HOW THE METAVERSE CAN ADD VALUE TO ESG PROJECTS:

Waste Management and Employee Safety

While some see the term “metaverse” as a buzzword or fad, it is a technological platform that most firms are discussing or embracing. In a survey of 1,000 U.S. business executives, 66% reported that their companies are actively involved in the metaverse (PwC 2022). Many definitions of the metaverse exist, with various firms and individuals contributing to this evolving definition. William Burns III, who is listed in Forbes as an early contributor to the metaverse, defined it as “a collective virtual shared space, created by the convergence of virtually enhanced physical reality and physically persistent virtual space, including the sum of all virtual worlds, augmented reality, and the Internet” (Hackl 2021).

While virtual reality headsets and life-like gamified environments are commonly associated with the term metaverse, it can be broadly thought of as a future, more immersive iteration of the internet. However, for simplicity in this article, the metaverse will be thought of as an individual’s immersive visual experience in a digitally developed world, using virtual reality technology. In thinking about the metaverse, many questions persist, including: Will the metaverse be longlasting? Do consumers demand metaverse experiences? Can the metaverse transcend the gaming industry to drive value for environmental, social, or governance-related issues?

ESG Issues

ESG stands for Environmental, Social, and Governance. These terms are grouped together because they are all considerations that consumers and investors value that are not strictly profit-related. Duke Law Magazine summarizes: “ESG encompasses a broad range of concerns about the power of corporations, including their environmental impact, stance on social issues, employment practices, treatment of suppliers, diversity in governance, and ethics and transparency of operational practices” (Naujek 2021). ESG considerations emphasize maximizing shareholder value while simultaneously aligning with the firm’s values. With the U.S. Securities and Exchange Commission’s release of the Climate Related Disclosure Proposal in March 2021, many firms seem to be focused on the environmental (E) aspect of ESG, while Social (S) advances are also increasingly prioritized.

Waste Management

The metaverse’s virtual reality experiences can be implemented by companies to decrease waste and collect more accurate data while lessening their ecological footprints. The metaverse and virtual reality technologies could be used to predict the success or adoption of some items, buildings, apparel, or public projects and advise against the creation of others. For example, Have you ever heard a family member say: “I would go to that grocery store, but the layout is so hard to navigate”? What if targeted consumers’ preferences on grocery-store layouts could be considered prior to the construction and design of the store? When you walk into a sale section of a clothing store, how many of the items are the same color or style, meaning they were not popular enough to sell? Additionally, a city planner or official might say, ‘We should build a public park to increase the health and safety of our children, but where is the best location to put it? What are the best types of equipment to place in the park?’

When businesses or governments fail to utilize data to create accurate predictions, products and resources are wasted. The grocery store might close or see lower customer retention, which could lead to food waste. In retail, the nonsold items are often thrown away, piling up in the landfill. A poorly placed park with unsafe or ‘boring’ equipment may be unattended, leading to wasted equipment, land, and potentially, crime. To lessen the quantity of waste in society, virtual reality software, including metaverse platforms, can be used to create randomized controlled experiments on a larger and more immersive scale, resulting in better data-driven or data-informed decisions, satisfied consumers, and less waste.

Industry Example

How often have you gone to the sale section in a store, and the remaining items have undesirable colors or styles in large quantities? The retail industry can use virtual reality software to better forecast trends, therefore, reducing waste. In 2017, the fashion industry was responsible for 85% of all textiles in landfills, according to the Environmental Protection Agency (Devaney 2017). Retailers have the option to donate unsold clothes, sell them to discount stores, or shred and deposit them in landfills However, most brands prefer to throw away unsold clothing rather than sell it for a discounted price: “The primary concern is the impact on the brand. We’ve spent all this time and money creating this image that we’re an upscale retailer, and now suddenly you can buy our products for 20 percent of the price” (Barrat 2014). As a solution, fashion retailers could introduce a metaverse platform to research which styles their consumers demand. For example, a sports apparel company deciding on which six colors to produce for their new line of leggings could randomly select a large group of previous customers to participate in a study with the goal of aligning the color choices with consumers’ preferences. Each storefront would ask participants to put on virtual reality headsets that immerse the consumers in a ‘metaverse showroom’ that displays six different types of people wearing 12 different color leggings, and then ask consumers to rank the colors. Furthermore, the metaverse platform could include an exercise class, virtually testing the garments. On larger scales, similar randomized controlled trials could be used to determine the design and location of a shopping mall, hotel chain, or line of resorts.

Safety Advances Through Metaverse Simulations

On a personal level, the first time I benefitted from a metaverse platform was in my college Genetics Lab during the COVID-19 pandemic. The virtual lab platform showed a digitally developed version of myself, moving around the lab, and completing various tasks. One day, I added an incorrect chemical to a solution, resulting in a virtual ‘explosion.’ My computer screen went fuzzy, mimicking blurred vision. The screen read, “press keys 1 and 2 ’to 'run' to the eyewash station”. Due to the virtual setting, I learned a lesson without potentially harming my vision. Many biology, chemistry, or pre-medical students must complete in-person labs, but, as an Economics major, I was glad to learn from this mistake without requiring medical attention or taking up space in a hospital needed by someone else.

Metaverse platforms can prevent dangerous situations and allow individuals to practice preliminary skills without physical consequences. On a graver note, school systems and teachers could benefit from metaverse active shooter drills, allowing teachers and administrators to be better prepared without their students’ presence and potential psychological harm. Metaverse simulations could help pilots practice landing planes in difficult areas or prepare for emergencies. Additionally, metaverse platforms could help in talent acquisition for any career. With the pilot example, a candidate considering enrolling in flight school could use virtual reality technology to test-fly a plane and decide if aviation is a career of interest. Prospective university students whose families cannot afford to travel and tour universities in-person could experience college tours in the metaverse, with the colleges and university recruiters lending virtual reality headsets to high schools. In politics or business, individuals preparing to give a speech or presentation to a large audience could practice in the metaverse with a crowd in front of them, improving their presentation quality and lessening their nerves.

Limitations and Remaining Questions

The main questions remaining are: Is the marginal benefit from implementing metaverse randomized trials and safety measures greater than the marginal cost of adding these initiatives? Which demographics are most likely to adopt or embrace these initiatives? Is virtual reality technology accessible in quantity and price to allow the implementation of these initiatives on a large scale? In my opinion, the main limitation of metaverse platforms is the shortage of metaverse software developers and engineers paired with researchers to create scenarios that are realistic, life-like, and safe. Additionally, metaverse training must be combined with nontechnologically immersive scenarios. Consumers would likely not trust a pilot who has only flown planes in the metaverse. However, it could be an introduction. Additionally, the metaverse creates safety concerns such as an increased sedentary lifestyle, potentially discriminatory depiction of individuals, and developer bias. Technology is only helpful when it is additive to society, and not negatively manipulated. Any technological advance will come with advantages and disadvantages, especially in the early stages If metaverse technologies are used to successfully improve ESG considerations, especially waste management, this controversial virtual platform would drive positive change for many members of society.

References

Ben-Achour,S (2014,March10) What do stores do with unsold merchandise? Marketplace RetrievedMarch2,2023,from https://wwwmarketplaceorg/2014/03/10/what-do-stores-do-unsold-merchandise/ Dalton,M (2020,August17) What happens to all of the unsold clothes? TheWallStreetJournal RetrievedMarch2,2023,from https://wwwwsjcom/articles/fashions-big-question-what-to-do-with-all-those-unsold-clothes-11597328695

Devaney,S (2017,May3) Here's why 235 million items of clothing will end up in landfill sites in the UK this year HuffPostUK RetrievedMarch2,2023,from https://wwwhuffingtonpostcouk/entry/235-million-items-of-clothing-landfill-sites-in-the-uk-this-year uk 58e62581e4b0917d34776259

ESG - Feature Story Fall 2021.DukeLawMagazine.(2022,March1).RetrievedMarch2,2023,fromhttps://magazine.law.duke.edu/esg-feature-story-fall2021/

Hackl,C (2022,November9) Defining the metaverse Today Forbes RetrievedMarch2,2023,from https://wwwforbescom/sites/cathyhackl/2021/05/02/defining-the-metaverse-today/ PricewaterhouseCoopers (nd) 2022 US metaverse survey PwC RetrievedMarch2,2023,fromhttps://wwwpwccom/us/en/tech-effect/emergingtech/metaverse-surveyhtml