 a public sector health portalintroduced by the UK government. Equally, theInternet offers access to a broader range ofhealth-related information than conventionalmedicine, promoting individual choice. Eventhe latest medical research is publicly availablethrough online medical journals, such as the USNational Library of Medicine’s MEDLINE.

However, the vast amount of informationonline can often be difficult to navigate andsort, and in many cases no systems to guaranteeaccuracy or lack of bias are in place. In the con-text of healthcare, misinformation can be par-ticularly dangerous. A public system or system ofthird party verification may alleviate this prob-lem, but healthcare professionals disagree overthe extent to which self-diagnosis and treatmentshould be encouraged. The potential for seriousoversight or misdiagnosis is all too apparent.

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38 Damian Tambini, IPPR/-Citizens Online, “UniversalInternet Access”, Novem-ber 2000

39 http://www.nhsdirect.nhs.uk/

ii. Access to government information

The eEurope Action Plan40 aims to create asocially inclusive knowledge economy in Eu-rope. It set 2002 as the target date for allgovernment information to be available online,on the basis that easy access to public serviceinformation can play a significant role in pro-moting social inclusion.

Online government information can play abroader role in increasing government transpar-ency and accountability towards its citizens.This is potentially significant in boostinggovernment legitimacy at a time when voterturn-out in elections is decreasing.

However, those most in danger of socialexclusion, such as the elderly or unemployed,are also those least likely to have access to theInternet. This is not adequately mitigated bythe provision of public access terminals. Thesuccess of “E-government” is dependent on par-ticipation by citizens and at present only around50 % of Internet users in the EU have accessedgovernment information online.41

5. 2. 2. Security challenges

Trust must underpin all transactions – finan-cial and social – if the Internet is to operate ef-ficiently and bring benefits to society. However,as a recent survey suggests, E-commerce isbeing stifled by concern over Internet security.42

With significant amounts of personal informa-tion entered online, including financial informa-tion, privacy and security have become a pri-ority.

The Internet is also the perfect tool forcriminal groups such as child pornographersand terrorists, to organise globally. There isclearly a conflict between protecting the privacyand security of legitimate users of the Internet,and regulating the Internet to prevent abuse:

there are concerns that regulation of the Inter-net will undermine the medium’s strengths offreedom and flexibility. Furthermore, it is as yetunclear where responsibility for content on theWeb lies, as the recent controversy in Franceover the sale of Nazi memorabilia showed.

Business has taken an active stance in re-sponse to abuse of the Internet. Some Internetservice providers have restricted the type ofcontent which can be accessed through theirsearch engines.

5. 2. 3. Access to better services

i. Health

Surgeons directing operations via remoteonline access may make the headlines, but therange of possibilities for using ICT to improvehealthcare services is much broader. Fullysearchable online medical records, Web-linkedhealth call centres, online patient monitoringand remote consultations could provide patientswith a better, more efficient healthcare system.At the same time, online monitoring and con-sultation may improve quality of life if patientscan be treated at home rather than in hospital.The ability of ICT to overcome distance meansthat E-health services offer specialist healthcareto those in remote locations, as well as to ex-cluded groups such as prisoners.

The barriers to rolling out ICT in healthcarebeyond individual initiatives are significant. Aswith so many applications of ICT, telemedicinedepends on inclusive access to high bandwidth,reliability and security.43

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40 For more informationplease see EITO 2002, PartTwo: “E-government andthe business environment”

41 Benchmarking Reportfollowing-up the “Strate-gies for Jobs in theInformation Society”,Commission Staff WorkingDocument, February 2001

42 Survey commissioned byConfederation of BritishIndustry, in FinancialTimes, 31st August 2001

43 “E-Life or E-death? A White Paper on theSocial Implications ofCyber Medicine”, PeterJames and Peter Hopkin-son, Sustain IT, August2000

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44 For more informationplease see EITO 2002, PartTwo: “E-government andthe business environment”


Online healthcare around the world

Australia is the current world leader in onlinehealthcare. It has developed centralised data-bases of medical records, online health infor-mation and support, and its Hospitals With-out Walls project aims to find ways of treatingand monitoring patients at home.

The US is pioneering several telemedicineprojects, such as a telehospice project in Kan-sas which uses phone lines and set-top boxesto provide care and support to patients.

The UK government has developed the NHSDirect Website which integrates online infor-mation and a health call centre.

ii. Education

The growing body of education and learningresources available online offers flexible, indivi-dually-tailored learning solutions which facili-tate lifelong learning. Some of the world’s lead-ing universities, such as MIT, now offer coursesand course content online, free of charge. In theUK, a national E-University will from 2002 offer 84 courses from some of the country’sleading institutions. Lifelong learning has be-come a key European policy goal in developingthe new “knowledge-based economy”, but againif this is to be delivered via the Internet, thecrucial question of universal connectivity mustbe answered.

iii. Government

The impact of ICT on government services44

is two-fold. Behind the scenes, informationtechnology allows for significant levels of inte-gration and co-ordination in administration,contributing to greater efficiency in the deliveryof public services. This is particularly the casewhere the services required are split acrossgovernment departments.

At the same time, online public services aremore easily accessible. In Singapore a singleportal offers access to all services from thecradle to the grave. In Europe, fully online serv-ices have been slow to develop, with online in-teraction largely confined to tax and culturalservices.45 There is a need to develop govern-ment sites organised in a way which responds tothe requirements of citizens and business ratherthan following administrative structures. Indoing so, government will be able to increaselegitimacy amongst its citizens.

5. 2. 4. E-commerce

B2C online retail could help to improvework-life balance by freeing up some of thetime currently spent by consumers on retail ac-tivities. However, it is still far from certain thatE-commerce will be adopted en masse by Euro-pean consumers.

Again, the opportunities of E-commerce de-pend on widespread connectivity. Additionallyin this case, participation often relies on posses-sion of a credit or debit card, which excludes asignificant proportion of Europe’s population.In view of this, alternative means of online pay-ment are being developed. Electronic pursesand smart cards for example use software whichstores currency and can be built into a mobilephone, PC or digital television.

For those who are unable to take advantageof online services, the closure of high-streetbranches only serves to further exclude themfrom opportunities for full participation in so-ciety.

5. 2. 5. Telework

At present 5.6 % of workers in the EU tele-work.46 Denmark leads the way with 17.4 % ofworkers regularly or occasionally teleworking(see Figure 5). Teleworking among managers ismore common: 42.2 % of managers in Denmarkand 26.7 % in the UK telework.

There are numerous social benefits of tele-work, for example:

– less time spent travelling to work;

– greater flexibility with working hours;

– more time spent with family;

– inclusion in the workforce of hitherto ex-cluded groups such as the physically dis-abled, carers and parents with young chil-dren;

– improved opportunities for work in remoteareas.

On the negative side, rather than being li-berating, the removal of the workplace commu-nity can undermine employee morale. The crea-tion of telecottages and telecentres may respondto the need for social interaction. One companyhas created seven telecentres in the Parisiansuburbs close to where employees live, so thatsocial contact can be maintained without entire-ly compromising flexibility.48

Pay and working conditions can be worse forsome teleworkers: Europe has over one millionpeople (growing to 2.5 million by 2006)49 doingrepetitive teleworking jobs such as data-entry,copy-typing and telesales, on less pay than theirnon-teleworking counterparts. Denmark andIreland are currently the only two countries inEurope with codes of practice covering tele-workers. The European Trades Union Congress

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47 Eurobarometer survey one-work, November 2000.Telework is defined as“carrying out all or part oftheir work away from theirnormal places of activity,usually from home, usingICT”.

48 e-work 2001, InformationSociety Technologies,September 2001

49 e-work 2001, InformationSociety Technologies,September 2001

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people engaging

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and the employers’ organisation UNICE (Unionof Industrial and Employers Confederations ofEurope) are negotiating an agreement to coverhealth and safety, work organisation and unionprotection for teleworkers.

5. 2. 6. New communities online

The Internet was created as a tool to allowuniversity researchers to collaborate across geo-graphical barriers. Its disregard for physical dis-tance has resulted in the formation of new com-munities online. Some of the earliest onlinecommunities were formed as support and infor-mation groups by mutual sufferers of illnessand their carers, as a complement to conventio-nal support structures. Other examples are theanti-globalisation movement, the community ofStar Trek fans or the community of program-mers who form the Open Source movement.

These online communities tend to bolsteroffline community rather than replace it. Geo-graphic communities are not being replaced by“E-tribes” as was once thought possible.

5. 2.7. Popular protest online

In addition to enabling the formation ofnew, global communities, the Internet also giveseasy access to an unprecedented amount of in-formation about companies and governments.This information can then be used in politicalcampaigns online and offline.

– One example of online action is the emerg-ence of spoof company Websites such asmcspotlight.com and shameonnike.com.

– Motivated protestors have attacked compa-nies through their Websites using hackerskills, bringing down computer systems andWebsites.

– Malcontents send E-mails in large numbersto protest against unpopular policies. WhenGeorge Bush withdrew the US from theKyoto Protocol, protest E-mails from envi-ronmental campaigners worldwide broughtdown the White House Website.

– Street protests, for example at the WTOmeeting in Seattle, are often organised overthe Internet.


Isolating the aggregated effects of large scaleICT use on society and social equity, from equi-valent effects on the economy or the environ-ment, presents many challenges. Equally, so-ciety is effected by a vast range of other factors,and at this level it is artificial to separate thesefrom those of ICT use. However, there follow anumber of opportunities for building social ca-pital, to which widespread adoption of ICT hascontributed.

5. 3.1. Cultural homogeneity or cultural diversity?

Despite the creation of software and inter-faces that support languages with non-Romanscripts such as Arabic and Japanese, the majori-ty of information on the Internet is in Englishand originates from the US. ICT is acceleratinga trend which is a symptom of globalisationmore widely. However, the detrimental impacton linguistic and cultural diversity is as yet un-

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known. If English comes to dominate almostexclusively, the potential for non-English speak-ers to be marginalised in the knowledge econ-omy would be a serious concern.

Counter trends exist though. There are op-portunities for new types of cultural diversity incyberspace. What is more, the Internet can beused to bolster cultures and communities underpressure. For example, Cornish is a languagespoken by just a few thousand people world-wide, but the online community of Cornishspeakers has a daily global newspaper, in theform of Nowodhow Kernow.50

5. 3. 2. Building local communities

The widespread adoption of ICT into societymay make it possible to rebuild strong localcommunities, where these have been eroded. E-commerce and telework both may reduce cartravel and provide an incentive for people tospend more time with their families and in theirlocal geographical community. The incentivewill be enhanced if local amenities such as postoffices or corner shops act as E-commerce deli-very points. Local businesses would also bene-fit.

Research has shown that interaction overthe Internet actually encourages interaction off-line. If Web traffic can be directed into locali-ties, this could encourage local face-to-face in-teraction and revitalise communities.

5. 3. 3. Building civic culture

The Internet may offer a way of channellingpopular interest in political issues back into theformal political process. Online voting is onemeans. In the Kalix municipality in Sweden, thelocal authority sought the opinions of localresidents via an online consultation prior todrawing up plans for redeveloping the towncentre.51

The Internet can allow citizens to engage di-rectly in the political process. Online inputs intoformal decision-making processes, online con-sultations and online advocacy can increase par-ticipation. Similarly, ICT gives political parties ameans of reaching new audiences faster andwith fewer resources than with door-to-doorcanvassing. Mass communications are essentialfor building coalitions of support in an agewhen party affiliations are weak and swingvoters make the difference. However, if ICT isto reinvigorate the democratic process, accessitself must first be democratised.

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50 http://www.geocities.com/cornishnews/

51 http://www.votia.com

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Growth of the ICT market Application of ICT within ICT and the “new economy”: businesses a new paradigm of growth?

– Size of sector and numbers – ICT creates opportunities for – Long-term and fundamental employed new efficiencies in business changes to the global economy

may create a more beneficial environment for the goals of sustainable development

Ongoing investment in ICT New opportunities for SMEs Exclusion or inclusion?– Investment in technology within – New markets and more efficient – The globalised economy may

companies continues to grow production for SMEs reinforce uneven patterns of wealth

– ICT may provide new solutions to ensure economic benefits are shared

Ongoing investment in Financial marketsICT research and development– Resources continue to be – ICT enables new financial

ploughed into developing markets, creating growthnew technologies – ICT enables wider participation

in financial markets

New types of company The relationship between business and the market

– Changing the structure of – Consumers are empoweredthe economy – Companies are encouraged

to act ethically

Boom and bust– Market volatility

Table 7

Economic

sustainability and ICT

6. Economic sustainability and ICT

Table 7 summarises the economic impacts and opportunities created by ICT.

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6.1. What is economic sustainability?

Economic sustainability could be taken tomean the conditions whereby stable economicgrowth can be sustained long term. This is cer-tainly important, but is only part of the picture.The aims of sustainable development are tocreate growth that is socially and environ-mentally beneficial. It should balance out socialinequalities and create opportunities for all,while not depleting the Earth’s resources anyfurther. Instead growth should invest in the re-building of ecosystems to provide for the long-term prosperity of humanity as a whole.

Economic growth in the context of sustain-ability is therefore best understood as sociallyand environmentally sustainable economicgrowth: growth that is measured by its contri-bution to improvement in human welfare.


6. 2.1. Growth of the ICT market

ICT has an increasingly significant role inthe European economy, making the social andenvironmental impacts and opportunities out-lined in this section all the more important.

The ICT market is expanding across Europeand looks set to continue in the future despitethe slowdown in late 2000–2001. Year-on-yeargrowth of the ICT market in Western Europewas 13 % from 1999–2000 and is expected to be5 % from 2001–2002,53 well above average GDPgrowth in the same period (see Figure 6).

This growth is reflected in the increasingnumber of people employed in the sector. InFinland for example, ICT employment in-creased by an average of 8 % per annum be-tween 1995 and 1999 and stood at 1,292,000 in

52 EITO 2002, Table 11,

Statistical outlook

53 EITO 2002, Table 12,

Statistical outlook

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1999. Employment growth in OECD countrieswas on average 12 % in the ICT sector in thefour-year period from 1995 to 1999.55 Employ-ment growth exists not only in the first orderdesign, manufacture and disposal of ICT equip-ment, but also in its application through ICTservice providers, software manufacturers andmore widely in economies as a whole throughthe stimulation of economic growth.

6. 2. 2. Ongoing investment in ICT

The increasing importance of ICT in theeconomy is demonstrated by the continuedheavy investment into ICT made by business,finance, government and every type of institu-tion. ICT capability is regarded as an essentialprerequisite for operation in the modern econ-omy and society. Continued investment intoICT equipment drives the move to a more ICTdependent economy, in which sustainable devel-opment issues can better be addressed.

Figure 7 illustrates that the share of GDPspent on ICT increased significantly since 1998in most countries.

6. 2. 3. Ongoing investment in ICTresearch and development

ICT companies and research institutionscontinue to plough large amounts of capital intotheir research and development budgets. In theperiod 1990–1997 applications to the EuropeanPatent Office for ICT patents increased by 8 %per annum, compared with 5.7 % per annum forall patents.56 The ongoing development of newtechnologies has direct benefits for the compa-nies responsible, but also has wider benefits forthe economy and society as a whole. Studiessuggest that the social return of research anddevelopment is at least twice as big as the pri-vate return due to spillover benefits to otherfirms.57

54 EITO 2002, Table 88,

Statistical outlook

55 Groningen Growth andDevelopment Centre,http://www.eco.rug.nl/ggdc/ictdatabase.html

56 OECD STI scoreboard

57 Economist, 23 September2000, p. 43

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6. 2.4. New types of company

The rapid development of ICT has led to thecreation of a range of new types of company toproduce the infrastructure and provide the nec-essary support services:

– Completely new markets have developed,such as the mobile telecommunications orthe optical fibre market.

– Certain characteristics of ICT implementa-tion and management – for example the ten-dency for new waves of functionality to ap-pear with relative speed, or the specialistknowledge required for programming – haveled many companies, especially SMEs, tooutsource their ICT needs. This has encour-aged the development of specialist supportagencies looking after core business activi-ties such as Knowledge Management, Web-site design and hosting or Customer Rela-tionship Management.

– Specialised software requirements are alsooutsourced. Instead of using expensive andquickly outmoded custom-built software so-lutions, many companies employ Applica-tion Service Providers (ASPs) to modify andimplement off-the-shelf solutions for SupplyChain Management or manufacturing pro-cesses.

This has inevitably led to diversification ineconomies and new opportunities for employ-ment.

6. 2. 5. Boom and bust in the ICT sector

The dramatic inflation and collapse of the“dot.com bubble” has attracted much media at-tention. Much larger organisations in the ICTsector than dot.com start-ups have been af-fected by the downturn in technology stocks.Figure 8 shows how ICT stocks in Europe havechanged in value from 1998–2001. The NasdaqEurope index includes a wide range of ICTcompanies of different type and size.

58 Nasdaq Europe:http://www.nasdaqeurope.com/ [with permission]

Nasdaq Europe Composite Index

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in the ICT sector –

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Clearly there are a range of factors that havecontributed to the boom and bust of technologystocks. In the context of sustainable devel-opment, it is worth asking whether the natureof ICT in the economy, requiring rapid develop-ment and deployment, encourages market vola-tility.


6. 3.1. Application of ICT within businesses

ICT has had a profound effect on the effi-ciency of internal business systems. To take oneexample, ICT has had particularly beneficial ef-fects on businesses’ inventory management,with implications for economic stability. ICThas increased the quality and speed of informa-tion that companies receive, for examplethrough bar-coding and real-time transmissionof sales data. Computer Aided Design has alsomeant that set-up and production lead timeshave been reduced. Companies are able to oper-ate with lower inventories and suppliers canproduce more to demand, reducing risk and ul-timately volatility. The inventories of durableconsumer goods for example fell relative tosales by approximately 20 % between 1988 and2000.

The application of Web-managed controlsoftware can result in:

– faster production lines and faster turnover;

– better logistics, cost and quality control;

– more information and better communicationthroughout a business;

– substantial elimination of waste.

The economic savings thus created also re-present in many cases environmental savings.

6. 3. 2. New opportunities for SMEs

Larger companies have had access to globalmarkets and economies of scale for a long timebut these opportunities are now becoming avail-able to smaller companies through the applica-tion of ICT.

– SMEs have access to new consumer marketsthrough the development of B2C E-tailingsites. B2B E-commerce provides greater ex-posure to business with large organisationsusing E-procurement policies or whole mar-kets where E-marketplaces operate. This canprovide small companies with limited re-sources access to global markets at very lowcost.

– A more networked economy creates greatereconomic diversity. SMEs are ideally placedto take advantage of developing marketniche products and services.

– SMEs have hitherto lacked the ability to ex-ploit efficiencies through large scale produc-tion. However, ICT control systems are asapplicable to small companies as they are tolarge and can allow SMEs to compete onprice.

The boost to SMEs has the potential tostimulate local economies and foster regionaldevelopment, contributing to a more equitabledistribution of wealth and opportunities, a keyelement of a more sustainable society andeconomy.

6. 3. 3. Financial markets

The application of ICT has been closelylinked to the rapid expansion of the world’sfinancial markets in the past ten years.

– ICT is used to communicate the data onwhich the operation of financial markets isbased. With the development of much fasterand more powerful ICT, financial marketsaround the world have been able to growand develop links. Because these financial

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markets deal exclusively in intangibles, thereis no limit to the speed and volume offinancial transactions.

– New financial sectors such as futures, deriv-atives or spread betting have been catalysedby ICT as it enables highly complex mathe-matical calculations and practically instanta-neous transfer of data.

– ICT has opened up financial markets towider participation. Through online sharestrading sites, financial information is dis-seminated to a new global community ofindividual shares traders.

The inclusion of large numbers of individu-al investors in the financial markets is at firstglance a positive democratising development. Itmay however lead to an increase in market vol-atility, as individual investors operate accordingto different rules from those of corporate inves-tors and their vast electronic markets.

The success of the financial markets gener-ates global wealth which can be channelled toaddress social and environmental issues. How-ever, it has been argued by some observers thatthe market is difficult to predict and regulateand creates patterns of wealth that are not glo-bally inclusive.

In the overwhelming majority of cases, in-vestment decisions are made taking only eco-nomic factors into consideration. If social andenvironmental performance of companies canbe given a market value, the financial marketshave great potential to contribute to sustainabledevelopment.

6. 3.4. The relationship between business and the market

ICT has changed the way that businessconnects to its markets in several ways. For ex-ample, ICT has stimulated the development ofnew business models such as E-marketplacesand has enabled individually-tailored marketingstrategies and product supply. Of particularimportance for sustainable development, ICThas provided the means for greater empower-ment of consumers, and has gone some way toenabling greater corporate accountability.

i. Empowerment of consumers

Increased product information online allowsconsumers to make informed purchasing deci-sions more easily. The growing body of ethicaland green consumers is better placed online tomake well informed purchasing decisions. Forexample, www.mtprog.com rates household ap-pliances based on environmental criteria. At thesame time, E-commerce is better suited toniche markets as niche consumer groups aremore easily targeted online than offline throughexpensive marketing campaigns.

ii. Corporate accountability

Corporate information is now more widelyaccessible than ever before, over the Internet.This enables consumers – indeed all stakehold-ers – to scrutinise companies’ social and envi-ronmental records, and then take action if theyfeel a company is operating unethically. Forexample, the Internet was key to organising thepopular movement against use of child labourin supply chains.

Furthermore, it has been argued that econo-mic relationships online, in an environmentwhere face-to-face contact is rare, place a great-er emphasis on trust. If a company can be seenas socially responsible, it is also seen as trust-worthy, and so attracts business, investment andnew recruits.

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In these ways, the increasing use of the In-ternet has been one factor stimulating compa-nies to develop strategies for Corporate SocialResponsibility (CSR). Many companies haveCSR departments and are committed to report-ing on social and environmental as well aseconomic performance.

“The Cluetrain Manifesto” examines howthe Internet has been central to the restructur-ing of business. Its authors argue that the Inter-net has been responsible for changing the bal-ance of power between companies and consum-ers, in favour of the latter. According to them,the Internet makes new relationships possible,“humanises the corporation, emphasises its in-teractions with other stakeholders and so rein-forces its social and environmental responsi-bilities”.59


6.4.1. ICT and the “new economy”: a new paradigm of growth?

Undoubtedly, today’s developed-world econ-omy has some different characteristics to that oftwenty years ago. For example, production ofmaterial goods has given way to a focus on serv-ices. Thus, the number of service industry jobsin France as a proportion of total employmentrose steadily over the past century, from approx-imately 25 % in 1900 to over 70 % in 1990. Glo-balisation is also a feature of the modern econ-omy, reflected in the increasing number and in-fluence of multinational enterprises and globaltrade bodies.

The increasing penetration of ICT has a verysignificant role to play in these changes to themodern economy, enabling services to be de-livered efficiently and providing the means tobind the global economy together.

Whether these changes constitute a “neweconomy”, a paradigm shift in the fundamentalsof economics, or whether they are the culmina-tion of long-term trends, is a matter for de-bate.60 More importantly, the modern economythat is emerging, with ICT at its core, may bebeneficial to the goals of sustainable develop-ment.

Central to this claim is the possibility thatICT contributes to generally higher rates of pro-ductivity growth. In the years 1972–1995, for ex-ample, productivity in the US economy grew by1.4 % per annum. This figure increased to 2.5 %per annum between 1995 and 2000, at a timewhen growth in ICT use was evident.

The IMF has identified this increase in USlabour productivity with ICT-related capitaldeepening and ICT-related efficiencies.61 TheUS Department of Commerce calculated that in1997 and 1998, when the US economy grew by8 %, between 27 % and 28 % of that growth wasattributable to the growth of ICT. RomanoProdi, President of the European Commission,said of US growth that it “leaves no doubt as tothe potential benefits of the new economy interms of growth, employment and low infla-tion”.62

However, dissenting voices exist. A recentreport suggested that US growth in the period1995–2000 was concentrated in just a few sec-tors of the economy, and not across all sectorsas would have been expected had ICT been thedriving force for growth.63

Furthermore, similar patterns of productivi-ty growth have not as yet been replicated inmany other developed economies, such as Fin-land or Sweden where ICT use is as high orhigher than in the USA. Nor is there clear evi-dence connecting ICT use and productivitygrowth in these countries.

59 Rick Levine et al., “TheCluetrain Manifesto: Theend of business as usual”,2000

60 See for example “Is there anew economy? First reporton the OECD growthproject”, OECD 2000

61 IMF, “The Informationtechnology Revolution”,2001 – see http://www.imf.org/external/pubs/ft/weo/2001/02/

62 Conference report from“The e-economy inEurope: its potentialimpact on EU enterprisesand policies”, 2001

63 Financial Times, 17 October 2001

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If ICT does indeed drive productivitygrowth, the increasing penetration of ICT sys-tems and applications across all aspects ofhuman endeavour may provide for greater pros-perity and stability in the economy of thefuture. It may even be possible for economicgrowth to finally be de-coupled from growth inconsumption and resource use, as explored ear-lier,64 creating a context in which the goals ofsustainable development can more easily beachieved.

6.4. 2. Exclusion or inclusion?

There are signs that the embedding of ICTin the new economy does not in itself addressdifferences between the rich and poor. Therichest 20 % of the world’s population still ac-counts for 86 % of GNP, 74 % of telephone linesand 93 % of the world’s usage of the Internet.

Some economists argue that the globaleconomy, driven by the financial markets, seeksvalue and bypasses areas where little profit canbe made, creating a substantial minority ofeconomically excluded people living in devel-oping countries and parts of developed coun-tries alike.

It has been shown that uneven distributionof ICT around the world leads to the creation ofa digital divide. However, the rapid develop-ment of ICT may present the opportunity forcountries currently with poor ICT infrastructureto “leapfrog” old economy solutions and pro-ceed directly to those of the new economy. Forexample, Rwanda is looking to roll out a mobiletelecommunications network without ever hav-ing invested significantly in fixed line. Similarly,emerging markets in the east of Europe such asPoland will soon have a much higher penetra-tion of mobile phones than of fixed-linephones. There are also many attempts to usefixed-line Internet access in developing andemerging economies to distribute economicbenefits more evenly.

7. Evaluation

This paper has reviewed the impacts and op-portunities of ICT on the three spheres of sus-tainability: environmental, social and economic.In evaluating the overall picture, it is necessaryto draw these three spheres together and iden-tify where the balance of positive and negativeeffects lies.

Figure 9 summarises the balance of positiveand negative impacts and opportunities of ICTon sustainable development, as presented inthis chapter.


The impetus for the development of ICThas been primarily economic, and so the imme-diate effects of ICT on economic sustainabilityare expected to be positive (c in Figure 9). Thisis the case, despite the current depressed stateof the ICT sector. Indeed, it has been arguedthat the bubble that burst in 2000 was a finan-cial bubble and not a technology bubble: tech-nology stocks were overvalued, but confidencein the technology itself remains strong.

The immediate effects on the environmentare quite the opposite (a in Figure 9). Productionof ICT equipment does not place the same levelof demands on natural resources, nor is it aspolluting, as many other industries, but none-theless the manufacture, operation and disposalof ICT equipment all have negative environ-mental impacts. Although efforts are beingmade to mitigate these effects from within theICT industry, action is also required at a policylevel:

64 See section 4.3.

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– to attain greater environmental efficiency inproduction;

– to produce greater environmental efficiencyof the equipment itself and

– to encourage “design for the environment”making equipment suitable for recovery andrecycling schemes.

Socially, the effects of ICT manufacture andoperation are more balanced (b in Figure 9). Thecreation of jobs is of social benefit, just as ac-cess to empowering technologies is of benefit tothe sections of society that have that privilege.However, patterns of digital exclusion threatento reinforce patterns of social exclusion, pre-senting a challenge to policy makers, NGOs andbusiness.


As Figure 9 shows, there is greater complexi-ty when considering the effects of the applica-tion of ICT on the sustainable developmentagenda.

Again, as might be expected, ICT applica-tions present opportunities for economic devel-opment (f in Figure 9). Furthermore, there aresigns that ICT, in particular through the use ofthe Internet, empowers consumers with greaterchoice.

First order Second order Third order

Environmental

Social

Economic

As yetunknown

Mostly positive

Mostly positive

Positive and negative

Mostly negative

More positive thannegative

a

b

c

d

e

f

g

n

n

n

Positive and negative n

n

n

Con

verg

ence

Figure 9

Evaluating the effects

of ICT on sustainable

development

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ICT co-ordinated financial markets may cre-ate market volatility and exacerbate exclusion,but this may be changing with investors andfund managers beginning to respond to con-sumer concerns. Indeed, the markets may be-come a powerful force for sustainable devel-opment in the future by directing increasingvolumes of capital into companies that candemonstrate a commitment to ethical issuesand a practical approach to social and environ-mental risk management.

Telematics is a promising technology for re-ducing traffic levels (d in Figure 9). ICT stream-lines business systems, increasing efficiency andtherefore decreasing the environmental foot-print of business. E-commerce and teleworkmay or may not cause a decrease in the use oftransport and a consequent decrease in vehicleemissions, depending on how consumer habitsare effected and how support systems are struc-tured. Many of the effects of ICT application onthe environment remain in the balance, and it ishere that policy initiatives are perhaps mostneeded to ensure that they are swung in theright direction for sustainability.

ICT applications, in particular the Internet,provide access to information and services andcreate the possibility for greater community in-volvement for hitherto excluded groups (e inFigure 9). Workers may benefit from an im-proved work-life balance. The Internet mayhave a generally humanising effect on people’slives. However, the social benefits of ICT at thislevel are dependent on universal connectivity,widespread “IT literacy” and the relevant con-tent being developed to serve communities andindividuals. There is a very significant role forpolicy makers to play in creating such an envi-ronment.


The aggregated effects of widespread use ofICT throughout the economy and society are asyet ambiguous (g in Figure 9). Long-term envi-ronmental effects are dependent on the type ofeconomy that results from ICT penetration. A“lightweight” economy where intangible goodsare valued above material production, whereeconomic growth is de-coupled from growth inenergy consumption and pollution, may beemerging. This is the type of economy thatwould benefit the aims of sustainable develop-ment, but it is far from clear whether the econ-omy of Europe is developing in this direction.

Similarly, it remains to be seen whether ICTpenetration produces cultural homogeneity ordiversity, whether social equity will be boostedor communities eroded. The third order effectson society, as with the economy and the envi-ronment, will be unveiled in the long term.Even then, directly attributing macro-leveleconomic social and environmental develop-ments to the increasing use of ICT, rather thanto other trends such as the rise of the serviceeconomy or changes in cultural attitudes, willbe extremely complex.

7.4. Summary

The past twenty years or so have seen ICTbecome ever more central to the world’s econ-omy and culture. This technological revolutionis of great significance for several reasons:

– The speed with which ICT has penetratedsociety is unprecedented by any other tech-nology.

– ICT has an enormous range of applicationsand can be profoundly enabling.

– The creation of ICT requires less resourcethan the creation of many other enablingtechnologies, such as the internal combus-tion engine, and has very low marginalcosts.

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In some cases ICT is of direct benefit to thegoals of sustainable development; in others ICTis directly or indirectly detrimental to social andenvironmental concerns. In most cases, how-ever, the effects will only become clear in themedium-to-long term.

The goals of sustainable development are toenable all people to realise their potential andimprove their quality of life in ways that simul-taneously protect and enhance the Earth’s life-support systems. As these goals becomeincreasingly accepted, more and more facets ofhuman activity will be analysed in terms of theireffects on sustainable development.

In the case of ICT, examples of this processtaking place have already been observed. How-ever, this section has shown that despite all thepotential, there is no overwhelming dynamic inthe penetration of ICT that automatically pro-pels the globe towards a sustainable state.Rather, ICT presents an array of opportunitiesto be taken: ICT is a tool that can be used tosteer society in a beneficial direction.

The possibilities of ICT should perhaps beseen as a challenge for those who wish to im-prove the quality of life for all. The response ofpolicy makers in government, business and incivil society is therefore crucial.

8. Policies and targets

The evaluation of the economic, environ-mental and social impacts of ICT highlights aseries of critical junctures at which action onthe part of business and government is neces-sary if some of the more negative impacts ofICT are to be avoided and the positive opportu-nities are to be exploited fully. Current trendsindicate that there is no room for complacencyabout the inevitability of positive outcomes.

Although the deployment of ICT throughthe economy and society is still at an earlystage, now is the right time for concerted policyaction. In this way, it may be possible to intro-duce sustainability into the ICT sector from theoutset, rather than having to retro-fit social andenvironmental concerns in response to stake-holder pressure.

Three broad principles should govern anyattempts to maximise the synergies betweensustainable development and ICT:

– Institutional innovation must be as radicalas technological innovation in order to keepup with the pace of change.

– Business, government and non-govern-mental organisations (NGOs) must work inpartnership for action to be effective.

– Successful policy will depend on a longerterm view, beyond the ups and downs ofICT stocks prices.

8.1. A selection of policy options

There is a range of policy tools available togovernment and business in attempting to in-fluence the development of ICTs and their im-pacts. Maximising the potential of ICTs to pro-mote sustainable development will depend onhow these policy tools are implemented and thedegree of co-ordination between different levelsof government, business and other policy actorssuch as NGOs.

Table 8 sets out a selection of policy toolswhich could be used, together with a brief ex-planation of how each tool functions and anindication of where each can be most effective.In addition, it offers specific examples for eachpolicy tool within the framework of ICTs andsustainable development.

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Policy tool Explanation Primary focus Policy examples

Table 8

Policy options

Frameworks

Market-based policies

Regulation

Voluntaryindustry initiatives

Monitoring and reporting

Government-supportedinitiatives

A broad statement of goals and strategy whichestablishes the directionfor more specific policymeasures.

Market-based policies,such as fiscal instruments,offer a way of promotingsocial and environmentalconcerns by reallocatingthe burden of taxation. At the same time, theypromote innovation andstimulate new markets.

Public authorities mandatethe social and environ-mental standards to beachieved, or the technolo-gies to be used, by firms.

Firms make a commitmentto improve their perfor-mance beyond strict legalstipulations. This is com-monly referred to ascorporate social responsi-bility.

Firms commit to transpar-ency and accountability intheir activities. This allowsbenchmarking across in-dustry, which can improvelong-term performance.

Information and financialsupport is offered bydifferent public authoritiesto promote sustainabledevelopment.

The opportunity to affect devel-opment at the first, second andthird orders by changingstrategic lines of thinking andcreating a fertile environmentfor new policy initiatives.

Market-based policies maycreate incentives to reducenegative first and second orderenvironmental and socialimpacts, whilst promoting adynamic, competitive ICTsector in Europe.

Regulation can reduce negativefirst order environmental andsocial impacts. However, regu-lation offers less flexibilitythan market-based incentivesand so market-based incentivesshould be favoured wherepossible.

Voluntary initiatives couldreduce first, second and thirdorder impacts. However, theoverall environmental andsocial impact depends onindustry-wide buy-in.

Over time, benchmarking maypromote sustainable develop-ment across first, second andthird orders.

Government-supported initia-tives could improve knowledgeon sustainability issues amongbusiness and create incentivesfor improved environmentaland social performance at thefirst and second orders.

The EU could take a lead in creating an integrat-ed framework for eEurope and sustainable devel-opment. This would create a favourable environ-ment for new policy initiatives and legislation topromote the positive impact of ICTs on sustain-able development.

Tax exemptions could be offered to employerspurchasing computers for use by employees athome. This would promote digital inclusion aswell as creating opportunities for home workingto reduce commuting and office space.

Increased taxation on high-emission fuels couldshift usage towards renewables and stimulateinnovation in new fuel technologies. This couldreduce the home delivery impacts of E-commerce.

The EU draft directive on universal access couldbe extended to broadband by 2015 to promotedigital inclusion.

Member State governments could increase finesfor heavy-metal contamination in order to en-courage industry to replace toxic substances inproduction.

ICT companies could commit to exceeding therequirements of the WEEE directive for recyclingelectronic waste in order to reduce the first orderenvironmental impacts of ICT equipment.

The ICT industry could put forward overalltargets for “factor four” efficiency gains as part ofan industry-wide strategy for reducing its environ-mental impact.

ICT companies could commit to triple bottomline reporting under the Global Reporting Initia-tive.The ICT industry could co-operate withNGOs and policymakers to develop sector-specificguidelines for triple bottom line reporting.

Government could finance and support socialpartnerships to tackle the digital divide.

Local and regional governments could providefinancial support for online local communities,particularly in rural and disadvantaged commu-nities.

Documents

The impact of ICT on sustainable developmenthomepage.cs.latrobe.edu.au/sloke/greenIT/eito_forum_2002.pdf · The impact of ICT on sustainable development ... 2 Forum for the Future