METALAB REVIEW

AI & CULTURE, BUSINESS AND SOCIETY

SPECIAL EDITION: STUDENT IDEAS THINK TANK

No 1, SEPTEMBER 2023
FOREWORD BY
METALAB DIRECTORS

We are delighted to present this first edition of the Metalab Review, as a special issue
assembled by the talented members of Metalab IDEAS, a student think tank.

At ESSEC Business School, our mission is to prepare future leaders – our students
of today – to comprehend and responsibly unleash the power of artificial intelligence
and data science to benefit both industry and society. We believe that realizing AI's
potential requires a wide ranging and concerted effort. The responsible adoption of
these fast-deploying technologies requires cultivating a new generation of professionals
who combine scientific acumen and organization savviness with ethical and societal
mindfulness. Our conviction is that our business school students must be equipped with
the multifaceted expertise needed to invent new AI solutions to the problems societies
and companies face today.

The insightful articles authored for this magazine by the student editors and analysts
of Metalab IDEAS embody the spirit of responsible AI leadership we seek to instill.
Analyzing topics ranging from enhancing human creativity through AI to the policy
implications of digital currencies, their contributions highlight the immense yet
unevenly distributed potential of data driven technologies. Weighing opportunities with
responsibilities, their work delves into the nuanced elements that shape an equitable
and sustainable AI future.

We believe this first edition will enrich debates on campuses and beyond by grounding
AI discourse in the contextual complexity of the real world. We hope it inspires readers,
especially those poised to assume responsibilities, to keep advocating for a human-
centric AI that ethically addresses social needs.

Congratulations to the talented 2023 IDEAS students cohort on their commendable work
to advance conscientious AI leadership!

THE METALAB CODIRECTORS

BENOIT BERGERET
PROF. GUILLAUME CHEVILLON
PROF. JULIEN MALAURENT

METALAB REVIEW ¦ 3
4 ¦ METALAB REVIEW
FOREWORD BY
ONEPOINT
In an era reshaped by technological breakthroughs and environmental upheavals, agility and
adaptability have never been more critical in crafting solutions for tomorrow's challenges and
in reassessing how our society envisions its future to better prepare for it. Overcoming the
obstacles ahead hinges on substantial investments in research and innovation.

Fueled by this steadfast belief, the onepoint Institute, our cross-disciplinary initiative,
orchestrates applied research initiatives that transform knowledge into practical and tangible
advancements.

The emergence of generative AI technologies paints a vast landscape of opportunities.

Together with its academic partners, the onepoint Institute aims to convert these possibilities
into meaningful value, underpinned by a sustainable and sovereign approach.

It was this vision and ambition that naturally led onepoint to establish a strategic partnership
with Metalab, a leading authority in AI and data from ESSEC, in 2021. This alliance offers a
unique platform for enriching collective insights on the rapidly growing adoption of these
technologies. Ongoing dialogues between our consultants and experts, and ESSEC researchers
and students enhance our service and consultancy offerings to onepoint’s clients. They also
fuel the creation of content that informs society at large on these transformational topics,
such as the student contributions from ESSEC’s think tank IDEAS, which form the core of this
inaugural Metalab Review, to which we are honored to contribute.

This symbiotic partnership also advances our mutual understanding of the present and
future impacts of AI and data. A collaborative approach serves as a catalyst for deepening
domain-specific knowledge. The enhanced public and civic visibility of both partners is further
amplified through joint events and communications. More than 600 students have engaged
in these events and hackathons, and the synergy between one of the world's leading business
schools and one point, the « the Architect of Transformations » also fosters a harmonious
balance between the academic and corporate realms. Our operational teams provide essential
on-the-ground perspectives to conduct research that aligns with the real-world corporate
challenges in responsible AI.

Without a doubt, this high-impact, structurally significant partnership aims to drive positive
change in the world. It focuses on understanding and applying new technologies wisely and
ensures that preserving our humanity remains a top priority.

MURIEL TOUATY
PARTNER EDUCATION AND INNOVATION, ONEPOINT

METALAB REVIEW ¦ 5
6 ¦ METALAB REVIEW
STUDENT
EDITORIAL

In 2020, ESSEC Business School pioneered the Metalab for data, technology and society,
a center aimed at creating dynamics around AI and disruptive technologies within ESSEC
programs - and beyond. As part of its activities, Metalab established the student-led IDEAS
think tank, a school-wide project to address the repercussions of technology on business
and management; from the increasing relevance of data analytics to the inescapable
reality of artificial intelligence. Now closing on our second year of existence, the think tank
has published numerous articles, developed privileged contacts with business partners,
conducted events, and produced a Podcast series—and we are only getting started!

With this first edition of the Metalab Review, we proudly present the editorial team’s work
produced over the 2022-23 academic year. We showcase a wide range of articles written
by the editors and analysts spanning multiple disciplines from the business school.
The articles correspond to each of the four key interest groups we have been leading: AI
Adoption, the Future of Sustainability & Society, Blockchain & Decentralization, and the
Future of Work & Business; and intermingled with these articles are snapshots of the
motivations behind some of the board’s participation in the Metalab.

This issue also features a series of the successful events organized by the team,
roundtables and poster sessions, as well as participation of Metalab IDEAS to other
relevant ESSEC initiatives. Indeed, in our second year, our team has endeavored to expand
beyond editorial publications. Such is the case for the release of Tech Tide: A Wave of
Ideas, a podcast series produced in conjunction with Tech ESSEC. It aims to shed light on
the impact of technology and AI developments on companies, society and the economy.

The publication of the magazine is a manifestation of the Metalab IDEAS team’s ambition,
hard work, and commitment to assuring the leaders of tomorrow are informed on the
technological advancements that will affect theirs and the lives of those they will lead. It
has not been easy, any member of the board will attest to that, but worthwhile? No doubt. It
is therefore the team’s greatest wish that not only will you be entertained by this issue, but
that you will learn from it.

IDEAS THINK TANK EDITORIAL BOARD

METALAB REVIEW ¦ 7
THE EDITORIAL
BOARD MEMBERS
NELBERTO NICHOLAS
“SAM” QUINTO
PHD STUDENT IN THE
MANAGEMENT DEPARTMENT
AT ESSEC BUSINESS SCHOOL
I’m Nelberto Nicholas “Sam” Quinto and I am a
doctoral student who does research on human-AI
collaboration. I am particularly interested in how
“collaborating” with AI alters problem-solving,
creative thinking, and group dynamics in innovation
contexts. Aside from studying AI, I also use it
to analyze large amounts of data from creative
industries to uncover approaches to innovation that
yield replicable outcomes when used by different
individuals. My predilection for AI can be traced
to my work as a data science consultant at BNP
Paribas’ Analytics Consulting team, my analytics
internship in Amazon, and my coursework on big
data, machine learning, and AI strategy during my
Master’s in Management at ESSEC. Hence, within
my work in the Metalab, I strive to distill insights and
thought-processes from these many experiences
to both co-create and curate content that drives the
frontiers of ongoing AI discourse.
MARINA PELLET
MASTER IN DATA SCIENCES
& BUSINESS ANALYTICS AT
ESSEC BUSINESS SCHOOL &
CENTRALESUPÉLEC
I’m Marina Pellet, I’m French and Hungarian, and
I am a student in the DSBA Master's program
created by Essec and CentraleSupelec. Before that, I
studied in London at UCL and I obtained a bachelor
of Management Science with a specialization in
Cybercrime. I speak four languages and I have
lived in six different countries. I love photography,
cinema and reading. Also, I am very keen on sailing
and kitesurfing. I am simultaneously excited and
concerned about the increasing use of technology
by society, so I can’t wait to discover all aspects
together!
8 ¦ METALAB REVIEW
MICHELLE DIAZ
MASTER IN MANAGEMENT
STUDENT AT ESSEC BUSINESS
SCHOOL
I’m Michelle Diaz! I grew up
between Ireland and the Philippines, and graduated
with a B.A. International Joint Honors in English
Literature & Information and Social Computing
from University College Dublin, with a year-long
academic exchange at Waseda University in
Tokyo, Japan. I’m currently a fourth-year Master in
Management student. My work experiences are in
AI, startups, & entrepreneurship. And I’m currently
doing a double degree in Global Management at the
University of Queensland, Australia. My interests
are in sustainability, ethical issues in business and
technology, AI, and impact ventures. Moreover,
in my downtime, I love watching films, tv shows,
documentaries & I spend a significant amount of
time reading and writing. In another life, I would
actually be in graduate school for creative writing.
VANSHIKA SHARMA
MASTER IN DATA SCIENCES
& BUSINESS ANALYTICS AT
ESSEC BUSINESS SCHOOL &
CENTRALESUPÉLEC
I'm Vanshika Sharma. I grew up in New Delhi,
India and did Bachelor's in Commerce (Honours)
from University of Delhi. Prior to joining the
masters program at ESSEC Business School
and CentraleSupélec, I worked for two years as
an Associate in Quantitative Analytics and Data
Science at Gartner, Inc. I recently completed a
Master in Data Sciences and Business Analytics and
started my end-of-studies internship at Amazon.
I have always been intrigued by how transforming
data into meaningful insights can lead to better
decision-making and innovation. My interests are
in exploring upcoming technology, its influence
on various industries, and how it can be used
to promote sustainability. In my free time, I love
binge-watching thriller series, exploring different
cities, and discovering their gastronomy (especially
various vegan/vegetarian food options).
 KUNAL PUROHIT
MASTER IN MANAGEMENT AT
ESSEC BUSINESS SCHOOL
I am Kunal Purohit, originally from
Udaipur, India. After engineering, I
worked in product in two different Tech companies
for two years and while pursuing my first year of
MIM at ESSEC, I am currently working as Data
Analyst Apprentice at a startup in Paris and also
participating in Accenture SBA Chair. Reading about
new technologies, writing blogs, playing Table-
Tennis, listening to podcasts and watching movies
are my interests. Fluent in 3 different Indian regional
languages and English, I am currently learning
French.
PAUL BÉDIER
MASTER IN DATA SCIENCES
& BUSINESS ANALYTICS AT
ESSEC BUSINESS SCHOOL &
CENTRALESUPÉLEC
My name is Paul Bédier, I am 26 years old and
French. I completed a bachelor in Economics &
English, before obtaining a MSc in Finance from
EDHEC Business School. I then worked in different
financial firms and investment funds as an analyst.
After that I got very interested in AI and Data
Sciences so I joined the DSBA Master from which
I recently graduated. My interests include various
things like movies, food, and mountain trekking. I am
also curious about other cultures and I like learning
new languages (Japanese, Chinese), which is why I
went to Singapore to cap off my studies. Excited to
keep contributing to Metalab Ideas!
NEIL JR. ROMUALDEZ
MASTER IN STRATEGY &
MANAGEMENT OF
INTERNATIONAL BUSINESS
Hi! I’m Neil Romualdez Jr, 23 years
old. I’m currently taking the Master in Strategy &
Management of International Business (SMIB) under
the Managing Digital Transformation & Innovation
Track. Prior to this, I graduated with a bachelor’s
degree in Mathematics. I had a short stint in trade
reconciliations for hedge funds before I worked on
public policy as an economist for the Philippine
Ministry of Finance. I am deeply interested in how
emerging technologies and our dependence on
them can change the way the world interacts and
manages its resources. In my downtime, I read
books, watch movies, and play musical instruments.
PIETER JAN MOTMANS
MASTER IN DATA SCIENCES
& BUSINESS ANALYTICS AT
ESSEC BUSINESS SCHOOL &
CENTRALESUPÉLEC
I’m Pieter Jan Motmans, a beginning researcher
in the exciting field of Reinforcement Learning
currently doing an internship at ESSEC Business
School in Paris. I have been part of the Metalab
for two years now, first during my Master’s in Data
Sciences and Business Analytics and now during my
internship. Throughout these years, I was constantly
driven by my interest in studying the societal impact
of different technologies. It has been enriching to
be a part of the think tank to progress the debate on
these topics, and I greatly enjoyed writing my own
articles, and helping analysts and fellow editors in
writing theirs.
RINALYN PAGAO
MSC IN SUSTAINABILITY
TRANSFORMATION AT ESSEC
BUSINESS SCHOOL
My name is Rina. I completed
my Global BBA at ESSEC through the Singapore-
Paris track and graduated in 2020. After that, I
spent 2.5 years as a financial analyst at large
digital and marketing agencies. This allowed me to
have multicultural and international experiences,
from my upbringing in the Philippines to living
abroad, especially in Singapore, Paris, and
Barcelona over the past 6.5 years. I am currently a
pioneering master student in MSc in Sustainability
Transformation 2022–2023 program at ESSEC,
Cergy Campus.
In the face of the global climate crisis and other
challenges, my main interests are at the core of
sustainability, social innovation, and making a
positive influence in our society. I am especially
curious about how technology interacts with green
and sustainable growth within the confines of our
planetary boundaries. I am thrilled to be part of the
editorial team and to learn more!
With contributions from IDEAS think tank analysts:
SEETHAL REDDY AMIR HUMZA
KAULURI - MASTER KHAN - MASTER
IN MANAGEMENT IN FINANCE.
METALAB REVIEW ¦ 9
TABLE OF
CONTENTS
AI & CREATIVITY

14 20 30
ARTIFICIAL WILL AI END THE AI CREATIVE
INTELLIGENCE: CREATIVITY? RENAISSANCE:
A BOOST UNPACKING THE THE IMPACT OF
HUMANITY BEHIND CO-CREATING WITH AI
TO HUMAN GENERATIVE AI ON CREATIVITY AND
CREATIVITY CO-CREATIONS THE FUTURE OF
WORK

SUSTAINABILITY & SOCIETY

40 48 58 66
THE PROGRESS ATTENTION CITIES OF THE FROM VIRTUAL
PARADOX: ECONOMY: FUTURE MODELS TO
CAN TECHNOLOGICAL YOU’RE NOT EVALUATING AI’S REAL-LIFE
ADVANCEMENTS POTENTIAL IN
COEXIST WITH
PAYING ENOUGH CLIMATE-RESILIENCY
IMPACT:
ATTENTION HOW DIGITAL TWIN
A DEGROWTH
AND AI ARE DRIVING
ECONOMY?
SUSTAINABILITY
EFFORTS

10 ¦ METALAB REVIEW
BLOCKCHAIN & DIGITALIZATION

76 86 96
DIGITAL DIGITAL CURRENCY: PATHWAY TO A
CURRENCY: THE THE OVERHAUL OF FAIR METAVERSE
SUBSTITUTION PUBLIC MONEY
WHY DO WE NEED
OF MONEY A CENTRAL BANK
DIGITAL CURRENCY
WHEN MONEY IS
ALREADY DIGITAL?

102 112
DIGITALIZATION BLOCKCHAIN:
OF TALENT THE ANSWER
ACQUISITION: TO INVESTORS’
MOVE FORWARD GREENWASHING
WITH CAGED WOES?
MACHINE

SAFETY & TRANSPARENCY

126 132 138

144
SOCIAL SCIENTISTS EXPLAINABLE AI: EXPLAINABLE AI:
IN THE QUEST FOR PART 1 - WHAT’S PART 2 - CAN WE
AI ALIGNMENT AT STAKE AND HAVE A STATUS
THE POTENTIAL OF
INTERDISCIPLINARY
WHEN DOES IT QUO WHERE AI IS
COLLABORATION IN AI MATTER? EXPLAINABLE? HIGHLIGHTS
SAFETY OF THE YEAR

METALAB REVIEW ¦ 11
12 ¦ METALAB REVIEW
CREATIVITY
AI &

METALAB REVIEW ¦ 13
ARTIFICIAL
INTELLIGENCE: A
BOOST TO HUMAN
CREATIVITY
By MICHELLE DIAZ
Master in Management Student at ESSEC Business School
WHAT IS CREATIVITY?
N
othing seems more human than
creativity—the trait that underpins
human innovation, from the arts to
the sciences, and pretty much everything
in between. According to the Cambridge
dictionary, creativity is defined as “the ability
to produce original and unusual ideas, or
to make something new or imaginative.”
However, physicists regard equations not only
for their originality, merit, or consequence, but
also for their elegance. On the way in which
an equation can embody a truth. Ingenuity is
defined not only by the solution-like quality
it may have, but by the subjective emotion it
can elicit.
One of the greatest love stories in medicine
is that between William Steward Halsted,
considered to be the father of American
surgery, and Caroline Hampton Halsted, his
scrub nurse. The story goes that around the
winter of the 1890s, Caroline complained
14 ¦ METALAB REVIEW
of dermatitis on her hands and arms due to
the solutions used in the operating room.
Given William’s regard for Caroline, he made
a request to the Goodyear Rubber Company
to make thin gloves as an experiment. And
these became the rubber operating gloves
used today, thin and reliable. Coupled
with hand hygiene, it significantly reduced
infections and deaths in the operating room.
A simple innovation borne out of necessity
and concern – a creative and consequential
solution sparked by an understanding of
context and the human need to alleviate
emotional turmoil.
As it stands, artificial intelligence remains
incapable of the emotion that makes
creativity human. It can neither comment on
the elegance of Einstein’s theory of special
relativity nor attribute any solution it proffers
as stemming from pain, devotion, or the
desire to simply evoke emotion. But ask any
AI specialist today, and they will heartily tell
you that AI already has a relationship with
creativity, one that is beneficial to both parties

and largely in service of human creativity. Not
quite out to compete with human creativity.
Not yet anyway.
DEFINING CREATIVITY
Over the years, creativity has been defined
in multiple ways. All with the explicit aim of
capturing and accounting for every facet
of the concept. From breaking it down into
different types, to analysing its consequences,
and clearly defining the common thread of
what makes a certain idea, behaviour, or
endeavour creative.
© Bench Accounting on Unsplash
One of the most known and cited definitions
was given by Simonton in 2012. It follows the
criterion used by the United States Patent
Office to determine whether an invention
can come under patent protection. An idea
or invention must be original, useful, and
surprising to achieve either full, or partial
patent protection. Another famous definition
was used by Boden in 1998, in her article on
creativity and its connection with artificial
intelligence. According to her, there are three
types of creativity, all involving the generation
of novel ideas, and each type is capable of
bringing about the emotion of surprise:
METALAB REVIEW ¦ 15

Three Types of Creativity
1. COMBINATIONAL CREATIVITY
> Definition: When two new ideas share a
common inherent structure.
> Example: Poetic imagery and analogy.
2. EXPLORATORY CREATIVITY
> Definition: Characterised by the creation
of new ideas through the exploration of
structured conceptual spaces.
> Example: Can include scientists, artists,
and musicians who all learn the rules
and styles of thinking involved in their
respective fields – superficially tweak
these established norms to achieve
something new.
3. TRANSFORMATIONAL CREATIVITY
> Definition: Involves the transformation of
the space itself, so that new structures
can be generated that were before
considered impossible – has the
capacity to bring about a shock, that is,
ideas that, depending on the degree of
transformation, may be more difficult to
accept.
> Example: Something like humanity’s
once upon a time dream of landing a
man on the moon. An idea seemingly
so out there that it is shocking, but a
vision easy enough to conjure that one
might deem it improbable instead of
impossible.
16 ¦ METALAB REVIEW
By categorising creativity in these three ways,
Boden was able to evaluate computer models
in accordance with the categories. She
additionally differentiated creative endeavours
as either being:
TYPES OF CREATIVE
ENDEAVOUR:
1. PSYCHOLOGICAL
> Definition: New to creators
themselves.
> Example: When an author writes a
story they’ve never written before.
2. HISTORICAL
> Definition: New to society.
> Example: Einstein’s theory of
Relativity.
In this way, computer models could be
built to mimic the process by which
creative ideas could be generated.
DISTINCTIVELY HUMAN
CREATIVITY
However, the key component of whether an
idea can be considered creatively successful
is the context in which it is made. Great poetry
does not simply follow a good rhyming scheme
but comments on the human condition in
a way that resonates with people—which is
to say, artificial intelligence when applied to
creativity must be directed. For instance, in
the fields of visual art or music composition,
AI can be programmed to produce something
that is transformational, in that it can create
something new and unexpected and be
deemed creative. But whether it can be
considered a work of art that is largely admired
by society is another question. It is imperative
for AI to understand, evaluate, and adjust
accordingly to contextual cues to compete with
this innately human aspect of creativity.
HOW AI ATTEMPTS
HUMAN CREATIVITY
Artificial neural networks (ANN), a set of
networks that are inspired by the human
brain, try to address this question of
recognition. ANN emulates and uses a
reduced set of frameworks from biological
neural systems. More specifically, these
models imitate the electrical activity of the
human brain and nervous system. The
ANN models are neurons in a complex and
nonlinear form. The neurons are connected
to each other by weighted links. There is a
supervised procedure that comprises three
layers: input, hidden, and output. Now, instead
of simply asking the algorithm to create
something novel and unexpected, it uses an
algorithm designed in accordance with the
human brain, with narrowed-down data sets
chosen by human beings.
For example, in music, as in several creative
fields, there exist melodies and patterns
that can influence human emotions in
certain ways. A study done in China using
AI capitalizes on this fact. Fundamentally,
music has three distinct parts: time, pitch,
and texture. Using machine learning and
deep learning paired with facial recognition
and music, they created a model that could
assess the effects of certain types of music
on a customer’s behaviour. Essentially, they
tracked if the music played would affect
how long a customer would stay in a certain
store. And it did. It confirmed that digital
transformation brought about by AI could be
used as an environmental stimulus to affect
customer behaviour.
All this to say that one can train a model using
a data set of the most known and beloved
musical pieces across the centuries and it will
manage to render melodies that will resonate
with human beings. In this way, the creativity
involved is combinational, exploratory, and
historical.
It is almost akin to Doctor Halsted bringing
about the invention of thin medical gloves,
wherein the data provided to the algorithm
is the context of the good doctor’s concern
for his eventual wife, thus emphasising the
human component in the creative endeavour.
Essentially, AI can create works of art or
demonstrate creativity by having access
to data that provides human preferences.
This type of work effectively improves
upon human creativity, actively resulting in
something useful like knowing the type of
music to play to encourage customers to stay
longer at a certain shop.
EXAMPLE: ARTIFICIAL
INTELLIGENCE CREATIVE
ADVERSARIAL NETWORK
(AICAN)
Another aspect of creativity is the
combination of transformational and
psychological, a creation that manages to
balance surprise with societal acceptance
and be new to the algorithm itself. In this
regard, there have also been advances. An
astounding example would be the work
of computer scientist Ahmed Elgammal
at Rutgers University in 2017. He used
generative adversarial networks (GAN) that
can do more than recognize existing images
of objects, but also generate novel images,
simply by inverting the "image coding/
recognition" procedure. He developed a new
GAN known as the Artificial Intelligence
Creative Adversarial Network (AICAN) which
was able to not only judge its own work, but
also look for styles that have yet to exist. In
essence, it could create.
The key part of this endeavour was that
he trained the algorithm on a database of
over 80,000 images from Western art in
the periods between 1400 and 2000. The
machine produced its own style by knowing
METALAB REVIEW ¦ 17
about the styles that already existed in that
period. Now for the judgement: the AICAN
images were shown at the 2016 Basel fair
in competition with works by human artists,
and the judges preferred the AICAN images.
The judges collectively regarded the images
as creative. The case to be made, however,
is that the newly produced AICAN images
followed the style of heavy abstraction, which
follows in line with the history of art.
As such, an argument could be made that in
this instance, the artwork fell just in line with
the creative categories of transformational
and psychological, given the domain of
western art paintings. Regardless, the results
were impressive and indicate a positive for AI
in creativity. But while it is brilliant that AI can
create something entirely new and manage
to adhere to human preferences, it remains
that there was a human touch to the data:
the algorithm was created by humans, and
trained on a data set curated by humans.
Hence, it misses the purpose born of an
artist’s context that is usually involved in
the production of art. Moreover, western
art is a domain with a wider tolerance
for astonishment and abstraction far
removed from human experience. A domain
wherein the purpose of art is allowed to be
less important than its ability to elicit an
imaginative response from humans.
© Amauri Mejia on Unsplash
18 ¦ METALAB REVIEW
WHERE AI FAILS TO ACHIEVE
HUMAN CREATIVITY
The opposite is required for great stories,
the narratives and writing that eventually
become a part of the literary and cinematic
canon need to be attached to the human
experience. Indeed, for stories to work, they
must go beyond the technical elegance of
the writing, they must speak to some sort of
human truth. Even the most fantastical of
stories, like the Harry Potter series or the Lord
of the Rings, revolve around certain universal
truths: the experience of adolescence and the
ethical conundrum of what is good or bad. In
essence, great stories must have a narrative
that humans can identify with.
In this realm, there are two use cases of AI
that have garnered a lot of attention.
TWO USE CASES:
1. COLLABORATIVE APPROACH:
FACILITATION OF HUMAN CREATIVITY
Most commonly used across different
storytelling mediums. For instance, the
incorporation of digital storytelling in
television, film, gaming, and the entertainment
industry fall under this category. In essence,
these AI interventions are to be incorporated
into the genre of Choose Your Own Adventure
(CYOA), a type of story that gives its audience
a hand in the direction of the narrative.
A familiar example would be Netflix’s
Bandersnatch, a standalone episode of the
popular Black Mirror series, wherein the
audience is presented with different choices
at different points throughout the narrative
that affect the ending.
The use of AI in this genre is through
narrative generation systems, wherein the
system responds to user input and allows
for interactivity. The difference between
the traditional application of CYOA is that,
previously, the author had to create the
different predetermined storylines upon
writing the story. But the use of AI, will allow
computational algorithms to process and
produce audiovisual media more seamlessly
in service of the author’s vision.

This will allow for a wider variety of endings

with different nuances in place—making the
arc of the storyline more diverse and less
predictable for the viewers.

2. AI AUTHORS WORK THAT

RESONATES WITH SOCIETY:
CREATIVITY THAT PASSES AS HUMAN

This second approach is in line with the

© Rawpixel from Burst

combination of transformational and
psychological creativity; these forms of AI
try to be content creators themselves. Such
works have largely been experimental and
academic, but some projects have made it
into the public domain.
Some examples include projects like Ross
Goodwin and Oscar Sharpe’s AI screenwriter,
along with Botnik Studios AI. The stories
these projects have developed are far from
the coherent, emotional, and storytelling
standards of the commercial entertainment
industry.
But like AICAN images, they have managed
to intrigue enough to garner an audience.
Perhaps, with time, these stories will
eventually evolve from curious, abstract,
and compelling in their strangeness, to
emotionally moving narratives that account
for human context and emotion.
KEY TAKEAWAY
Distilled, the relationship between AI and
creativity can be categorised in two ways:
the empowerment of human creativity
and the pursuit of a creativity that can
pass as human. Currently, AI has made
more strides in the first category, working
more so in partnership and with the
guidance of human creativity to achieve
new heights.
The latter category which proffers AI as
having the ability to compete with human
creativity by correctly accounting for
emotion, nuance, and societal context,
remains in progress. The question is
how long. But for now, creatives all over
can capitalize on the ways in which AI is
another means for them to exercise their
creative juices and dazzle their target
audiences—to lean in, and treat AI as what
it currently is: a powerful boost to human
creativity.

METALAB REVIEW ¦ 19
WILL AI END
CREATIVITY?
UNPACKING THE HUMANITY BEHIND
GENERATIVE AI CO-CREATIONS

By NELBERTO NICHOLAS QUINTO

PhD student in the Management department at ESSEC Business School

R
ecent advancements in artificial
intelligence (AI) have prompted us to
ponder the fate of human creativity
and its relationship with technology. Present-
day AI platforms have demonstrated their
prowess in generating a diverse array of
creative outputs. From fabricating tailor-
made digital imagery, crafting compelling
advertising phrases, drafting cogent essays,
or even composing infectious tunes, the allure
of generative AI technologies is unmistakable.
In 2022 alone, they have drawn a staggering
$2.654 billion in investments, marking a
tenfold increase since 2020. As AI encroaches
upon what was once considered a uniquely
human domain, the ontological, economic,
and legal systems that underlie creative
production are consequently being redefined
in profound, uncharted ways. Amidst this
upheaval, a question emerges: Is creativity
dying, and is AI the culprit?
WHAT EXACTLY IS
CREATIVITY AND WHY IS
IT IMPORTANT?
To untangle this provocative question,
it is essential to probe into the essence
of creativity—its core attributes and its
significance to society and organizations.
Creativity is defined as the generation
of ideas, solutions, or products that are
both novel and useful1. It is a multifaceted
phenomenon, encapsulating not just the
outcome or process of idea development,

1. Teresa M. Amabile et al., “Affect and Creativity at Work,” Administrative Science Quarterly 50, no. 3 (September 1, 2005):
367–403, https://doi.org/10.2189/asqu.2005.50.3.367.
Teresa M. Amabile, “The Social Psychology of Creativity: A Componential Conceptualization.,” Journal of Personality and
Social Psychology 45, no. 2 (August 1983): 357–76, https://doi.org/10.1037/0022-3514.45.2.357.

20 ¦ METALAB REVIEW

artistic creation, or problem-solving2, but also
the inherent ability of individuals to produce
the new and valuable. As the cornerstone
of innovation, creativity transforms unique
ideas into tangible actions or products, which
in turn fuel technological advancements.
Within organizations, creative employees
are a catalyst for competitive advantage3.
They contribute unique solutions to pressing
challenges, resulting in strategies, business
processes, and design concepts that drive
success. Creativity also bolsters adaptability
© Evgeniy Alyoshin on Unsplash
in the face of external changes and disruptive
technologies, enhancing the likelihood of
success for individuals and organizations4.
To grasp the essence of creativity’s central
components – novelty (newness, originality)
and usefulness (value, quality) – think of
the last time you or someone around you
has deemed something to be ‘creative.’ Was
the value found in the end result or in the
process that led to it? As will be revealed, this
distinction is central to the debate of whether

2. Spencer Harrison et al., “The Turn toward Creative Work,” Academy of Management Collections 1, no. 1 (August 4,
2022), https://doi.org/10.5465/amc.2021.0003.
3. Richard Florida and Jim Goodnight, “Managing for Creativity,” Harvard Business Review, July 1, 2005, https://hbr.
org/2005/07/managing-for-creativity.
4. Martin Reeves and Mike Deimler, “Adaptability: The New Competitive Advantage,” Harvard Business Review, July 1,
2011, https://hbr.org/2011/07/adaptability-the-new-competitive-advantage.

METALAB REVIEW ¦ 21

the growing impact of AI will usher in a
creative renaissance or its antithesis.
HOW AI AFFECTS
CREATIVITY:
PERSPECTIVES,
BENEFITS, AND
LIMITATIONS
THE PRODUCT PERSPECTIVE
The traditional perspective of creativity places
emphasis on the final product. Think about
an evocative novel or an influential film.
Their creativity is gauged by the audience's
experience with the completed work. The
unpredictability of the plot, the introduction
of nonconforming characters, and the
use of groundbreaking narrative styles all
serve as sources of novelty. Meanwhile, the
exhilaration experienced from narratives
22 ¦ METALAB REVIEW
© Yannick Pulver on Unsplash
that defy convention, the emotions they
stir within us, the curiosity they spark, and
the respite they offer from everyday life—all
are markers of usefulness attributed to the
end product. AI-generated designs, leading
to a revolutionary product, align with this
perspective. From a managerial standpoint,
the value is not in the AI's process of creation
but in the resultant artifact—its appeal in the
market, and its innovative design that caters
to and anticipates consumer needs.
From this product-centered perspective,
AI emerges as a potent tool for enhancing
our creativity. It produces innovative ideas
and forms that inspire human artists and
democratize access to creative production
by making aesthetic prowess and innovative
combinations more accessible. Generative AI
can be conceptualized as a new 'paintbrush'
for artists and creatives. Anyone can pick up
this 'brush' and create—be it poems, design
prototypes, or unique product concepts—
without necessarily needing the traditional,
extensive training or experience. For many,
this accessibility may very well foster
inclusivity, thereby encouraging a larger
population to engage in creative pursuits.
It brings people who might never consider
performing artistic or innovative work into the
sphere of creative endeavors, exploring their
human ingenuity as they co-create with AI.
AI LIMITATIONS IN CREATIVE
PRODUCTION
However, such democratization comes
with its own challenges and limitations.
The novelty of the output generated heavily
relies on the creativity infused in prompts.
The usefulness of the final output also
remains somewhat limited, especially when
considering the current state of AI wherein
the quality of the generated paragraphs,
images, or media may still fall short of those
produced by traditional professionals. There's
often a substantial amount of trial and error
involved in crafting the right prompts, as
well as significant post-processing once
a satisfactory output is achieved. While
these are technical limitations that may be
resolved as AI advances, there's another
side to consider. As AI improves, so will the
benchmarks for what is considered quality,
useful, and new. Therefore, it's rare for a
few string of prompts to suffice in creating
something truly considered creative—that is,
novel and valuable—for its time. Even with
significant advancements in AI capabilities
over time, leading to minimal post-processing
or prompt engineering needs, there's always
an inherent risk tied to tools that simplify
processes.
THE PROCESS PERSPECTIVE
Another facet of creativity lies not in the final
product, but in the process itself. Envision
a Master Chef contestant, orchestrating a
culinary symphony with a keen eye for novelty
and a daring spirit to match the time and
ingredient constraints set by Gordon Ramsay
and his colleagues. Their masterpiece
unfolds as an intricate dance of unexpected
ingredient pairings, artistic presentations,
and innovative use of techniques, equipment,
and resources. Here, creativity is not solely
defined by the outcome but by the culinary
journey that unfurls, tantalizing taste buds
and challenging preconceived notions of what
can be done with limited resources. Similarly,
improvisational theater values the performers'
on-the-spot thinking, synchronized action,
and narrative creation, as much as the final
performance. The process is integral to
determining creativity. Even in organizational
settings, the sequential motions inherent
in problem-solving —brainstorming,
experimentation, and collaboration—
are regarded as creative, alongside the
effectiveness of their end solution.
HUMAN EXPERIENCE IS WHERE THE
REAL ISSUE LIES
Despite known limitations, numerous
instances exist where works co-created with
AI have been recognized for their creativity.
Last year, a digital image generated by AI
won a statewide art competition in Colorado.
The judges affirmed that their decision to
honor the contestant would have remained
the same, regardless of prior knowledge of
AI involvement in the artwork. In April of this
year, a song that employed AI to generate
melodies in the voices and styles of popular
artists Drake and The Weeknd, went viral on
social media. Titled 'Heart On My Sleeve', this
track mimicked the stars' distinctive styles
in verses ostensibly about pop sensation
Selena Gomez, who has romantic ties with
The Weeknd. The song was widely lauded for
its innovative stylistic fusion and its infectious
rhythm. Similarly, in corporate environments,
generative AI has been employed to aid
the development of innovative marketing
campaigns as well as fundamentally novel
METALAB REVIEW ¦ 23
and useful business strategies that managers
can build upon and implement. As such, AI
capabilities continue to improve over time, it's
becoming increasingly apparent that there's
little pushback against the technology’s
ability to generate works that are novel and
valuable, provided that creativity is interpreted
from a product oriented perspective. Hence,
the primary criticisms against AI's capability
to produce or enhance creativity stem from
adopting the process-centric one.
“Songs arise out of suffering, by which
I mean they are predicated upon the
complex, internal human struggle of
creation and, well, as far as I know,
algorithms don’t feel. Data doesn’t
suffer. ChatGPT has no inner being,
it has been nowhere, it has endured
nothing, it has not had the audacity
to reach beyond its limitations, and
hence it doesn’t have the capacity for
a shared transcendent experience,
as it has no limitations from which to
transcend. ChatGPT’s melancholy
role is that it is destined to imitate and
can never have an authentic human
experience, no matter how devalued
and inconsequential the human
experience may in time become.”
Valuing process over product often comes
with an emphasis on the emotional
and sensory journey inherent in human
imagination and innovation. This viewpoint
suggests that the true value of creative
work is deeply entwined with the feelings
and shared experiences manifested in its
creation. As AI produces creative works
based on learned patterns– without true
5. https://bit.ly/3LKyHY8
24 ¦ METALAB REVIEW
comprehension of our intentions, history,
or emotions– creations that leverage it are
seen to lack the depth and meaning that
gives value to the creative process. Thus,
for the many patrons of the human touch,
any process void of these elements loses
their usefulness automatically. Singer and
songwriter Nick Cave eloquently expressed
this very sentiment when reacting to a song
written by AI chatbot GPT in 'his style':
ARE AI CO-CREATIONS
REALLY DEVOID OF
HUMAN EXPERIENCE: A
CASE STUDY
In December of 2022, an intriguing event
unfolded in the creative world. One, that
invites reflection into the humanity behind AI-
co creations. Aamar Reshi, then a tech worker
in Silicon Valley, who had no prior experience
in graphic illustration or creative writing,
produced a children’s book in the span of 72
hours and sold 841 copies in Amazon over
a week. His secret sauce? OpenAI's Chat
GPT for the story narrative, and the AI art
generator, Midjourney, for the illustrations.
This well-documented accomplishment
represents an interesting shift in the creative
landscape, as tasks that traditionally
demanded years of learning and skill honing
were executed by Aamar in a mere three
days—and at virtually no financial cost.
A crucial aspect of this narrative is that
Aamar circumvented the laborious grind
of mastering digital design and storytelling
intricacies. His main inputs, as documented
on his Twitter feed5 were two-fold: textual
prompts that generated the narratives and
illustrations found in his book, and his clever
use of these digital tools to construct a
coherent piece in a limited amount of time.
Trial and error was central to his creative
process, as he experimented with different
prompts to craft his desired manuscript
and illustrations. What used up most of his
time was learning to maintain a consistent
depiction of his protagonists, Alice and
Sparkle on Midjourney. Yet, the conversion
of his imagined images and plot ideas into
tangible illustrations, descriptions, and
written stories required merely a few seconds
of waiting time for each iteration. While
Aamar's journey showcases the power of AI
to democratize the creative process, it also
highlights the pitfalls of such an approach.
His illustrations lacked consistency and
detail, likely a result of his over-reliance on AI
tools and his lack of domain expertise in the
digital arts. In the end, Sparkle, Alice's robot
companion, was rendered differently across
each page due to Midjourney's inability to
produce consistent illustrations from the
same descriptions. Alice, too, was not spared
from inconsistencies, depicted with missing
fingers on occasion.
THE CREATIVITY AND HUMANITY
BEHIND AAMAR’S CO-CREATION WITH
AI
Aamar was innovative in his clever use
of limited resources to solve a pressing
challenge: creating a children's book.
Although he did not utilize traditional
artistic techniques or software, his co-
creation with AI served as a conduit for
transmuting his imagination into tangible
prototypes that allowed him to develop
a novel plotline through experimentation
with various prompts. Confronted with the
issue of inconsistent images, Aamar applied
his human ingenuity to devise a clever
solution: describing Sparkle to be a robot
that metamorphosed into various forms- a
creative fix that cohesively blended with his
narrative.
As noted, his case also illustrates the
democratization and streamlining of creative
work. Even if he lacked formal training in
graphic design and had no prior experience
as an illustrator or storyteller, he was still
able to conceive an original, interesting
story that had (somewhat) coherent and
meaningful illustrations. In essence, he came
up with creative solutions to turning his fresh
ideas into a tangible product which found
significant demand, and hence– value, upon
its release. And although the usefulness of
his work is limited by the inconsistent and, at
times un-detailed, illustrations –a limitation
which might diminish as AI technology
continues to evolve and improve– the
evidence suggests that Aamar’s final product
is in fact, creative - i.e. novel and useful.
Despite the innovative manner in which he
developed his storybook however, the value
in his process remains questionable to
those who value the human elements which
underlie creativity production. Therefore,
the query looms: was his work void of the
humanity that– arguably– gives meaning,
depth, and usefulness to the creative
process?
Not only did he “borrow” the feelings and
emotions nested in the collective intelligence
within Chat GPT's memory to produce his
plot, dialogue, and illustrations, but upon
further contemplation, much of his process
actually involves a variety of inherently
human attributes. The excitement he felt
with his work, the love he felt for his niece
that sparked this project, the oscillations
between euphoria and melancholy during
each imaginative iteration, and the victorious
sensation he savored as he reveled in
his accomplished masterpiece were all
profoundly human experiences and emotions.
In the parlance of Nick Cave’s critique: his
blood, sweat, and guts coalesced into a
tangible expression of creativity– there at
his desk– a realization of a nebulous idea
METALAB REVIEW ¦ 25
that made its way to him. That is- within
the vast expanse of algorithmic and artistic
unpredictability, his creative idea found him.
In all his humanity. And he made it come
to fruition in three relentless days. Thus,
Aamar’s case illustrates that the process of
co-creation with generative AI can, and often
does, involve quintessential human aspects
where innovation emerges from processes
and ideas that are new and valuable.
REFLECTIONS ON THE
GENERALIZABILITY OF THESE CASE
TAKE-AWAYS
For those of you who have used AI to
generate works that were considered
novel and highly valuable by your peers,
organization, or audience-evaluators, perhaps
it is time to reflect and appreciate the inherent
humanity in your creative work. For those of
you who haven’t, you are invited to envision
what such a process should involve as you go
through the next sentences.
Think of instances where you brainstormed
ideas or developed potential solutions
through a conversation with Chat GPT.
Maybe there were times when you involved
generative AI in creating a business proposal,
an artistic illustration, a musical piece; or
perhaps a scientific publication, an innovative
product, or even a clever recommendation
that was, in fact, considered original and
beneficial. Did your creative journey involve
the emotional roller coaster of highs and
lows? The frustration felt when ideas fail? The
iterative cycles where you leveraged multiple
tools and information sources in inventive
ways to achieve a part of your desired
outcome?
Did you harness feelings and intuitions
from your gut? Did you rely on tacit
heuristics and knowledge formed from
years of accumulated experience and social
interactions deeply embedded in your human
26 ¦ METALAB REVIEW
psyche? If the answer to some of these
questions are a yes, then it only shows that
Aamar’s experience was not an isolated case-
but is, in truth, a generalizable one.
These aspects are integral to our humanity–
our shared experience– and they would very
likely have been present in the generative AI
co-creation instances that you experienced
or envisioned. Even the journey to developing
your accumulated expertise in whatever
it is you do involves painstakingly human
ways in which you labored to sharpen them.
More people need to be reminded that the
knowledge and skill that you and I have
developed is critical to both evaluating and
building upon the intermediate outputs
produced by AI to produce works that are
actually novel and useful.
Indeed, the route to producing work that
is genuinely innovative, with or without
AI's assistance, invariably involves a
unique recombination of our lived human
experiences and abilities. As can be drawn
from your personal cases, and that of Aamar
Reshi’s, creators often employ a range of
tools, techniques, and information sources
to generate value and endure iterative
procedures that are seldom smooth and free
of emotional dynamics. As such, so long as
humans remain in the production loop, any
creative process that leverages generative AI
still retains significant traces of our shared
experience and human nature.
WHEN DOES CO-
CREATING WITH AI HARM
CREATIVITY THEN?
As with all tools that streamline processes,
there is always a danger that individuals
might over-rely on them, progressively
depending less on their abilities and unique
value contributions. In this case, such a
trend could lead to a reduced cultivation of
both individual creativity and the essential
skills relevant to creative production—be it
mastering the use of a paintbrush, crafting
a riveting narrative for a target audience,
evaluating the aesthetics of a presentation
deck, or steering a company brainstorming
session. As AI takes up an increasing part of
the creative process, our aptitude for ideation,
improvisation, and critical thinking may begin
to fade.
Similarly, when individuals overestimate
AI’s ability to generate value, there is also a
tendency to bypass activities that cultivate
our ability to generate the novel and useful.
Examples include discussing our ideas with
our colleagues (as opposed to just chatting
with an LLM about them), engaging in
exploratory learning, or improving the depth
of our specific professional expertise. The
ease of producing AI-generated outputs that,
at first glance, might seem highly innovative
and valuable, might also cause a drop in
motivation to engage in creative work - i.e.
the question: 'If AI can generate creative
works with relative ease, why should I expend
the effort?' People need to understand that
the path is often an arduous, emotionally
tumultuous one, and cases where new and
useful products are developed with relative
ease are very much the exception rather
than the norm. Moreover, projecting into the
future, if AI does advance to the extent that
it eliminates the need for substantial post-
processing work, several prompt iterations,
inventive ways to combine different tools
and knowledge inputs to produce a novel
and useful work– and well, all the emotions
that come with these– would that signal
the demise of creativity? It definitely is a
possibility. If co-creating with generative AI
results in fewer problems that demand new
and impactful solutions, then creativity may
diminish simply because we would need less
of it. But that is, by all means, a good problem
to have.
CONCLUSION
It is imperative that individuals learn to
co-create with generative AI tools both
responsibly and proficiently. The outlined risks
to our creativity demands an understanding
that these technologies are not replacements
for our own cognitive ability and domain
expertise. Neither are they supposed to be
used as quick-fix mechanisms for producing
content (e.g. essays, images, or sounds) with
scant surprise or quality appeal. Instead,
individuals should engage with these tools
in ways that stimulate their critical thinking,
challenge them to push the boundaries of
convention, and inspire them to conceive
ideas, products, artworks, or business
processes that are not only distinct from
predecessors but also more efficient, value-
enhancing, and superior in quality. And all of
this begins with understanding that the path
to truly creative co-creation with generative
AI is a painstaking, iterative, and exploratory
process that requires novel ways to combine
our cumulative human experiences,
imaginative capacity, and knowledge with the
current capabilities of these technologies.
Such a paradigm shift necessitates
substantial investment from organizations,
educational institutions, and even
governments in programs designed to enable
and encourage these exploratory practices.
Experimentation, after all, benefits from
guidance and often comes at the cost of not
getting traditional work or schooling done. But
this should not be a cause of worry. We have
already witnessed select groups of individuals
and organizations leveraging generative AI
in new and useful ways that showcase their
unlocked creative potential. Business news
feeds and popular technology sites such as
TechCrunch, Product Hunt, and VentureBeat
are filled with a rich variety of new use
cases each week. Hence, it is conceivable
that support for such endeavors are likely
to come. And, as history has demonstrated,
METALAB REVIEW ¦ 27
28 ¦ METALAB REVIEW
© Rod Long on Unsplash
when the innovative use of AI enables select
groups of people or organizations to excel in
their niche, gain a competitive advantage, or
simply overcome their peers, then others will
emulate their strategies– fueling creativity
and perpetuating the cycle of innovation.
Will AI spell creativity’s demise, or could it
instead ignite a renaissance of sorts? If the
concern lies in losing the humanity behind
the creative process, then, so long as humans
are involved in the creation process, and that
problems and needs that require novel and
useful solutions, approaches, or products
continue to exist, then the more optimistic
of the two scenarios is likely to materialize.
In other words, AI may well just revolutionize
creativity for the better.
There are, however, a few other concerns
that need to be accounted for, such as the
lack of acceptance or understanding behind
the value that these generative technologies
bring. Particularly relevant as well is how
increasing AI adoption inevitably creates
higher standards for what is valuable, truly
unique, and feasible to accomplish within
a given period of time. The sequel to this
article attempts to summarize all of these
other concerns, building on the evidence
and logical arguments presented in this first
part to more robustly answer the tantalizing
question behind AI’s impact on creativity.
Importantly, this second installment will
underscore the necessity to shift our focus.
The imminent issue may not be a potential
dwindling of our ingenuity, but rather a
constellation of critical factors surrounding
the perception and common understanding
regarding what it takes to co-create ideas,
processes, or products with AI that are truly
novel and useful. There's also a pressing
need to consider the protective measures
extended to workers who are at the interface
of AI's influence. For instance, while AI may
not necessarily stifle overall creativity, it
holds the potential to extinguish the arts if
considerations around the valuation of artistic
capabilities and the protection of artists'
intellectual property are not meticulously
examined. These will all be touched upon in
the sequel of this two-part article series.
METALAB REVIEW ¦ 29
THE AI CREATIVE
RENAISSANCE:
THE IMPACT OF CO-CREATING WITH AI
ON CREATIVITY AND THE FUTURE OF
WORK

By NELBERTO NICHOLAS QUINTO

PhD student in the Management department at ESSEC Business School

A
I's march into the realm of creativity
has been teeming with trepidation,
stemming from fears that increasingly
sophisticated machines might eclipse our
ingenuity and devalue the human experience.
Dissecting the intricacies of co-creating
works that are deemed creative– i.e. deemed
both novel and useful – with generative AI in
the first installment of this two-piece article
series however reveals an inherently human
process. A dance that involves iterative
bouts of innovative experimentation, unique
amalgamations of tools and ideas, and a
critically overlooked component – emotion.
The realization of these intensely human
aspects offer a distinctly more hopeful
perspective, contingent upon us remaining
actively involved in the process.
Transitioning from the debate concerning
the retention of humanistic elements in AI
co-creation – elements that imbue depth,
meaning, and value to the creative process,
as discussed in this article’s predecessor,
this installment aims to elaborate more
on the benefits, limitations, and long-term
challenges to creativity that arise from
this generative process. The question of
whether AI could potentially spell the demise
of creativity in the long-term is ultimately
addressed, followed by a conclusion that
steers the discourse towards identifying more
pressing concerns about AI that will require
much of our ability to provide novel and useful
solutions.

30 ¦ METALAB REVIEW

RECAPPING THE
CREATIVE BENEFITS TO
LEVERAGING AI
Creativity is understood as the generation
of ideas, processes, or products that are
both novel and useful1. When understood
as an ability to produce works that meet
this two-fold criteria of novelty (uniqueness,
originality) and usefulness (value, quality),
both the outcomes and processes inherent
in generating them become relevant. One
of the most widely observed benefits of
co-creating with generative AI is that it
© Matthew Henry from Burst
streamlines and democratizes the process
of creative production. By curtailing the
costs related to skill, talent, and equipment
(or software), AI facilitates the genesis of
valuable, new creations – be they illustrations,
poems, marketing slogans, or strategic
proposals. This empowerment invites a
wider demographic to unlock their inherent
creative potential and engage in the human-
AI symphony of creation. Take, for instance,
the case of Aamar Reshi discussed in detail
in the first part of this article series. His
imaginative journey to crafting a children's
storybook in 3 days without any prior
experience in illustration or creative writing

1. Teresa M. Amabile et al., “Affect and Creativity at Work,” Administrative Science Quarterly 50, no. 3 (September 1, 2005):
367–403, https://doi.org/10.2189/asqu.2005.50.3.367.
Teresa M. Amabile, “The Social Psychology of Creativity: A Componential Conceptualization.,” Journal of Personality and
Social Psychology 45, no. 2 (August 1983): 357–76, https://doi.org/10.1037/0022-3514.45.2.357.

METALAB REVIEW ¦ 31

was made possible by AI's ability to translate
his motivation into captivating illustrations
and engaging storylines.
AI also significantly lightens the cognitive
load associated with conceiving original
solutions to intricate, pressing problems. For
instance, imagine a marketing team trying
to brainstorm a new advertising campaign.
Instead of spending hours coming up with
basic ideas, a large language model (LLM)
such as Chat GPT could generate a list of
them within minutes. The team could then
immediately start discussing which of these
listed ideas are worth developing further. They
could also combine different AI-suggested
concepts to create something unique and
impactful. In this way, AI allows for more
effective use of the team's expertise and
creative thinking. And while much of the
content produced by LLMs tends towards
32 ¦ METALAB REVIEW
© Charles Deluvio on Unsplash
the mundane and predictable, this in fact
offers a crucial advantage. The immediate
availability of a broad spectrum of highly
conventional ideas allows individuals and
teams to swiftly dispatch with the obvious,
learn from these iterations, and refocus
their cognitive prowess. In the context of
prototyping, generative AI tools have emerged
as a catalyst for quickly transforming abstract
concepts in our heads into tangible, useful
drafts. They shoulder the cognitive and labor-
intensive burden of the initial groundwork,
generating the first iterations swiftly. As a
result, just as in brainstorming, teams can re-
allocate their mental energy and time towards
more creative tasks, including those where
human expertise still surpasses AI.
AI’S IMPACT ON
QUALITY STANDARDS
PERPETUATES
CREATIVITY
As we hurtle into a future fraught with
increasingly complex challenges requiring
novel solutions, it's clear that both creativity
and generative AI’s role in the creative
process is here to stay. While individuals
will continue to extract value from AI, the
benchmark for what constitutes quality
and usefulness will concurrently increase.
When productive expectations rise, fostering
creativity and innovation to meet these
heightened standards will always be a need,
and often, a priority. While the influx of novel
combinations of information and ideas might
make the task of generating something truly
different and unique with AI progressively
challenging as well, it will undeniably
necessitate increasingly creative methods
to continuously derive value from current
tools and systems. Thus, regardless of how
sophisticated AI systems become, creativity
will always have a place within organizations
and society.
For instance, in producing digital art, some
graphic designers are already leveraging AI
image generators such as Midjourney and
Stable Diffusion to simulate prototypes of
their ideas, draw inspiration from different
styles, or ultimately create distinct artworks
that require minimal post-processing. At first,
such use of AI was deemed innovative, and
there have been many cases where fresh
and valuable works have been produced
through such a process. But as leveraging AI
capabilities have become more widespread,
the novelty of such techniques have declined,
and the average uniqueness of generated
works have suffered as well. Consequently,
the standards for what is considered useful
have risen as more people have realized the
value of current AI tools. Artists must then
deepen their creative explorations, finding
fresh ways to collaborate with AI to generate
art that remains innovative and valuable
amidst the evolving landscape. This may
involve countless experimentations with
prompt patterns or combining different
tools, systems, or methods to process works
generated by AI.
Meanwhile, in organizational settings,
particularly when teams make use of
Large Language Models (LLM), such as
OpenAI’s ChatGPT or Google’s Bard, to
streamline brainstorming sessions, catalyze
idea generation, and decode complex
problems– the interplay between creativity
and AI unfolds in the same manner as in
the arts. Consider a tech start-up using
GPT technology to augment their product
design brainstorming. The AI solutions
might generate new perspectives on user
interface design, providing inspirations that
the team hadn't previously considered.
Companies that successfully integrate such
technologies into their workflow stand to
gain a competitive edge, as they can alleviate
the cognitive burden inherent in creative
tasks and propel their innovation teams
into uncharted territories. However, as AI-
assisted approaches become commonplace,
the novelty of these processes diminishes.
As more and more employees, teams, and
organizations become accustomed to
harvesting the creative benefits of AI across a
spectrum of tasks, the standard for what can
be achieved within a certain timeframe and
resource set escalates exponentially.
In response, organizations would need to
persistently cultivate creativity to extract
further value from AI. They might deploy
additional algorithmic tools to discern
patterns from past AI-laden brainstorming
sessions and predict potential hurdles.
For example, a company could use AI to
analyze both previous meeting notes and
past AI suggestions given various employee-
METALAB REVIEW ¦ 33

generated GPT prompt patterns. This would
allow individuals and teams to leverage
insights derived from such data analyses to
consequently modify their use of generative
technologies for idea development and
prototype-building. Such a solution could also
lead to routinized processes and systems
that facilitate extracting more value from
novel AI suggestions in order to suit their
unique problem contexts. For example, a
marketing team could develop protocols for
how to synthesize campaign ideas developed
through multiple rounds of brainstorming
with generative AI, across several meeting
groups. They could also devise a structured
process that involves integrating these
insights with those uncovered by social
media trends, competitor campaigns, and
customer behavior data that predictive AI
models concurrently deliver.
In such instances, creative production
necessitates innovation in processes where
different individuals and AI systems come
together to meet the new, heightened
34 ¦ METALAB REVIEW
© Vonecia Carswell on Unsplash
standards for novelty and value that
innovation and competition propel. However,
when novel processes or new best practices
are found to be creative at a given point in
time, more and more companies are likely to
find value in them. This implies that standards
will rise again and organizations would need
to search for more ingenious processes that
leverage existing human and technological
capital, fostering creativity and perpetuating
its need.
THREATS TO
CREATIVITY: UNDER-
APPRECIATION AND
OVER-RELIANCE ON AI
Instead of pondering the supposed demise
of creativity, perhaps the real issue at hand
is the skepticism and under-appreciation of
the immense value generative AI brings to
the table. It is unsettling to see how quickly
some individuals abandon the use of these
technologies, swayed by a few erroneous
outputs, unsuccessful prompts, or the
cynicism of others. On the flip side, there
exists an equally troubling group – those
over-reliant on AI to the extent that they
forsake nurturing their own critical thinking,
domain expertise, and breadth of knowledge.
This excessive dependency threatens to
hollow out human innovation and intuition,
reducing our contributions to mere button-
pressing reactions to whimsical needs. The
remedy to both of these conundrums lies in
fostering a comprehensive understanding of
AI's capabilities and limitations among the
broader population, as discussed in more
detail in the first piece of this two-part series.
There is simply so much value-creation lost
when people do not simply understand the
usefulness of generative tools that can rapidly
produce creative drafts and prototypes ; all
while harnessing centuries of accumulated
human knowledge to yield accurate, factual
results in at least 9 out of 10 instances. As
such, there is a pressing need to educate
individuals about applying even basic
generative AI capabilities to the multitude of
use cases in their personal and professional
lives. This requires promoting practices that
encourage persistent experimentation with AI,
while fully acknowledging its current bounds
and how it can complement our unique
strengths.
THE SOLUTION:
CONTINUOUS
EXPLORATION OF AI-
HUMAN BOUNDARY
CAPABILITIES
AI will continue to improve, and so too
will our abilities, skills, and talents. In this
constant cycle of progression, the necessity
of understanding the evolving capacities
of AI and human creativity cannot be
overstated. Identifying the complementary
intersections between AI and our innovative
capacity enables us to effectively harness
their combined potential. And this begins
by ensuring that we remain determined to
cultivate the requisite knowledge, expertise,
and capabilities to credibly evaluate the
usefulness, appropriateness, and credibility of
AI generated outputs.
In this dynamic panorama of evolving AI
systems and expanding human capabilities,
the value of experimentation in demarcating
the ever-changing boundaries of both AI and
our personal abilities becomes paramount.
In particular, this knowledge helps illuminate
our understanding of what AI can and cannot
do for us, and what we can achieve more
efficiently with or without these technologies,
for any given moment in time. It also enables
us to identify which domain-specific skills
and new capabilities we should invest our
time in developing and refining. And as
we navigate this blurred frontier, the role
of continuous learning, engagement, and
development of our unique creative abilities
vis-a-vis AI becomes ever more critical.
While the “death of creativity” is far from
imminent, the reshaping business and
societal terrain calls for both prudence
and immediate action. As AI emboldens
individuals and organizations to leverage
technology to augment their unique
capabilities and cumulative expertise,
navigating this evolving landscape thus calls
us to reconsider our part in the redefined
creative epoch. Are we disrupting, merely
keeping up, or falling behind? Survival
in competitive environments, after all,
necessitates exploiting the opportunities
emerging technologies offer, and we should
therefore set aside time in our schedules
to explore ways we can achieve this at a
personal level. Again, this begins by carefully
discerning what both we and AI uniquely
excel in, and identifying potent synergies that
METALAB REVIEW ¦ 35
allow us to balance each other's strengths
and weaknesses for our specific trade and
tasks. Whether you are a marketer, musician,
illustrator, business owner, or a corporate
planner, understanding how emerging
technologies affect the value and novelty
you produce at any given point in time is
paramount to continued success. Stop. Think.
Reflect. What critical inputs, processes, and
skills does AI need from you to deliver in
order for you to generate ideas, products, and
systems that are new and valuable? What
are you doing to know or develop this? Your
answers to these questions may well define
your survival amidst AI’s creative renaissance.
BEYOND THE ISSUE OF
CREATIVITY: WHERE
MORE PRESSING
CHALLENGES LIE
While this thought exploration attempts
to address whether AI would extinguish
the flame of human creativity, it inevitably
leaves a myriad of related issues unexplored.
Indeed, while AI, with its prodigious generative
capacities, promises to herald a creative
renaissance—exploring uncharted territories
of ideas and unveiling transformative
solutions to pressing issues—we must also
recognize the potential detrimental impact
it could have on our artistic workforce. As
discussed, the process of co-creating with
generative AI still necessitates an intricate,
often emotionally charged, and iterative
human endeavor. It involves the careful
orchestration of past human experiences to
weave into the fabric of our creations.
Yet a recurrent threat that we are treading is
the dangerous line of devaluing the authentic
human touch; that is– the artisanal signature
underlying much of the creative work we
know. Companies may start to undervalue
the finesse of artistic capability, leading to
36 ¦ METALAB REVIEW
reduced remuneration for graphic designers,
composers, and other artists. This, even
before a novice utilizing generative AI can
genuinely outperform seasoned creators.
Such devaluation can cause both current
and aspiring artists to neglect nurturing
their unique aesthetic skills and specialized
capabilities, which could be detrimental to the
future of creativity. After all, truly harnessing
the power of AI for creative endeavors
requires not just knowing its technological
boundaries, but also having a robust
foundation of one’s specialized domain
and the aesthetic sensibility needed to both
recognize and conjure quality art.
Furthermore, we need to tread carefully on
the path of intellectual property (IP) rights.
Artists may feel aggrieved as their creative
genius– their unique output– is utilized to
train AI systems without due recompense or
consent. This could make it facile for others
to mimic their distinctive style, enabling
these individuals to build on years of the
artists’ painstaking dedication without due
permission or acknowledgement. If we fail
to establish robust mechanisms for suitable
compensation, recognition, and consent
for creative IP, we risk discouraging artists
from trusting and reaping the benefits of AI.
Worse, we risk a decline in traditional artistic
pursuits, which form the bedrock of cultural
heritage and individual expression. On a less
immediate yet significant impact, we risk
losing valuable creative contributions that
future generations could build upon. If we
deter a whole generation from pursuing arts
due to lack of passion or adequate incentive,
we lose more than just individual livelihoods.
The vibrancy of our cultural tapestry and
our collective ability to innovate are at stake.
It is therefore vital that we safeguard the
livelihoods and IP of artists to prevent cultural
impoverishment.
Moreover, while AI undoubtedly creates
new job opportunities and uncovers novel
synergies between human and machine to
drive value and discover novel solutions to
critical problems, the rapid pace at which
AI is reshaping the job market is cause for
concern. The velocity of job displacement
could potentially outpace that of job creation
and skill development across a wide-array of
fields. Its reach already extends to every facet
of work, life, and the economy, sometimes
unpredictably. Such an imbalance could
endanger a substantial segment of the
workforce, along with their dependents.

While AI is not poised to extinguish the flame

of creativity, it could expedite the ebb of
certain industries and livelihoods faster than
it rebuilds or expands them. This necessitates
an inventive approach to temper potential
fallout. Hence, the real merit of AI lies not
only in catalyzing and amplifying human
creativity to forge new solutions to high-value
issues, but also in innovating answers to
the challenges it itself surfaces– from that
of artistic preservation, intellectual property
rights, overly rapid job displacement, and
beyond.

METALAB REVIEW ¦ 37
38 ¦ METALAB REVIEW
 SUSTAINABILITY

METALAB REVIEW ¦ 39
& SOCIETY
THE PROGRESS
PARADOX:
CAN TECHNOLOGICAL ADVANCEMENTS
COEXIST WITH A DEGROWTH
ECONOMY?

By RINALYN PAGAO
MSc in Sustainability Transformation at ESSEC Business School

D
o you ever feel like the pursuit of
economic growth has taken us down
a dangerous path, where the health of
the planet and its inhabitants are sacrificed for
the sake of financial gain? If you are nodding
your head in agreement, then continue reading
because we are about to dive into a fascinating
topic: degrowth.
In our current global society, the growth-based
economic model has dominated for too long,
leading to environmental degradation and social
inequality1. Fortunately, an alternative concept of
degrowth has emerged, promoting a supposedly
sustainable and more equitable way of life.
However it does not surprise us that regardless,
technological advancement and digitalization
continue to shape and transform our world in
profound ways that could seem inevitable.
In this article, we will explore the intersection
of degrowth and technological advancement,
and critically analyze their intertwined potential
implications in a global context.
DEFINING DEGROWTH
Degrowth is a concept that challenges the
idea that economic growth is necessary
for human development and wellbeing. It
is based on the principles of sufficiency,
resilience, and equity, and calls for a reduction
in production and consumption levels to
achieve a sustainable and equitable society.
2
While the concept of degrowth has its roots
in the 1970s, it has gained more attention
in recent years as a response to the current
ecological and social crises, however it also
raises some criticisms as such that degrowth
is too radical and impractical, while others

1. Hickel, J. (2020). Less is More: How Degrowth Will Save the World. Penguin Random House.
2. Degrowth Movement. (2023). Degrowth. Retrieved from https://degrowth.info/degrowth

40 ¦ METALAB REVIEW

claim that it overlooks the needs of those in
poverty3.
TECHNOLOGICAL
ADVANCEMENT AND ITS
IMPACTS
Technological advancement has undoubtedly
brought about many positive changes to
our world, from medical advancements
to increased connectivity and access to
information. However, it has also been
associated with negative impacts such as
© Anastasiya Badun on Unsplash
environmental degradation, social inequality,
and job displacement. The debate around
technological determinism, the idea that
technology shapes society, versus social
constructivism, the idea that society shapes
technology, is still ongoing4. Both views
have their merits, and the truth likely lies
somewhere in between as per what the
scholars suggest. While this debate is not the
focus of this article it is still important for us
to consider both perspectives when thinking
about the relationship between technology and
society, as this will help us to develop a more
nuanced understanding of this complex issue.

3. Victor, P.A. (2019). Growth, degrowth, and climate change: A scenario analysis. Ecological Economics. Retrieved from
https://www.ledevoir.com/documents/pdf/victor_growth.pdf
4. Jonas Hallstrom (2020). Embodying the past, designing the future: technological determinism reconsidered in
technology education. International Journal of Technology and Design Education, Retrieved from

METALAB REVIEW ¦ 41

EXPLORING THE
INTERSECTION: IS
TECHNOLOGICAL
INNOVATION AND
DEGROWTH POSSIBLE?
Technological advancements per se in the
sustainability sector are the renewable energy,
clean transportation, energy efficiencies, and
carbon capture and utilisation storage (CCUS)
- can these potentially be a powerful tool to
degrowth our economy?
The latest report done by the International
Energy Agency (IEA) on its Clean Innovation
Report: Global status of clean energy
innovation in 2020 5 acknowledged that
technological innovation is crucial for
addressing climate change and achieving the
goals of energy policy, such as expanding
access to energy and lowering air pollution.
5. IEA (2020), Clean Energy Innovation, IEA, Paris https://www.iea.org/reports/clean-energy-innovation, License: CC BY
4.0
42 ¦ METALAB REVIEW
© Harper-Sunday on Unsplash
However, it might be hard to monitor
innovation progress, specifically the major
challenge to be able to quantify or allocate
inputs to policy goals like more affordable
technology, industrial change, and economic
growth. Nevertheless, a number of measures,
including (1) funding and (2) patenting, might
provide insight into clean energy innovation
on a worldwide scale. More comprehensive
sets of measurements are being created by
some governments in order to find and share
best practices.
• FUNDING
This trend (see: IEA public energy technology
R&D and demonstration spending by
technology, 1977-2019) tells us that the
government funding on energy research
and development increased by 3% in 2019
to USD 30 billion globally, with over 80% of
that money going toward low-carbon energy
technology. Specifically in China, the low-
carbon component of energy research and
development increased by 10% in 2019,
with significant increases in research and
development for energy efficiency and
hydrogen in particular. Spending on public
energy R&D increased by 7% in both Europe
and the United States, exceeding the previous
year's trend.
• PATENTING
On the other hand, in terms of patenting
since 2011 (see: Issuance of patents for
low-carbon energy technologies in selected
countries and regions, 2000-2016), the
quantity of patents submitted for low-
carbon energy technologies has sharply
decreased after a decade of rapid increase.
Patents capture part of the intermediate
R&D outputs, a percentage of which will be
converted into commercial products, and so
offer a window into the research operations
that are producing new information with a
view toward its perceived commercial value.
However, general patenting trends offer
us some insightful data on the scope and
direction of clean energy innovation.
The drop in renewable energy patenting
activity from roughly 2011 may be due to
the maturity of some technologies. The
dominance of existing solar PV, bioethanol,
and wind technologies may discourage
researchers from striving to improve them
and enter the markets in Europe, Japan,
and the United States. Moreover, renewable
energy patenting continues to be more active
than it was before approximately 2007, and
Li-ion battery patenting, in particular, is
expanding (EPO and IEA, 2020).
Now that we have built a solid foundation
on what constitutes a green technological
innovation, what begs a question here is
6. Hickel, J. and Kallis, G., 2019, ‘Is Green Growth Possible?,’ New Political Economy, DOI:
10.1080/13563467.2019.1598964
that how could it intersect with the degrowth
principle? In the publication done by Hickel
and Kallis (2019) they investigated and
tried to answer: is green growth possible?6
According to the green growth theory,
sustained economic expansion is consistent
with our planet’s ecology because technology
change and substitution will allow us to
completely disconnect GDP growth from
resource use and carbon emissions. This
claim is increasingly assumed in national and
international policy, including the Sustainable
Development Goals. Green growth has
developed as a major policy response to
climate change and ecological disintegration.
However, empirical evidence on resource
utilization and carbon emissions does not
support green growth theory. After reviewing
relevant papers on historical trends and
model-based projections, this research study
conducted reveals that:
“(1) there is no empirical evidence that
absolute decoupling from resource use
can be achieved on a global scale against a
background of continued economic growth,
and (2) absolute decoupling from carbon
emissions is highly unlikely to be achieved at
a rate rapid enough to prevent global warming
over 1.5°C or 2°C, even under optimistic policy
conditions. We conclude that green growth
is likely to be a misguided objective, and that
policymakers need to look toward alternative
strategies.”
Hence, even looking at the intersection
between the myriad of technological
innovations we have reached today, especially
the energy transition needed to net zero
emissions by 2050 commitment, the promise
of a sustainable future for our current and for
the next generation is still not guaranteed.
METALAB REVIEW ¦ 43
44 ¦ METALAB REVIEW
© Austrian National Library on Unsplash
PARADOXES OF
TECHNOLOGICAL
ADVANCEMENT AND THE
DEGROWTH
In this section, let’s dig deeper on the four
main paradoxes that hinders technological
advancement toward sustainability and
degrowth: (1) decoupling growth from
resource consumption, (2) e-waste
generation, (3) conflicting power and politics,
and (4) cultural and social implications.
1. DECOUPLING GROWTH FROM
RESOURCE CONSUMPTION
Degrowth advocates for a reduction in
production and consumption levels to achieve
a sustainable and equitable society7. However,
this poses a challenge in a world where
economic growth is closely tied to resource
consumption. This means that if we want to
reduce production and consumption levels,
we will also need to reduce economic growth.
This is a challenge because economic
growth is seen as essential for prosperity
by many people. There are a number of
ways to address this challenge. One way is
to change the way we measure economic
growth. We could focus on measures of well-
being, such as life expectancy, happiness,
and environmental quality, instead of GDP.
Another way is to decouple economic growth
from resource consumption. This means
finding ways to grow the economy without
increasing resource consumption.
While technological advancements can
facilitate the transition towards renewable
energy and more efficient production
processes, it is unclear whether they can
enable a complete decoupling of growth
from resource consumption. According to
the Global Footprint Network, achieving
sustainable resource use would require a
reduction in resource consumption by roughly
75% in high-income countries and 90% in
middle-income countries8. This would be
challenging to achieve through technological
advancements alone. In addition, the findings
in the recent study stated that while energy
and material efficiency improvements have
reduced the amount of resources required
for each unit of GDP, the overall consumption
of resources has increased due to economic
growth.
2. E-WASTE GENERATION
According to the United Nations The Global
E-waste Monitor 2020, in 2019 there was
a record high of 53.6 million metric tonnes
(Mt) of electronic waste generated globally,
which is an increase of 21% in just five years9.
E-waste is a term used to describe discarded
electronic devices and equipment such as
discarded electronic devices and equipment,
such as computers, mobile phones,
televisions, refrigerators, and air conditioners.
It may contain harmful substances, and can
pose significant risks to the environment and
human health if not managed appropriately.
The production of e-waste is increasing
quickly due to advances in technology and
the popularity of electronic devices among
consumers10. As a consequence, it imposes

7. Kallis, G. (2011). Degrowth: A vocabulary for a new era. London: Routledge.

8. Global Footprint Network. (2019). Ecological Footprint and biocapacity of 209 countries and territories, 1961-2016.
Retrieved from https://www.footprintnetwork.org/content/documents/2019_Country_Fact_Sheets.pdf
9. International Telecommunication Union. (2020). The Global E-waste Monitor 2020. Retrieved from https://www.itu.int/
en/ITU-D/Environment/Documents/Reports/GEM_2020_report.pdf
10. World Health Organization. (2018). E-waste and children’s health. Retrieved from https://www.who.int/ceh/
publications/e-waste-childrens-health/en/

METALAB REVIEW ¦ 45
potential conflicts between degrowth and
technological advancement. The increasing
levels of e-waste, low collection rates,
and non-environmentally sound disposal
and treatment of this waste stream pose
significant risks to the environment and
human health. Also, as technology advances,
older devices become obsolete and are
often discarded, leading to a significant
environmental impact11. Hence, degrowth
principles call for a reduction in consumption
levels, while the technology industry relies on
continuous consumption and disposal of new
products.
3. CONFLICTING POWER AND
POLITICS
The implementation of both degrowth
and technological advancement requires
significant changes to the current global
economic and political systems, which
is a very challenging task. The dominant
economic and political actors may not be
willing to relinquish their power and privilege
to facilitate such changes. It can be seen in
the reluctance of many governments to adopt
policies that would limit economic growth or
reduce resource consumption.
Furthermore, this is exemplified by the failure
of the COP26 climate summit where we
all witnessed countries failing to agree on
crucial measures to limit global warming12.
The International Energy Agency has also
warned the public that current climate
policies fall short of what is required to limit
global warming to 1.5°C above pre-industrial
levels, and rapid action is needed to avert
a climate catastrophe. In addition, there
are questions around who benefits from
technological advancements and whether
the benefits are distributed equitably. Finally,
a study by Oxfam International found that
the world’s wealthiest 1 percent emit more
than double the carbon emissions of the
poorest 50 percent13. This highlights the need
for degrowth principles to reconsider and
move away from the mentality that growth
is good for the economy, instead prioritizing
sustainability, equity, and well-being of the
public over endless growth and consumption.
4. CULTURAL AND SOCIAL
IMPLICATIONS
Finally, a report by the World Economic
Forum found that the gender gap in the
technology sector is widening, with women
underrepresented in artificial intelligence and
other emerging technologies14. Additionally,
the reliance on technology can also lead
to social isolation and a disconnection
from the world behind the screens of
one’s smartphones. This illustrates that
the development of new technologies can
reinforce existing power structures and
exacerbate social inequalities. In the article
published by UNICEF, it is found that social
media use was associated with higher
levels of anxiety and depression among
teens’ mental health15. The findings reveal
that social media use may contribute
to anxiety and depression by increasing

11. United Nations Environment Programme. (2019). Global E-waste Monitor 2019.
12. United Nations. (2023). COP26: Together for our planet. Available at: https://www.un.org/en/climatechange/cop26
13. Oxfam International. (2022, November 8). Billionaire emits a million times more greenhouse gases than average
person. Retrieved from https://www.oxfam.org/en/press-releases/billionaire-emits-million-times-more-greenhouse-
gases-average-person
14. World Economic Forum. (2020). The Global Risks Report 2020. World Economic Forum. Retrieved from https://www.
weforum.org/reports/the-global-risks-report-2020
15. UNICEF. (2018). Is social media bad for teens’ mental health?, Retrieved from https://www.unicef.org/stories/social-
media-bad-teens-mental-health

46 ¦ METALAB REVIEW
social comparison, leading to feelings of
inadequacy, and providing a platform for
cyberbullying. However, it is important to note
that correlation does not equal causation, and
more research is needed for us to understand
the complex relationship between social
media use and mental health.
CONCLUSION
Throughout this article we have seen that the
intersection of degrowth and technological
advancement presents us with a complex and
nuanced picture for our future. Technological
advancement is the development of new
technologies that can improve our lives
in a variety of ways. On the other hand,
degrowth is a socio-economic paradigm that
advocates for a reduction in production and
consumption levels to achieve a sustainable
and equitable society. While both concepts
offer potential solutions to the ecological and
social challenges we face, we must recognize
their limitations and critically evaluate their
implications. Degrowth, for example, could
lead to a loss of jobs and economic growth.
Technological advancement hence could
have negative environmental impacts, such
as increased pollution and resource depletion.
The cultural and social dimensions of
technological advancements must also be
considered. For example, some technologies,
such as social media, can have negative
impacts on mental health. We must work
towards a more equitable and sustainable
global society, where everyone has access to
the benefits of technological advancement,
and where the negative impacts are
minimized. Ultimately, our goal is to find a
balance between sustainability and progress,
and to ensure everyone can enjoy the benefits
of technology without harming the planet or
ourselves.
KEY TAKEAWAY
1. Technology is a tool, not a solution.
It can help us address environmental
challenges, but it cannot solve them on
its own. We need to use technology in
combination with other approaches, such
as degrowth and social change.
2. Achieving both degrowth and
technological advancement would
require significant global changes. These
changes would be difficult to achieve due
to political and economic complexities.
3. In our current economic system, which
is driven by growth, it can be challenging
to reduce production and consumption
levels. This would require a fundamental
shift in the way society and the economy
operate.
4. Technology has both benefits and
limitations. It can improve our lives, but
it can also create new problems and
exacerbate existing ones.
5. To achieve just sustainable economic
transition, we need to recognize the
complex and interconnected nature of
our environmental, social, and economic
challenges. Developing solutions that
address all of these challenges is needed
simultaneously.
METALAB REVIEW ¦ 47
ATTENTION
ECONOMY:
YOU’RE NOT
PAYING ENOUGH
ATTENTION
By MICHELLE DIAZ & MARINA PELLET -
Master in Management at ESSEC Business School &
Master in Data Sciences & Business Analytics at ESSEC
Business School & CentraleSupélec

WHAT IS THE specific aspect of our environment carries

ATTENTION ECONOMY? an opportunity cost, or the foregone benefit

E
conomics is the study of scarcity 1;
from wealth, food, energy, or even
time. Otherwise known as human
attention. The latter example might seem
odd. Nevertheless, human attention is in fact
a scarce resource. One that is intangible, but
is nevertheless invaluable. After all, of the 24
hours we have access to a day, one third we
spend sleeping.
Every time we decide to focus our attention
on a particular task, our entire cognitive
resources are directed to that one task at
the expense of others. In economic terms,
spending time focusing our attention on a
that would have been derived from another,
unchosen task. Just like money, one can also
exchange attention, as we usually allocate
our attention to tasks in order to gain a
benefit, whether it is learning a new topic,
getting remunerated at work, taking care
of our health and body through exercise, or
releasing serotonin, endorphin or oxytocin by
engaging in a pleasurable activity. This small
analysis gives the idiom ‘paying attention’ all
its economical depth.
In this context, the attention economy, a
term first coined by psychologist, economist,
and Nobel Laureate Herbert A. Simon in
1971, can be defined as the mechanisms

1. https://www.merriam-webster.com/dictionary/economics

48 ¦ METALAB REVIEW

and strategies put in place to captivate the
scarce resource that is human brain time
to generate revenue2. Everytime you pass
by an advertising board in the street that
successfully catches your attention, every
time your eyes deviate from the news article
you’re reading to that newest trendy shoes
ad on the side of the webpage, or every time
Instagram shows you a ‘suggested’ video that
you actually watch, you are participating in
the attention economy.
WHO ARE THE BIG
PLAYERS AFTER YOUR
ATTENTION?
2. BER staff. (March 31, 2020). Paying Attention: The Attention Economy. Berkeley Economic Review
© Andrew Moca on Unsplash
As most people can guess, the stakeholders
after your attention are predominantly
technology, entertainment, & social media
companies, in historical accordance with
the traditional media players: the press,
newspapers, TV channels, & radio. All, to
some extent, are on the conquest of retaining
human attention. But in our modern times,
social media platforms have brought a new
dimension to capturing human attention.
Indeed, as most of them do not produce any
content themselves, their sole purpose and
main revenue stream is to sell available brain
time to advertisers.
In essence, there are two types of companies
after your attention, the subscription-
METALAB REVIEW ¦ 49

based model and the advertising-based
model. In the first category, we have the
media and entertainment industry, like the
streaming companies: Netflix, Disney+, Hulu,
for example. In the second category, are
the social media platforms like Facebook,
Instagram, and Tiktok. Both rely on
consumers to actively and consistently use
the services provided, which results in tactics
to achieve said result, a feat these companies
have increasingly managed to do3.
WHAT EMERGING
TECHNOLOGY IS DRIVING
THE ATTENTION
ECONOMY?
To sustain the audience or the consumer’s
attention, companies need to serve them
exactly the content they want. In the past,
companies did this by conducting market
research, adhering to what the market
3. Kemp, S. (July 20, 2023). Social Media Use Reaches New Milestone: User identities now equal to more than
sixty percent of the world’s population. Meltwater
50 ¦ METALAB REVIEW
© Markus Winkler on Pexels
deemed popular. Today, this market research
is bolstered by technology’s improved
capacity to collect more fine-grained,
instantaneous, and relevant data on human
behaviour through the various digital
platforms people use. Given the emergence
of artificial intelligence (AI), all this data can
now be fed into machine learning powered
algorithms that use relevant computational
techniques to better understand and predict
human preferences.
Nowadays companies are able to curate
content in unprecedented ways. And over the
years, platforms have successfully leveraged
big data and AI to maximise the time people
spend online. By collecting data every time we
like, comment, share, rewatch, scroll and post,
social media platforms are able to construct
extremely detailed profiles of their users
and their preferences. Such profiles are built
through sentiment analysis which is backed
by Natural Language Processing (NLP), the
branch of computer science—and more
specifically, a technique in AI which gives
computers the ability to understand text and
spoken words in much the same way human
beings can4.
For example, Facebook can classify as much
as 52,000 features on each of its users to
simultaneously curate the most addictive
feed, and target the most appropriate ads
to maximise revenue5. These features can
involve pages followed and ads clicked
amongst other things. In essence, AI has
become the main strategy used by companies
to capture the scarce resource that is human
attention and further generate revenue.
WHY SHOULD YOU
CARE?
According to Dataportal’s 2023 digital report
on the global usage of the internet and digital
services, our lives have become inextricably
linked with technology, with over 5 billion
internet users all over the globe6.
It is imperative that we understand the
repercussions that technology plays in our
lives. Indeed, some of the digital services
we use play on some of our deepest, most
basic, and evolutionary impulses; to the
detriment of our health and general well-
being. By effectively distilling the audience’s
desire through the use of AI, companies
are now, more than ever, able to capitalise,
take advantage of, and directly or indirectly
negatively impact human psychology. Below
are apt samples of said influences:
MENTAL HEALTH
Consider social media platforms and the
long-established relationship between their
use and body image. The existence of highly
perfected, curated, and edited images of
influencers on social media like Instagram
may bring about issues of mental health
risks such as appearance-related concerns,
eating disorders, and body dysmorphia.
These issues predate the application of AI in
these platforms, even when feeds were only
occupied by posts of accounts you follow.
But now, with the use of AI, it means that
even when users make the active choice to
avoid certain types of accounts or content,
they may be unable to do so, especially as
the ‘suggested’ posts in feeds take up a more
important space than before7.
Consequently, AI further exacerbates the
problem. What’s worse is that psychology has
proven that even the things we particularly
dislike or fear prove to be points of interest,
akin to the desire of watching horror movies,
even though doing so might give one
nightmares8.
How many times have you scrolled through
the social media feed of someone you do
not particularly like? Might you have done
something more productive, or at the very
least, less emotionally taxing instead?

4. Taherdoost, H. (2023) Enhancing Social Media Platforms with Machine Learning Algorithms and Neural Networks,
Algorithms, 16(6), 271. https://doi.org/10.3390/a16060271
5. Wright, K. (September 15, 2018). How Facebook AI may help to change the way we shop online in the future. CNBC
6. Kemp, S. (July 20, 2023). Social Media Use Reaches New Milestone: User identities now equal to more than sixty
percent of the world’s population. Meltwater
7. Harriger, J. A., Evans, J. A., Thompson, J. K., Tylka, T. L. (2022) The dangers of the rabbit hole: Reflections on social
media as a portal into a distorted world of edited bodies and eating disorder risk and the role of algorithms, Body image,
41, 292-297. https://doi.org/10.1016/j.bodyim.2022.03.007
8. L. Coolidge F., Srivastava A. (2021) Why We Enjoy Horror Films. Decoding the fascination behind scary movies.
Psychology Today

METALAB REVIEW ¦ 51
POLARISATION & DIGITAL
ESCAPISM
On the other hand, having an algorithm
cater to specific interests can be viewed as
a good thing in that users are able to easily
discover more content that they will enjoy, as
is the case for entertainment platforms with
AI-powered recommendation systems. But
the increased personalisation comes with
caveats like polarisation and digital escapism.
Polarisation refers to the tendency of social
media users to fall into a vacuum of content
that only reinforces their view of the world,
thus giving them a biased and distorted
view of reality9. Such is the case with
recommended content on platforms, wherein
“social media robots, more commonly known
as “bots,” are becoming a formative tool of
online radicalization”10. It is easy to draw
the line from these bots to the rampant
polarisation online that has instigated many
incidents of real-life violence owing to the
spread of disinformation, conspiracy theories,
and radical viewpoints. Such is the case with
the 2017 Rohingya Massacre in Myanmar,
wherein people were “killed, tortured, raped,
and displaced in the thousands as part of the
Myanmar security forces’ campaign of ethnic
cleansing. In the months and years leading
up to the atrocities, Facebook’s algorithms
were intensifying a storm of hatred against
the Rohingya which contributed to real-world
violence.” – Agnès Callamard, Amnesty
International’s Secretary General11. Indeed,
researchers have predicted that the dawn of
effective and persuasive generative AI will
further exacerbate the problem12.
Secondly, we have digital escapism, which
refers to the use of digital technology and the
internet as a means to escape the realities of
our lives. This new trend of digital escapism,
in addition to private spaces in the virtual
world13, has been further exacerbated by AI.
The act of escaping itself may not be all that
bad, after all, we all need a reprieve from time
to time. However, research has shown that
excessive escape to the digital world has
given rise to psychological disorders. It brings
forth “Internet Disorder syndrome” which
invites stress, depression, deviation from
one's own goal, sleeplessness and anxiety14.
DECREASE IN
ATTENTION SPAN
According to the Merriam Webster Dictionary,
attention span is defined as “the length of
time during which one (such as an individual
or a group) is able to concentrate or
remain interested.”15 Historically, scientists
hypothesise that having a shorter attention
span served humans well, in that it allowed

9. Arora, S. D., Singh, G. P., Chakraborty, A., Maity, M. (2022) Polarization and social media: A systematic review and
research agenda, Technological Forecasting and Social Change, 183. https://doi.org/10.1016/j.techfore.2022.121942
10. Mantello, P., Ho, T. M., Podoletz, L. (2023) Automating Extremism: Mapping the Affective Roles of Artificial Agents in
Online Radicalization, The Palgrave Handbook of Malicious Use of AI and Psychological Security, 81-103. https://doi.
org/10.1007/978-3-031-22552-9_4
11. Amnesty international (2022) Myanmar: Facebook’s systems promoted violence against rohingya; meta owes
reparations
12. Hsu, T., Thompson, S. A. (February 8, 2023) Disinformation Researchers Raise Alarms About A.I. Chatbots. The New
York Times
13. Subudhi, R. N., Das, S., Sahu, S. (2020) Digital Escapism, Journal of Humanities and Social Sciences Research, 2(S),
37-44. https://horizon-jhssr.com/view-issue.php?id=63
14. Ibid.
15. https://www.merriam-webster.com/dictionary/attention%20span

52 ¦ METALAB REVIEW
us to quickly monitor for danger. However,
in today’s digital era, humanity’s shorter
attention span can be detrimental. In fact,
the US National Center for Biotechnology
Information claims that the average human
attention span has dropped from 12 to 8
seconds between 2000 and 2013, just one
second below that of a goldfish, which is
why the phenomena of a decreasing ability
to concentrate on a task was called the
“Goldfish Effect”. Social media is often held
as most accountable for this drop in our
attention span.
Now, consider the push through notifications
on our phones from these platforms. Each
ping conditions us to reach for our phones.
So much so that even without that ping,
people find themselves reaching for their
phones anyway; what researchers have
come to call phantom phone signals.16
Given the boost that AI gives to social media
and entertainment companies after our
attention, it is imperative that society at large
understands how detrimental a decrease in
one’s attention span can be for their lives. The
inability to focus can decrease productivity
at work, make it harder to complete personal
chores, and at their very worst, impact
personal relationships.17
How many times have you found yourself
annoyed with someone using their phone
while you’re relaying a story to them? How
many times have you been that person? Do
we not owe the people we care about our
absolute attention? Do we not want that for
ourselves? Unfortunately, without outsized
intervention, it is an uphill battle for most
users.
16. Kelleher, E. (January 14, 2023) 5 Things To Do For Better Focus & A Longer Attention Span, mbghealth
17. Ibid.
18. Isaac, M. (March 15, 2016) Instagram May Change Your Feed, Personalizing It With an Algorithm. The New York Times
19. Wallaroo (2023) Facebook News Feed Algorithm History
20. https://en.wikipedia.org/wiki/The_Social_Dilemma
INTERVENTIONS: WHAT,
WHERE, & REALLY?
The mechanism behind social media and
entertainment platforms have not always
used AI to construct their various newsfeeds.
In other words, while the feeds could be
addictive, they were not always powered by
AI. At one point, it was true to its name; it was
simply a feed of the content posted by people
you followed. Not a curated feed designed
to explicitly keep you online for as long as
possible.18 The change into algorithmic feeds
came into effect largely around 2009, with
Facebook leading the way by prioritising
popular posts.19 But the mission was always
to retain users on the platforms for as long as
possible, and the use of AI is simply the most
powerful way of currently doing so.
But big tech is aware of the backlash, and has
subsequently introduced measures that some
may call ways to curb the excessive use of
their services. And the release of Netflix’s
documentary on the attention economy:
The Social Dilemma, has made people more
aware of the issue.20 Meanwhile, Apple and
other technology device manufacturers have
introduced app timers to help users better
manage their time and curb the hours they
spend in front of a screen. And child settings
can be applied on these devices to safeguard
internet use, excluding certain websites and
searches that may be bad for children.
Furthermore, some companies have even
implemented what can be called more
concrete measures like Alphabet and Meta.
Indeed Google Chrome has been on course
to phase out third-party cookies since 2021,
METALAB REVIEW ¦ 53
with 1% of cookies being phased out in early
2024.21 Moreover, Meta has increasingly
over the years made privacy controls more
accessible for its users; users now have the
option of tweaking what data, if any, is shared
with the advertisers.22
But how effective are these efforts really?
Might we even call these interventions? Or
just ways for these companies to seemingly
address customer concern, and in effect
continuously sell their products? Or worse
yet, might these tweaks just be another push
to further sell said products, as an appeal to
concerned consumers? After all, as anyone
with a smartphone knows, you can always
just extend the timer. Does it not, in some
way, feel like the impetus of responsibility
is being pushed onto users? Do individual
users actually stand a chance when a former
Google designer, Tristan Harris compares the
level of addiction to a "Vegas slot machine"
as users "check their phones hoping that they
have a notification, as if they are pulling the
lever of a slot machine hoping they hit the
jackpot"?23
As the business models of social media and
streaming companies continue to largely be
based on the attainment and maintenance of
people’s attention, it follows that society at
large cannot expect intervention to primarily
come from companies themselves. From a
business and profit driven perspective, these
companies cannot be effectively counted
upon to match their interventions to reduce
screen time to healthier levels. Particularly,
if said levels fall below what is required to
continue rapid company growth and appease
shareholders.
REGULATION?
Currently, the European Union has led the
way when it comes to regulation of big
tech companies. For example, through the
recent Digital Services Act (DSA), regulating
illegal content, transparent advertising, and
disinformation online, the Digital Market
Act (DMA), ensuring a higher degree of
competition in the European Digital Markets
by preventing the largest digital players
(defined as Gatekeepers) from abusing
their market position and power by enabling
smaller companies to enter the market on a
more level playing field. And lastly, albeit the
most known, the General Data Protection
Regulation (EU), a regulation on privacy
and data protection in Europe, adopted
in April 2016 and became enforceable in
May 2018.
The GDPR remains one of the core
regulations on privacy and data protection in
Europe, and arguably one of the biggest tech
regulations so far, which has sparked similar
regulations across the globe.24 In 2023, the EU
AI Act, the first regulation on the use of AI was
adopted by the parliament, with talks to begin
with EU countries in the Council on the final
form of the law underway25. Outside Europe,
and given the testimony of Sam Altman, the
OpenAI chief executive on the repercussions
of AI earlier this year in Congress, multiple
actors within the US government are jostling
to regulate AI26. In spite of all this and given

21. Lardinois, F. (July 20, 2023) Google starts the GA rollout of its Privacy Sandbox APIs to all Chrome users. TechCrunch
22. https://www.facebook.com/privacy/center
23. McGinley, J. (November 2, 2020) 3 Things We Learned About Social Media from Netflix’s “The Social Dilemma”.
Blackstone LaunchPad, Syracuse University
24. Statista (2023) Tech regulations in Europe - Statistics & Facts
25. European Parliament (2023) EU AI Act: first regulation on artificial intelligence
26. Levin, B., Downes, L. (May 19, 2023) Who Is Going to Regulate AI?. Harvard Business Review

54 ¦ METALAB REVIEW

the historical speed at which regulation
comes into play around big tech, it is
imperative that users of digital services and
social media platforms refrain from being
complacent.
A WAY FORWARD?
As individual users of these entertainment
and social media platforms, what is there to
do? How might we shift the powers that be?
Do we have that ability? The Social Dilemma
was released in 2020, and three years later,
here is an article calling your attention yet
again to the attention economy. Outlook
is rather grim. But users can call for better
behaviour from big tech — it may not seem
like much, but calling attention to the issue,
with a big enough mic, and a coordinated
enough mass, might speed up the process
of accountability. Indeed, let’s not forget that
consumers create demand and have the
power to shift the actions of big companies
through their choices.
© dole777 on Unsplash
Just like we have seen the rise in demand
for more sustainable and ethical products,
we can hope to see a mass gathering and
ask for anthropologically beneficial tech
products that promote learning, collaboration,
and solidarity; stepping away from the
negative effects we’ve outlined. Much like the
environmentalist movement, where people
make conscious decisions to fly less, buy
local groceries, and support circular brands,
online users can shift to digital minimalism.
By using alternative internet services like
Duckduckgo, Vivaldi, or Ecosia, users are able
to limit data collection from big tech to some
degree, reduce their time online, and help the
planet along the way.
Additionally, the decentralisation movement
or Web 3.0, which is an alternative way for
the internet to work could be something
that users might think to further support.
In essence, the decentralisation of the
internet means widely distributing the control
of online information, interactions, and
experience of users. Such a system would
METALAB REVIEW ¦ 55
56 ¦ METALAB REVIEW
© Anete Lusina from Pexels
see the reorganisation of the internet into a
peer-to-peer infrastructure as opposed to
the current centralization of data amongst
hosting services27. More concretely, this
would mean that large amounts of data might
no longer be concentrated in the hands of
those that provide the services we use, like
Alphabet, Meta, and Apple.

But for now, reading this article has hopefully

made you more aware of how your phone,
that you bought with your hard-earned
money, might be serving big tech more than
it serves you. The first step to addressing
any problematic issue is awareness; we
all need to pay a bit more attention to the
consequences of our time online. Remember,
the attention economy is not an immovable
object, met with the right amount of pressure,
it can change. Like any business model. Given
that, shall we turn the tide and assure your
phone serves you first? Sharing this article is
a start.

27. Polzin, M. (August 24, 2016) What Is the Decentralized

Web? 24 Experts Break it Down by Mackenzie Polzin.
Syracuse University

METALAB REVIEW ¦ 57
CITIES OF THE
FUTURE
EVALUATING AI’S POTENTIAL IN
CLIMATE-RESILIENCY

AS AN INCREASING NUMBER OF PEOPLE MIGRATE TO CITIES,

WILL AI'S ADOPTION EMPOWER CITIES TO PROTECT ITS
INHABITANTS FROM THE RAMIFICATIONS OF CLIMATE CHANGE?

By Seethal REDDY KAULURi

Master in Management at ESSEC Business School

F
rom bushfires in Australia, floods in India,
“AI IS droughts in Africa, to dry corridors in
Central Asia, we have seen some of the
THE NEW deadliest and costliest climate disasters of
history1 in According to the United Nations2
ELECTRICITY.” the recent past. They won’t be the last of such
disasters to occur if our efforts to fight climate
Andrew NG, co-founder of Coursera change remain scant as today. According to
and Google Brain Deep Learning the United Nations, the global emissions were
Project. supposed to be reduced by 7.6% per year
between 2020 and 2030 in order to limit global
warming below 2 degrees Celsius (3.6 degrees
Fahrenheit) set at the Paris Agreement. However,
global emissions increased in 2021 after a dip by
5% in 2020 due to the COVID-19 pandemic.

1. 10 costliest climate disasters of 2022. (2023). World Economic Forum.

2. Cut global emissions by 7.6 percent every year for next decade to meet 1.5°C Paris target. (2019). UN Environment
Programme

58 ¦ METALAB REVIEW

Cities contribute to over 70%3 of these
global CO2 emissions due to massive
industrialisation and motorised transportation
systems that still use fossil fuels. They are
also the most vulnerable to these disasters
as they are home to more than half the
world’s population today and three quarters
of the population or 6.5 billion people by
2050. Asia and Africa, where the majority
of the population still resides in rural
areas, increasingly face the stress of rapid
urbanisation, while uplifting living standards
at the same time. According to Mckinsey
Global Institute's report4, Asia will starve due
to increasing droughts, and India may lose
3. Dasgupta, S., Lall, S., Wheeler, D. Cutting global carbon emissions: where do cities stand? (2022). World Bank
4. Woetzel, J., Tonby, O., Krishnan, M., Yamada, Y., Sengupta, S., Pinner, D., Fakhrutdinov, R., and Watanabe, T. Climate risk
and response in Asia. (2020). McKinsey Global Institute.
© Eren Namli on Unsplash
up to 30 percent of annual daylight hours by
2050 due to rising temperatures.
As we desperately hunt for solutions
to protect our cities in the wake of this
emergency, this article critically compares
and assesses the potential of AI as a solution
as it is increasingly revered today in various
applications due to its abilities to perform
human-like tasks faster, with minimum
errors, and at a much grander scale than was
possible before.
METALAB REVIEW ¦ 59

ARE SMART CITIES
ENOUGH?
To overcome the challenge of rapid
infrastructural development while improving
quality of living, many African and Asian
countries are looking to build smart cities: to
integrate advanced technologies to manage
overcrowding and traffic, and to manage
resources better. Smart cities also seem to
be a way of attracting foreign investment as
they are seen as an opportunity to expand
markets, promote innovative products and
services, tap into emerging hubs for skilled
workforce and gain trade benefits. While
there is no universally accepted definition
of a smart city, in a broader sense, it has
been defined by multiple sources as a
city that leverages smart technology and
communication, such as, data analytics,
5. What is Climate Resilient Development and how do we pursue it? Intergovernmental Panel on Climate Change report.
6. Thormundsson, B. Smart cities market revenues worldwide 2019-2030. (2023)
60 ¦ METALAB REVIEW
© Brodie from Burst
cloud computing, Internet-of-Things (IoT), or
artificial intelligence to achieve operational
efficiencies for the welfare of the citizens.
But this definition doesn’t explicitly state
that smart cities are necessarily built to be
resistant to the adversities of climate change.
According to the Intergovernmental Panel
on Climate Change5, Climate Resilient
Development is urgently needed. It defines
this framework as, “reducing exposure and
vulnerability to climate hazards, cutting back
greenhouse gas emissions and conserving
biodiversity are given the highest priorities in
everyday decision-making and policies on all
aspects of society including energy, industry,
health, water, food, urban development,
housing and transport.” Therefore, as the
global smart cities market6 is expected to
grow to the value of about $1.38 trillion by
2030, there is an increasing need to refocus
this investment on building smart cities that
are, in fact, resilient.
UNCONVENTIONAL
CITIES
Before proposing solutions, let us first
analyse some popular non-AI experimental
eco-settlements and assess whether
inspirations can be drawn from their styles of
governance, economy, and self-sufficiency
in achieving climate-resilience. One such
settlement is Auroville7 in Viluppuram
district of India, which was founded in 1968
as a community in which people from all
over the world could come together and
live in harmony, transcending the barriers
of nationality, race, and religion. The town
is resilient to climate as the inhabitants
are committed to sustainable living while
reducing environmental impact by adopting
methods such as using renewable energy,
organic farming, and implementing water
conservation and waste management
systems. Auroville also places a strong
emphasis on educational programs that
help build the knowledge and skills needed
to adapt to the impacts of climate change.
It is home to several research centres
and innovative projects that focus on
sustainability and climate resilience.
Another utopian settlement project is NEOM8,
which is part of Saudi Arabia’s vision 2030
that aims to offer its citizens the best of
diverse climates - from sun-soaked beaches,
floating industrial islands on Red sea, to ski
resorts in snow capped mountains, all while
running on 100% renewable energy. The
7. Koduvayur Venkitaraman, A., Joshi, N. A critical examination of a community-led ecovillage initiative: a case of Auroville,
India. Clim Action 1, 15. (2022).
8. Palmer, I,. Is Saudi Arabia’s New Climate City ‘Neom’ Future Or Fantasy? (2022) Forbes.
9. Almasoud, A., Albasri, K., Alshammari, M., Alghamdi, R., Alanazi, A., Binladen, S., Alsikhan, S., Kingdom of Saudi Arabia
Budget Report. (2018). KPMG.
region, an area larger than Israel, aims to
eliminate cars and roads by replacing them
with a hyper-speed rail that covers the entire
Line - the shape in which the city will be built
for a length of about 177 km. Each block of
this city aims to be self-sufficient by building
schools, groceries and other basic amenities
at a walkable distance to cut emissions. The
project also claims to care for biodiversity by
building a coral-reef restoration project.
However successful or utopian these
experiments might sound, it is overly
ambitious to adopt their styles on a large
scale. Auroville is a close-knit community
with a number of residents just over 3000,
although the plan was initially to attract
tens of thousands more residents. This
sense of unity helps build social resilience,
which is essential for climate resilience but
cannot be replicated at a global scale due
to bureaucracy and disharmony between
national and local governments. This is
also why NEOM, which aims to host up to
9 million residents by 2045 (only 0.09% of
the world population by then), aims to have
an independent governance system with
laws of its own, which not only substantiates
that it is easier to control climate policies in
a smaller sample, but also establishes that
it is impossible to achieve these climate and
self-sufficiency objectives while remaining
under the law and economy of its host
country that still derived 68%9 of its budget
revenues from oil in 2019. Another challenge
of scaling these models is the differences
in global diversity. Even though Auroville
brings together diverse people from all over
the world, they are still connected through
a common sense of spirituality and respect
for nature. These individuals share values of
METALAB REVIEW ¦ 61
collectivism and insist on learning a common
language, Tamil, to facilitate cooperation
and smooth community functions. Finally,
such models depend on local resources for
self-sufficiency. While Auroville depends on
its organic farms and renewable projects
for food, energy and water, Neom aims to
build a close-knit self-sufficient economic
hub by attracting world-wide talent from 14
industrial sectors in creating a concentration
of resources and economic power that makes
it far easier to achieve resilience here than
at a macro-level. Analysts also suggest that
projects like Neom are more a delay towards
climate objectives than a solution as living
in Saudi Arabia necessitates the use of air
conditioning, which is still challenging to shift
into renewables.
Therefore, as the sustainable models
implemented in the cities discussed above
cannot be replicated on a larger scale, we
must turn towards more pragmatic and
viable solutions to improve our cities’ climate
resilience.
THE PROMISE OF AI
According to a survey conducted by BCG10,
AI can expedite reduction of GHG emissions
up to 10% per organisation and up to
5.3 billion tons of CO2e if scaled globally.
This is because of its enormous power
of gathering, computing, and analysing
unstructured, multidimensional, and end-to-
end data points. As cities in Asia and Africa
suffer from inefficient city designs due to
informal settlements and inadequate public
transportation systems, these regions can
radically transform into sustainable and
resilient cities by leveraging AI’s power in
360-degree information modelling to optimise
energy, reduce wastage, and improve
accuracy and speed of climate-modelling
10. Maher, H., Meinecke, H., Gromier, D., Garcia-Novelli, M., Fortmann, R. AI Is Essential for Solving the Climate Crisis.
(2022). BCG.
62 ¦ METALAB REVIEW
for better mitigation and preparedness in the
short-term and adaptation and resilience in
the long-term.
In buildings, energy can be optimised by
autonomous lighting, heating, and cooling
based on occupancy levels, time of the
day, weather conditions and occupants’
comfort. AI can be used to track carbon
foot-print, water usage, and waste production
in order to set consumption limits. AI can
spot anomalies through data gathered
from sensors and check performances
of equipment outside the norm for timely
maintenance and repairs. AI can predict
energy requirements to ensure ample
solar panels and storage are installed for
uninterrupted renewable energy consumption.
Comparative data analysis from other
green-buildings, or with simulations based
on AI-built “digital twins”, can be used to
prescribe alternative architectural designs
in comparable areas to further reduce
emissions if required. For example, it can be
prescribed to use tinted windows or green
roofs to keep the buildings cooler if the major
carbon emitter for a particular building is air
conditioner. AI can cluster the occupants
based on consumption behaviours and
emissions for law-makers to either encourage
favourable behaviours through reward
systems or through penalties.
Similarly in transport, AI can optimise train
and bus routes and frequencies by matching
demand and supply based on time of day,
season, weather, etc. It can be used to predict
repairs and maintenance in advance to
prepare for downtime and ensure that public
transportation is always available and running
smoothly without interruptions. It can also
be used to propose on-demand services
or reduce off-peak inefficiencies caused
by vehicles running almost empty because

of their fixed itineraries and schedules.
Personal vehicles can be replaced by car-
pooling that matches passengers based on
pickup and destination. AI can also analyse
data about walking, running, and cycling
activity to make recommendations. For
instance, it can suggest the best locations
for basic neighbourhood amenities such
as groceries, coffee shops, pharmacies,
schools and emergency clinics, to ensure
widespread access that does not rely on
fossil fuels. It is also possible to centralise
transport systems to optimise routes and
traffic. A city’s transportation system can be
entirely integrated on a 360-degree carbon
monitoring to ensure that collectively, the
city’s transport stays within the carbon
budget. If at a particular time, personal
vehicles on road cause more emissions,
reinforcement learning can be used to
encourage citizens to use more of public
transport by increasing frequency of trains
and metro while increasing time of red traffic
signals on the road to discourage vehicle
traffic or converting roads into carbon-free
zones to promote cycle and pedestrian-traffic
only.
© Mitul Shah from Burst
AI can study vast data from weather sensors,
satellites, news reports, and social media,
and spot hidden patterns and events to
predict risks, such as temperatures, sea-
levels, droughts, rainfalls, heat-waves,
hurricanes etc. Predicting these events can
help prepare the necessary infrastructure
for minimising the consequences, including
utilities’ networks (water, gas, electricity,
etc.), critical to the proper functioning of a
city. These patterns and clustering can also
help predict the degree of impact for each
region based on population density, industrial
activity, infrastructure, biodiversity, etc and
compute the degree of rescue services and
relief supplies required for better mitigation.
An integrated biodiversity system can help
monitor species, plantations and conditions
of habitats to spot patterns of endangerment,
deforestation and environmental factors
affecting the weather patterns.
Thus, AI’s power of integration systems from
macro to micro-level emission monitoring
and hazard prediction can help build a
harmonised source of truth and scale what
smaller experiments like Auroville or NEOM
have on a much larger, global scale.
METALAB REVIEW ¦ 63
ADOPTING AI
The aforementioned ideas may sound like the
answer to our problem, but there is resistance
in the adoption of AI due to several reasons.
Firstly, the data is widely scattered and
dissociated as there is a lack of centralised
data source. This is because the climate
objectives are too broad and the firms and
law-makers haven’t adequately defined
the KPIs to be tracked for each sector. To
establish the same could be challenging as a
large infrastructural overhaul will be required
to substitute independent systems with
interconnected, autonomous and accountable
systems and appliances which might be
highly infeasible depending on the scope
of project and the cost of sensors, storage,
computing resources, and personnel required
to implement the models. Therefore, it is the
duty of the law-makers and enforcers to break
down the objectives to smaller key results
and introduce policies for infrastructure,
construction and automobile industries to
mandate accountable data collection points
in their products. Secondly, there is lack of
education and training on AI expertise among
organisational leaders and governing bodies
to realise its vast potential. Free online and
offline educational programs, workshops, and
certifications shall be set up from schools
to organisational leaders and policy-makers
to equip them with the requisite knowledge.
States should also promote research centres,
events and competitions in the field of green-
AI to encourage new and innovative ideas.
Another challenge is that setting up large-
scale and centralised AI integrated systems
requires huge financial investments which is
challenging for countries in Asia and Africa
due to the pressure of mitigating fundamental
gaps in the economy and infrastructure.
According to a report by OpenAI11, it is
estimated that the cost of training a model on
11. AI Model Training Costs Are Expected to Rise From $100 million to $500 million By 2030. (2023). MetaversePost.
12. Herweijer, C., Combes, B., Gillham, J. Artificial intelligence and the fate of planet Earth. (2019). PWC.
64 ¦ METALAB REVIEW
a large dataset will increase to $500 million by
2030 due to an increase in the size of datasets
needed to train large models. However, setting
up this investment right away will ensure
resilience, cost-efficiency and a significant
gain in the GDP of up to 4.4% 12by 2030. But
even if these governments were convinced
to step up the financing for this preparation
today, a larger issue regarding AI adoption
would remain: can we trust the results that AI
provides?
TRAINING GREEN-AI
MODELS
One of the reasons why AI-based
recommendations are not always relied upon
is due to the quality of their design and model
training. Human intervention in feeding,
labelling and training data while the model
is built can give room for bias and skewed
results. For example, if the AI-based traffic
system mentioned earlier aims to manage
demand and supply to optimise bus routes
in a city, such a model will work inefficiently
if it has been trained on historical data of a
city’s bus routes where certain high-income
areas never had a bus-stop because they
used cars. Such a model will have to be
trained on collecting data from all modes
of transport to understand commuting
patterns. New experimental car-pooling and
bus routes will have to be set up initially to
collect data on public transport preferences
of the citizens. Another example is if a model
has studied smartphone data of a region to
understand walking and cycling patterns to
plan roads and accessible neighbourhood
amenities such as groceries and pharmacies.
Such a model will work inadequately if the
data collected was from an area of ageing
population with minimal smartphone
adoption. Therefore, such models will have
to be trained by nudging some preferred
behaviours first13, and may rely on human
modelling assumptions (such as that
which was used in the 1970s to predict
train demand for the newly created BART
system in San Francisco, and for which Dan
McFadden received the 2020 Nobel Prize in
Economics)14.
An additional concern is regarding the
confidentiality of the information captured
by the AI systems that can compromise
privacy and security. The accuracy of
these models will depend on the extent to
which the inhabitants are willing to share
their information. The law-makers need to
carefully consider the type of information to
be mandatorily collected from the citizens,
and ensure that it does not compromise
their freedom of choice. Additionally, will
highly autonomous systems be capable of
considering externalities? Or new patterns?
Indeed, what if green-buildings’ AI integrated
systems were trained on pre-pandemic
occupancy levels, but when another
pandemic, like COVID, hits the region causing
almost everyone to work from home? Will
such AI systems accept the extra-bandwidth
of energy needed to run the residential
buildings? It would be necessary that such
a system should also train the carbon
budget at the macro-level and maintain a
global balance of buildings’ emissions, by
temporarily transferring the carbon budget
of office buildings to that of the residential
buildings. This brings us back to the general
limitations of AI that when faced with
adversities, especially in situations when
no historic data or patterns exist, a human
intervention is always required. Then the real
question remains for us to ask ourselves,
whether undergoing such an ambitious
infrastructural project is justified given the
13. Cowls, J., Tsamados, A., Taddeo, M. Floridi, L. The AI gambit: leveraging artificial intelligence to combat climate
change—opportunities, challenges, and recommendations. (2021). AI & Soc.
14. McFadden, D. The Measurement of Urban Travel Demand. (1974). Journal of Public Economics, 3, 303-328.
human efforts required despite the massive
capital expenditure and with the uncertainties
of the risks present in adopting it.
CONCLUSION
Given the numerous applications of AI
in mitigating climate risks and achieving
climate-resiliency, overlooking such an
immense potential will be a significant
missed opportunity. However, due to the
challenges present in adopting a globally-
scaled autonomous infrastructure and
the accuracy of its decisions, AI is only an
accelerator towards achieving our climate
objectives and not the solution itself.
Just as it is easy to coordinate smaller-
sized homogenous experimental cities,
implementing AI for climate should be
scaled step-by-step starting with the most
vulnerable sectors by carefully monitoring the
results and reimplementing models in similar
and comparable conditions.
Achieving climate-objectives goes beyond
adoption of AI. International organisations,
governments, urbanists and corporations
have a fundamental role in adopting a
harmonious framework by breaking down
climate objectives into smaller-measurable
targets for each region, industry and sector.
They play an important role in creating a
clear path for investment and innovation.
Governments should pave the way for
adoption of new technologies that will not
only make our future cities smart, but future-
proof them. Policies in education, research
and business will play a defining role in the
future of AI and in its adoption for a green,
stress-free future of habitation.
METALAB REVIEW ¦ 65
FROM VIRTUAL
MODELS TO REAL-
LIFE IMPACT:
HOW DIGITAL TWIN AND AI ARE DRIVING
SUSTAINABILITY EFFORTS

CAN AI-POWERED DIGITAL TWIN TRULY PAVE THE WAY FOR

ACHIEVING SUSTAINABILITY GOALS?

By VANSHIKA SHARMA - Master in Data Sciences & Business Analytics

at ESSEC Business School & CentraleSupélec

I
n today’s digital age, innovative technologies
are driving significant transformations in
various industries. One such transformative
technology is digital twin technology, which
involves creating virtual replicas of physical
objects or systems. This state-of-the-art
technology has proven to be instrumental in
optimizing operations, reducing production
timelines, and fostering innovation across
industries. By connecting the physical
and digital realms, digital twins enable
simulations, real-time data-driven decision-
making, and remote system management.
This brings us to an exciting intersection
of technology and sustainability. Can the
combination of digital twin technology
and artificial intelligence (AI) enhance
sustainability efforts? Can this data-driven
approach optimize resource utilization,
minimize waste, and promote sustainable
practices across sectors? In this article, we
will explore the concept of digital twins, their
role in driving sustainability across industries,
the associated challenges, and their future
prospects.
WHAT ARE DIGITAL
TWIN?
Digital twins are high-fidelity digital replicas
of physical entities or systems that mimic
their behavior and processes over time. By
integrating data from sensors and machines,
digital twins provide a comprehensive
understanding of the physical world, enabling
better decision-making and optimizations.

66 ¦ METALAB REVIEW

The impact of digital twins has permeated
through manufacturing, healthcare,
construction, energy, and e-commerce. For
instance, Amazon, a global e-commerce
leader, utilizes digital twin technology to
enhance remarketing advertisements. By
leveraging vast amounts of data on users’
past purchases, viewed products, and visited
websites, Amazon’s digital twin algorithm
creates personalized replicas of each
consumer. This enables tailored experiences
and targeted remarketing ads, ultimately
driving users back to their platform.
However, the significance of digital twins
extends beyond business efficiency. When
combined with AI, these virtual replicas
hold promise in promoting sustainability
by optimizing resource utilization, reducing
© Zack Walker on Unsplash
waste, and fostering sustainable practices
across industries. Industrial giants like
Unilever harnessed the power of digital twins
at its facility in Brazil. They used a digital
twin to fine-tune manufacturing parameters,
such as the temperature for soap production.
Such minor tweaks led to a productivity
improvement of 1% to 3% and an energy cost
saving of USD 2.8 million.
But how did we arrive at this point, and
what lies ahead? Let’s delve into the
origins of digital twins and AI, explore their
convergence, and understand their impact on
the sustainability landscape.
METALAB REVIEW ¦ 67

BRIEF HISTORY OF
DIGITAL TWINS AND AI
Digital twin technology has evolved
significantly since its inception in the 1960s.
It was first utilized by NASA to create physical
replicas of systems on the ground that
matched those in space. The breakthrough
came during the famous Apollo 13 rescue
mission, where a critical system failure
threatened the crew’s safety. Leveraging
digital twin technology, NASA engineers
simulated conditions and tested solutions
from the ground, eventually guiding the crew
back to safety.
However, it wasn’t until the early 2000s that
the term «digital twin» was coined by Michael
Grieves during a presentation on product
lifecycle management center. This marked the
formal recognition of digital twin technology
68 ¦ METALAB REVIEW
© Conny Schneider on Unsplash
and its potential to revolutionize industries.
The integration of the Internet of Things (IoT)
in subsequent years made digital twins more
cost-effective and practical, paving the way
for widespread adoption across industries.
In recent years, the integration of AI has taken
digital twin technology to new heights. AI
analyzes data from various sources, providing
real-time insights into system performance
and empowering organizations to make
accurate and timely decisions. Today, AI-
enhanced digital twins are at the forefront of
sustainability efforts, optimizing operations,
reducing waste, and improving resource
efficiency. The synergy between digital twin
technology and AI drives innovation and
facilitates sustainable development, making
them indispensable for our future.
DIGITAL TWINS AND AI:
THE SUSTAINABILITY
GAME-CHANGERS
Sustainability efforts encompass a
multifaceted approach to meet present
needs without compromising the ability of
future generations to meet theirs. In this
context, digital twins and AI have emerged as
significant catalysts for driving sustainability.
Digital twins revolutionize system monitoring
and optimization, excelling in resource
utilization, emissions simulation, and supply
chain optimization. They also play a vital
role in predicting maintenance requirements,
minimizing downtime, and generating cost
savings while enhancing productivity.
The increasing role of AI in digital twins
further enhances their precision. Acting as
digital mirror images, AI leverages real-time
data to provide real-time insights into system
performance, empowering organizations to
make informed decisions based on accurate
and timely information. AI algorithms excel
in data analysis and predictive capabilities,
surpassing human cognitive abilities in speed
and accuracy.
Moreover, AI addresses key challenges in
the digital twin landscape by facilitating
seamless integration and improved
performance across systems. It consolidates
sensor data, optimizes processes, and
ensures real-time updates are delivered,
overcoming interoperability challenges. The
transformative power of AI in the digital
twin ecosystem cannot be overstated, as
it enhances the simulation and prediction
accuracy of virtual models.
This powerful combination of digital twins
and AI not only accelerates sustainability
efforts but also implements them more
effectively. By leveraging the capabilities
of digital twins and the potential of AI,
organizations can achieve their environmental
goals, propelling us toward a more
sustainable future.
The market’s response to digital twins affirms
their growing importance. In 2020, the digital
twin market was valued at $5 billion. However,
a 2023 report by Fact.MR estimates this
market to swell to a staggering US$ 95 billion
by 2033, growing at a brisk 34.3% CAGR from
2023 to 2033. A survey conducted by the
Capgemini Research Institute in 2022 adds
another dimension to this trend: 51% of the
digital twin implementers surveyed believe
that this technology will help them achieve
their environmental sustainability goals.
There are, of course, varied views
regarding the role of digital twins in driving
sustainability. While some organizations
primarily see this technology as a tool for
process efficiency, others perceive its role in
product design and development. Regardless,
57% consider improving sustainability
efforts as a key driver of their digital twin
investments, underscoring the environmental
considerations that factor into the adoption of
this technology.
To make this idea more tangible, let’s
understand it with an example of the
industrial manufacturing sector. Here,
digital twin technology, coupled with AI,
identifies improvement areas to transform
operations. Manufacturers can spot pain
points, such as machine inefficiencies
or quality control issues, that may cause
product defects or delays. Digital twins also
identify energy loss areas and opportunities
to reduce consumption, like inefficient
machinery or sub-optimal processes. AI
algorithms expedite data analysis and future
outcome predictions, surpassing the pace
and accuracy of human cognitive abilities.
Virtual simulations further curb waste
and power consumption associated with
METALAB REVIEW ¦ 69
physical prototypes, permitting emulation
of a production line using a digital twin. This
enables changes at every stage to amplify
cost savings, boost efficiency, and diminish
environmental impact, making digital
twins and AI integral allies in the quest for
sustainability.
HARNESSING DIGITAL
TWINS AND AI: STORIES
OF SUSTAINABLE
TRANSFORMATION
A TALE OF A SMART CITY: VIRTUAL
SINGAPORE
Singapore, a city-state often acclaimed for its
smart city initiatives, stands at the forefront of
adopting digital twin technology. Its ambitious
project, Virtual Singapore, exemplifies how
this technology can be harnessed to drive
sustainable urban development.
Launched in 2023, Virtual Singapore is a
dynamic digital twin of the city, incorporating
a wide range of data, from geographic and
architectural details to demographic and
real-time sensor information. This virtual
cityscape empowers authorities to model
and analyze different urban scenarios. They
can simulate the impacts of new buildings on
wind flow, sunlight, and traffic or forecast the
implications of population density changes
on the city’s infrastructure and services.
This aids in making data-driven, informed
decisions and ensures the city grows
sustainably.
Solar potential is another area where Virtual
Singapore shines. This digital twin aids
authorities in identifying the best rooftops for
solar panel installation, promoting renewable
energy use and reducing Singapore’s carbon
footprint. In crisis situations like fires or terror
attacks, the digital twin can quickly devise
70 ¦ METALAB REVIEW
optimal evacuation routes, ensuring citizen
safety. Virtual Singapore also supports public
health monitoring, measuring the density
of disease-carrying mosquitoes to predict
potential outbreaks. This leads to swift
preventive actions and aids in responding
promptly to potential health crises.
DRIVING SUSTAINABLE SUPPLY
CHAINS AND LOGISTICS
Digital twins are playing a significant role in
optimizing supply chains and logistics for
sustainability, as seen in the collaboration
between Maersk and Ericsson in 2023. By
creating a digital twin of a shipping vessel,
they are able to optimize fuel consumption,
leading to a reduction in carbon emissions.
Using real-time sensor data, the digital twin
modeled the vessel’s operations to pinpoint
improvement areas. As a result, Maersk was
able to cut fuel consumption and associated
carbon emissions by up to 20%, contributing
significantly to its sustainability initiatives
and leading to considerable cost savings.
Predictive maintenance enabled by the digital
twin also allowed Maersk to proactively
address potential issues, mitigating downtime
or disruptions.
REALIZING
SUSTAINABILITY:
CHALLENGES TO THE
JOURNEY OF DIGITAL
TWINS AND AI
Implementing digital twins and AI for
sustainability efforts is not without
challenges. This journey is marked by
hurdles that encompass data collection
and management, system integration,
cybersecurity concerns, significant costs,
social, ethical considerations, and even the
potential environmental implications of the
technology itself. Let’s delve into each of

these challenges in detail, bringing to light
specific case examples.
1. NAVIGATING THE DATA LABYRINTH
Data is the lifeblood of digital twin technology,
and the process of collection, standardization,
and management of this data is indeed an
uphill task. Take the case of Singapore’s
Virtual Singapore project; the creation of
a comprehensive digital twin of the entire
city demands data inputs ranging from
geographical, architectural, to demographic
and real-time sensor information. Collating
and normalizing this data from varied sources
necessitates an intricately devised data
collection strategy, coupled with a reliable set
of data sources.
2. BRIDGING THE INTEGRATION GAP
The integration of digital twin technology
within existing systems, especially in intricate
networks like supply chains and logistics,
often proves to be a significant barrier.
The digital twin initiative of Maersk and
Ericsson provides a case in point. To obtain
valuable insights, their digital twin had to be
© Max Langelott on Unsplash
compatible with Maersk’s shipping operations
and Ericsson’s telecommunications
technology, demanding seamless integration
and interoperability.
3. GUARDING THE CYBER FRONTIER
The heavy reliance on data of digital twin
technology and AI makes them prime
targets for cyber-attacks and potential data
breaches. The case of Amazon, which uses
digital twins for re-marketing, underscores
the importance of securing customer data
against potential threats. This necessitates
the implementation of robust cybersecurity
measures and a constant state of vigilance.
4. INVESTING IN THE DIGITAL TWIN
DREAM
The significant costs associated with
implementing digital twins and AI can pose
notable challenges. Unilever’s venture into
the digital twin realm, for instance, required
substantial investments in hardware,
software, and training. Simultaneously, the
company had to ensure that the complexity of
the technology did not stymie its adoption.
METALAB REVIEW ¦ 71
5. GRAPPLING WITH SOCIAL AND
ETHICAL DILEMMAS
The impact of digital twin technology and AI
on society is a crucial consideration. From
potential job losses due to automation to
concerns about the technology’s carbon
footprint, these issues cannot be overlooked.
While Unilever’s use of digital twins led to
enhanced production efficiency, it could
potentially result in job losses due to
automation.
NAVIGATING THE
CHALLENGES:
POTENTIAL SOLUTIONS
AND EMERGING
TECHNOLOGIES
The path towards sustainability using digital
twins and AI is filled with challenges. However,
it is essential to understand that these
hurdles can be managed with meticulous
planning and execution. Addressing the
complexities in implementing digital twins
and AI for sustainability necessitates robust
strategies and pioneering technologies. An
essential part of this process is establishing
strong data governance policies that
streamline data collection, storage, and
usage, reducing time consumption and
enhancing data interoperability. Automated
tools and standardized data formats can
further facilitate this.
While digital twins and AI offer transformative
possibilities, it is important to recognize the
potential vulnerabilities and risks associated
with relying heavily on AI. Substantial
investments are necessary for successful
implementation, encompassing not only
technological infrastructure but also training
and upskilling initiatives to ensure a skilled
workforce capable of leveraging these
technologies effectively.
72 ¦ METALAB REVIEW
Seamless integration of digital twin
technology with existing systems can
be achieved using middleware solutions
or APIs, which enable different software
applications to interact and exchange data.
These integration methods allow for efficient
utilization of data from diverse sources,
enhancing the effectiveness of digital twins
in driving sustainability. To counter cyber
threats, advanced cybersecurity measures
like data encryption, secure access controls,
and regular security audits are vital. The
protection of sensitive data and infrastructure
is paramount, and cloud-based digital twin
platforms, with their built-in security features,
provide an extra layer of protection.
Addressing social and ethical concerns is
crucial in the adoption of AI. This involves
the creation of ethical AI frameworks and
guidelines, ensuring AI aligns with societal
values and ethical norms. It is important
to consider the potential impact of AI on
employment and mitigate potential job losses
through upskilling and reskilling strategies,
fostering a workforce that can adapt and
thrive alongside these technologies.
Emerging technologies offer exciting
possibilities for enhancing digital twin and AI
capabilities. Edge computing enables real-
time data processing at the source, improving
digital twin system performance and reducing
latency. Integrating Blockchain technology
can heighten data security and transparency,
mitigating data privacy and security issues.
Advances in machine learning and AI
explainability are increasing the accuracy and
interpretability of AI predictions, enhancing
digital twin applications in sustainability
efforts.
Overall, strategic planning, best practices, and
leveraging cutting-edge technologies form
the crux of overcoming challenges associated
with digital twins and AI for sustainability.
With careful consideration of vulnerabilities,
substantial investments, and the integration
of emerging technologies, we can unlock the
full potential of digital twins and AI to drive
sustainable practices and create a better
future for generations to come.
technologies enhance the performance,
security, and effectiveness of digital twins
and AI, propelling us towards a future where
technology and sustainability go hand in
hand.

STEERING TOWARDS A As organizations invest in necessary

SUSTAINABLE FUTURE:
THE PROMISE OF DIGITAL
TWINS AND AI
As we look towards the future, the role
of digital twins and AI in sustainability
efforts is becoming increasingly prominent.
Technology is rapidly advancing, and with
increased adoption, organizations are finding
new ways to leverage data and analytics for
sustainable development.
technologies and resources, the ability to fully
harness the potential of digital twins and AI to
meet sustainability goals becomes a tangible
reality. This is a collective effort, one that calls
on every sector to contribute. The fusion of
digital twins and AI is not just a technological
revolution; it’s an essential catalyst for a
more sustainable future. It’s not just about
embracing new technology—it’s about
creating a sustainable world for us all.

The sophistication of AI and digital twins is

growing exponentially, creating more accurate
models and predictions. AI’s ability to analyze
data from multiple sources and identify
patterns and trends otherwise overlooked
proves pivotal for informed decision-making
and efficient resource allocation. This not only
drives sustainability efforts forward but also
lays a foundation for innovative solutions to
environmental challenges.

However, realizing the full potential of these

technologies isn’t without its challenges.
Data standardization, cybersecurity, cost, and
ethical considerations stand as formidable
hurdles. Yet, as demonstrated throughout
this article, these are not insurmountable.
Strategic planning, innovative solutions,
and emerging technologies are keys to
tackling these challenges. The embrace
of Edge computing and Blockchain
technology, advances in machine learning,
and AI explainability, among others, are
taking us closer to a reality where digital
twins and AI become an integral part of
sustainability strategies. These evolving

METALAB REVIEW ¦ 73
74 ¦ METALAB REVIEW
 BLOCKCHAIN &

METALAB REVIEW ¦ 75
DIGITALIZATION
DIGITAL CURRENCY:
THE SUBSTITUTION
OF MONEY
By PAUL BÉDIER AND MARINA PELLET
Master in Data Sciences & Business Analytics
at ESSEC Business School & CentraleSupélec

«As a central banker interested in information
technology, should I regard this prospect as a
dream or a nightmare? Perhaps the answer is
that central bankers should enjoy life today»
(King 1999)
first article aims to identify and compare the
properties of Bitcoin-like crypto-assets which led
to their adoption by many, either for investment
purposes or as a complement, if not replacement,
to fiat money.

T QUICK INSIGHTS:
his question was posed over twenty
years ago by a group of economists who
wondered whether there was a threat of
obsolescence posed on central banks from the
innovations of information technologies. While
a decline in the role of central banks has not
been observed yet, the increasing adoption of
crypto-assets relying on blockchain technology,
and removing intermediaries from transactions,
should not be overlooked.
European Central Bank President Lagarde called
for more regulation of crypto-assets, which
shows the breadth of the crypto phenomenon.
Of course, one can not ignore the recent and
significant Bitcoin and Ether crashes, nor the
undeniable and massive environmental impact of
crypto-assets mining.
Before diving into the question of whether crytpo-
assets can substitute traditional currencies, this
• There are a lot of similarities between
traditional currencies (fiat money) and crypto-
assets, in the processes that encompass
them, such as the money creation and the
verification process for transactions; but
there are enormous differences that oppose
them. Crypto-assets’ creation and verification
processes are decentralized and based on
computational power, and their total supply
can be finite and permanent.
• Whether crypto-assets can be considered
as a currency or not is an ongoing debate:
while it is generally agreed that crypto-
assets do not fulfill all the properties of a
currency, economists and large financial
institutions disagree on their ability to meet
the different criteria. This article also explores
the physical properties of money creation for

76 ¦ METALAB REVIEW

crypto-assets and draws a parallel between
the precious metals from which our coins
were originally made, whose value was
influenced by the amount of energy put into
their extraction, and the energy-consuming
process of crypto mining.
• The invention of blockchain and crypto-
assets coincides with the heart of the
financial crisis of 2008. This new form of
currency was invented in reaction to failing
financial institutions and continues to
play a major role in countries where those
institutions cannot support the local economy
(El Salvador, Venezuela, Lebanon, and many
more).
• Nevertheless, the crypto-assets market is
experiencing a major crisis. The total value
of the market fell under half of where it was
© Thought Catalog on Unsplash
last November, with several crypto-assets
now at 0 USD value (Terra, Luna). Bitcoin has
fallen 45% since El Salvador adopted it as a
legal tender in September 2021, which could
sink the country deeper into the economic
crisis the country has been going through
for the past several years. This situation is
an example of the consequences of crypto-
assets’ volatility which makes it impossible
to qualify them as legal tenders for most
countries and their monetary institutions.
• As a result of the energy-intensive
computational process involved in the
proof of work mechanism used to verify
new transactions, the crypto-assets’
mining industry has serious environmental
consequences. It is estimated that Bitcoin
alone consumes more energy than Norway
annually (University of Cambridge).
METALAB REVIEW ¦ 77
78 ¦ METALAB REVIEW
© Rupixen.com on Unsplash
Additionally, every four years the amount of
Bitcoin that rewards miners is halved. So,
after each halving, the amount of carbon
emissions required to mine one coin is
doubled. This rate is clearly not compatible
with the imperative of reducing our carbon
emissions in light of the climate crisis. China
banned crypto mining from its territory
in 2021, partly because it was conflicting
with the climate objectives set by 2050
and also for regulatory concerns. If other
countries follow, or more strict environmental
regulations come out, it is possible that crypto
mining will slow in the upcoming months
and years. We have yet to see the impact this
crypto-creation decrease will have on crypto-
assets value.
TRADITIONAL MONEY
VERSUS CRYPTO-
ASSETS: IS THE TERM
CRYPTOCURRENCY
JUSTIFIED?
Bank money is the most abundant form
of money today and is largely already
digitized. In fact, money has been affected
by information technology since the
digitalization of account books and registers.
MONEY CREATION AND MAJOR
PLAYERS IN THE MODERN ECONOMY
Before the invention of information
technology, there were only three forms of
money: coins, notes, and bank money. The
first two forms of money are emitted by
Central Banks of each monetary area, while
the third is released by private banks, through
the deposits that they hold and the credits
they offer. The exchange of coins made
of precious metals was one of the earliest
methods of payment in the modern economy,
to which gradually succeeded the notes, at
first redeemable for precious metals. Today,
and since the end of the Bretton Woods
system and of the US Dollar’s convertibility
to gold (James 1996), the notes’ value is
determined by the activity of the central
banks. The world’s most used currencies
are not backed by commodities like precious
metals anymore, but by the governments that
issue them and the monetary policies that
control them.
In the modern economy, commercial banks
increase the amount of money in circulation
every time that they lend. Indeed, banks credit
their clients’ accounts with bank deposits of
the size of the loans, creating new money. The
amount of money created by private banks is
not unlimited, it is in fact regulated by several
factors. Market forces and firms’ investment
capabilities, risk mitigation through prudential
regulation, and households’ behavior control
the process of money creation. At the top of
the system, central banks’ monetary policies
act as the ultimate constraint - or incentive,
depending on the context - on money
creation. To achieve this, central banks have
three tools at their disposal: the amount of
minimum reserve requirements commercial
banks must hold in central bank accounts,
the policy interest rate at which commercial
banks borrow and which is the building block
of all other interest rates, and finally open
market transactions in which the central bank
buys or sells securities in the market. The
latter has been massively expanded in its
scale in the last decade through Quantitative
Easing, or massive security purchase
programs aiming to increase the money
supply and sustain economies (McLeay,
Radia & Thomas 2014).
METALAB REVIEW ¦ 79
A NEW FORM OF
“CURRENCY”, BORN TO
REVOLUTIONIZE THE
MONETARY SYSTEM
With the rise of the internet, a fourth form
of currency was created: cryptocurrency
- that we shall call crypto-assets because
they are not recognized as currencies by
most governments - which differs from the
previous types by its very essence: created
and existing through computer code, it
does not have any physical equivalent,
unlike the other forms discussed. They
are not controlled by any third party, but
rather created through algorithms and the
blockchain - a distributed ledger technology
that records transactions as immutable
timestamps, relying on a peer to peer network
to validate transactions through complex
computing problem-solving. Bitcoin, created
in 2009, is the first crypto-asset in circulation.
The creation and transaction process are
quite different from that of bank money.
Bitcoin is issued through the blockchain
technology, which stores and transmits
secure and transparent information, acting as
a higher authority. New Bitcoins are created
through the verification process of new
transactions: to be effective, each transaction
must be publicly verified by miners, through
a series of complex algorithmic calculations
which results in the storage of the transaction
inside the blockchain. Mining is a laborious
process that requires high computing power
to solve the extreme complexity of the
cryptographic puzzles. To acquire Bitcoin, one
can either successfully mine transactions,
or simply buy some on exchange platforms
using Euros or Dollars for example.
Interestingly, Bitcoin has been programmed
as a finite resource, like gold, silver, or oil:
its total supply equals 21 million coins,
expected to be all in circulation in 2140. Here,
there is an interesting parallel to be made
80 ¦ METALAB REVIEW
with other finite resources on earth, and the
consequences on their values - this point
of view on Bitcoin-like crypto-assets will be
explored later in the article.
FIAT MONEY VS.
CRYPTO-ASSET: WHICH
ONE GUARANTEES THE
HIGHEST STABILITY,
SECURITY, AND
TRANSPARENCY?
There are two major differences between
crypto-assets and bank money, like the Euro
for example. The first difference is of course
the verification process of the transactions.
For a currency like the Euro, the control of
transactions is made possible through its
centralization within commercial banks
and the European Central Bank. For Bitcoin,
transactions are, as we discussed, public and
verified by miners, which can, in theory, be
anyone willing to provide computing power
to solve complex algorithmic problems in
exchange for remuneration. The second
major difference is how the system’s stability
and security are guaranteed. On one hand,
they depend on a higher authority, may it
be commercial or central banks, on the
other hand, they are based on information
technology and high-level cryptographic
security. The trust component is extremely
important in guaranteeing the stability
of a currency. In countries in which the
government issues the currency, not backed
by a physical commodity, the currency is fiat
money. Most currencies today are fiat money.
Their value and stability lie in the central
bank’s policies and the control of inflation,
and also in the trust that users place in them.
As an example, the Euro is fiat money: its
users trust Europe’s Eurozone economy and
monetary policy, largely guaranteed by the
European Central Bank.

Nevertheless, by their decentralized nature,
crypto-assets remove from the system the
very components dedicated to maintaining
currency stability, and therefore trust. Bitcoin
supporters argue that information technology
and the blockchain are better guarantors of
stability - of the system, the prices and the
security of transactions - than the state or
monetary authorities acting as regulators, for
they are not subject to political influence and
do not concentrate control over the money in
the hands of a few, but rather give it to anyone
wanting to contribute with their computing
power. Considering that Bitcoin was created
in 2009, at the heart of the global financial
crisis, we understand that this innovation
appeared as a result of a loss of confidence
in the financial system and a will to break free
from state authorities.
However, the stability of a fiat currency does
not come solely from trust in the institutions
backing it, but also from the economy to
which it is attached to, and how deep and
© Tomáš Hustoles from Burst
diversified it is. The liquidity of a currency is
also of critical value to economic agents as
they convert money into and from assets.
Maybe the reasons for the observed relative
instability of crypto-assets is that they
are hardly linked to any economic zone,
and are therefore not entrenched in any
underlying local economic reality. After the
recent crypto-asset crash of May 2022, ECB
President Christine Lagarde said about crypto
in general that “it is worth nothing, it is based
on nothing, there is no underlying asset to act
as an anchor of safety”. Of course, it is in the
interest of Central Banks around the world
to warn the populations of the speculative
nature of crypto-assets and redirect financial
transactions towards traditional currencies
and their future digital form (central bank
digital currencies). Nevertheless, the question
remains: can crypto-assets claim the title of
currencies, even when being exposed to what
seems to be inevitable instability.
METALAB REVIEW ¦ 81

HOW DO BITCOIN-LIKE-
CRYPTO-ASSETS FIT
THE TRADITIONAL
DEFINITION OF A
CURRENCY?
Bitcoin and other crypto-assets are not
officially recognized as currencies by the IMF
as they are not issued by central banks nor
authorized by governments, in most cases (cf.
later example of El Salvador). Nevertheless,
the question of the classification of Bitcoin
and similar assets as financial or nonfinancial
assets is debated and debatable. To
determine whether an asset behaves like a
currency, an economist’s approach would
be to ask if it functions as a medium of
exchange, a unit of account and a store of
value. Although the definition of a currency
seems clear, opinions on how Bitcoin is
defined diverge and do not find a consensus.
Different views argue about whether or not
Bitcoin is a medium of exchange. Since the
first good bought in Bitcoins in 2009 - a pizza,
acquired for 10,000 Bitcoins - crypto-assets
have been used for acquiring goods and
services all over the world (Yermack 2013)
but its overall adoption level for transactions
compared to traditional currencies remains
low. In theory, crypto-assets offer advantages
as mediums of exchange, amongst which
pseudonymity, as practically no information
is necessary to buy and transfer crypto-
assets - although this is to be nuanced, as
the blockchain stores all transactions ever
made, allowing for traceability (the monero
is incidentally replacing Bitcoin in criminal
activities financing).
For cross-border transactions, crypto-assets
offer the advantage of cutting processing
time from days to a few hours through
the lack of intermediaries, as well as low
transaction fees (He 2018). The quality
of Bitcoin as a medium of exchange is
82 ¦ METALAB REVIEW
naturally debated as the high volatility that
it is subject to makes it inconvenient for
daily transactions. Yet, the role of Bitcoin as
a store of value and as a unit of account is
questioned more broadly. The IMF recognizes
Bitcoin both as a medium of exchange and
as a store of value, comparable to holding
precious metals, especially in countries where
central and commercial banks’ credibility is
low (IMF 2021). JP Morgan compares Bitcoin
to gold and shows how both are stores of
value. Others disagree, putting forward the
high volatility as the main argument. Views on
the use of Bitcoin-like crypto-assets as a unit
of account are less divided and tend to agree
that their highly fluctuating value makes it
impossible to express prices in Bitcoin that
would not be unstable (Banque de France,
2018).
A DIFFERENT APPROACH
TO THE DEBATE:
PHYSICAL PROPERTIES
AND ENERGY
However, there are other approaches to
the definition of money than the three
characteristics seen previously. One of them is
of particular interest and could shed new light
on the debate over the proper qualification
of crypto-assets. In one word: energy. This
approach was developed at length in Octavian
S. Ksenzhek’s work entitled Money: Virtual
Energy. Economy through the Prism of
Thermodynamics (2007). In this specific book,
he makes a very elegant case for the similarity
between energy and money. Energy, like
money, is hard to define, and scientists, like
economists, focus on determining its qualities
or characteristics. Perhaps the most practical
way to think about energy is as the capacity
to produce work. Work here can be defined as
an action of a system upon an external object
followed by the production of certain changes
in its structure or position. For instance, an
athlete lifting a weight is performing work on
the weight against gravity. This shift always
requires an energy transfer from the system to
the object, which usually means a conversion of
energy into another form (from mechanical to
electrical in a turbine for instance).
Now, let’s take a step back and see how
relevant these concepts might be with respect
to human societies and economies. All goods
and services exchanged in economies require
energy to be produced and delivered where they
are needed. As seen previously, money quickly
emerged as a necessary unified equivalent
allowing for practical exchanges of such goods
and services. In primitive societies, any object
was used: shells, rams, grains and feathers.
However, and as early as the 3rd millennium
BC, precious metals were introduced as unified
equivalents. Their unique properties, such as
their scarcity, their durability or purity (difficult
to corrode) and the ease with which they can be
transformed, made them very efficient units of
account, and later an ideal medium of exchange
as they were turned into standardized coins.
Looking at it more closely, money based on
precious metals share many properties with
energy: money determines the capability to
perform work (purchasing goods or services),
money is always conserved -at least if the
economic system that supports it is stable- and
exists in different forms, and the process of
energy dissipation is akin to money spending
(as we spend money, it is getting more
dispersed and less useful). Furthermore, when
humans extract precious metals from the earth,
they essentially transfer a massive amount of
energy required for the mining process into
the metal itself. Regardless of their practical
utility for manufacturing or their social utility as
wealth displays, the mere act of extracting and
refining metals is sufficient to give them their
value likely because of all the energy spent in
the process. It is therefore interesting to ponder
on the extent to which money is, from this
perspective, a vector of condensed energy.
Unsurprisingly, this approach of money
as a quantity has also been entertained
by many economists, from Monetarists to
Neo-Keynesians. For instance, Bill Philips,
most famously known for his Philips
Curve illustrating the relationship between
unemployment and inflation, was also
interested in physical and quantitative
representations of money. He built a kind
of early computer, simulating the economy
using water as the physical representation of
money flows. As such, this approach could
shed a new light on crypto-assets. Indeed,
their whole concept is based on the blockchain
and usually the Proof of Work paradigm, which
is a highly energy-intensive process. High
amounts of electrical energies are converted by
computers into information about transactions,
giving value to crypto-assets such as Bitcoin.
This is directly comparable to what was
outlined above with precious metals. If it
remains difficult to consider crypto-assets as
currencies from the point of view of classical
economics, the argument developed here gives
further credence to the idea that crypto-assets
are very similar to gold and other precious
metals, which were used as currencies not so
long ago.
However, this analogy, like all analogies,
remains limited. First, it does not explain
how humanity has moved away from using
currencies requiring high amounts of energy.
Fiat money, no longer tied to the value of gold,
has been widely adopted all over the world
because of its high efficiency and despite its
value being detached from physical properties.
Instead, its value comes from trust in
institutions and the strengths of the underlying
economy it is linked with. Likewise, not all
crypto-assets are based on the high-energy
Proof of Work paradigm, and a lot of them are
trying to move to more energy efficient money
creation and transaction processes (Proof of
Stake for example). In this sense, crypto-assets
could be just like other historical currencies
and follow the same evolution.
METALAB REVIEW ¦ 83
THE CASE OF
FINANCIALLY UNSTABLE
COUNTRIES, WHERE THE
TRUST COMPONENT IS
ERODED
As mentioned previously, markets in which
the central bank has limited credibility and the
banking system is weak - typically financially
unstable countries - see users consider
crypto-assets as a store of value on top of a
medium of exchange, and thus drive adoption
rates up at a faster speed than in more stable
financial markets. There are many examples
of countries where the population, unable
to access the most basic financial products
like bank accounts, turn towards crypto-
assets. Financial instability can be the result
of political instability and/or armed conflict,
erosion of trust in the financial system
(1997 Asian crisis), natural catastrophes or
health crisis, and Bitcoin repeatedly plays
the unprecedented role of the resource of
reference in times of crisis. The return of
the Taliban to Afghanistan in August 2021
resulted in a national cash shortage, closed
borders, and a plunging local currency.
Several banks closed their doors and most
money transfer services stopped functioning.
What resources did people turn to as their
government and monetary institutions
were failing them? The internet and crypto-
assets, inevitably. The country saw a sharp
rise in crypto adoption following the start
of the conflict. Similarly, the mass adoption
of crypto-assets in Lebanon resulted from
central bank mismanagement and corruption,
and therefore an important loss of trust in the
system. A somewhat different example is that
of Ukraine, which started accepting crypto
donations in February as tensions with Russia
rose, even before the war started. Indeed,
the speed of transfers and the ability to cope
with the rising inflation were all convincing
arguments to turn towards crypto-assets.
84 ¦ METALAB REVIEW
One step further, El Salvador became the
first country to recognize Bitcoin as a legal
tender, to facilitate international remittances,
tackle the problem of underbanking and
mitigate the risk of dollarization (Arslanian
and others 2021). The lesson is that crypto
alternatives are positioning themselves as a
great resource to fill the gaps in weakened
economies. We can wonder whether the
country will rule out this payment option
once/if local fiat money finds more stability
and people regain trust in monetary
institutions, or whether the population
will adopt crypto-assets in the long term
and stick to its use even in a more stable
environment. The answer is probably not,
as naturally the majority of people are
risk-averse and will prefer stability over
speculation. Nevertheless, as we saw, trust is
at the base of a strong economy, and people
who were let down by their government and
their monetary institutions might place more
trust in crypto-assets despite higher volatility.
We can imagine that owning crypto-assets
could for instance be a risk mitigation or
hedging strategy in countries with heavy
economic distrust in the past, leading to
limited demand for central bank money,
which would then have difficulty setting
interest rates freely. Just like dollarization can
be a threat to local economies in emerging
countries with weak foreign exchange and
monetary policies, cryptoization represents
a risk for macro-financial stability, consumer
protection, and the environment (IMF 2021).
CLOSING THOUGHTS
While economists, digital experts, and
governments endlessly debate its nature and
whether to regulate it, crypto is undeniably
making a significant impact on the entire
world’s economic system and is already
instrumental in many further developments
around the digitization of the economy (NFTs,
metaverses and decentralized finance).
Precisely because of their difference with
regard to traditional currencies, they are
unlikely to replace them entirely, at least for as
long as sovereign states will exist. However,
by removing part of the issue of trust inherent
to any centralized currency system, they
offer a useful alternative and complement
to fiat money, as seen in unstable countries
or in some specific ecosystems where their
decentralized nature creates value.

There is no doubt that crypto will continue

to evolve on adjacent paths to traditional
currencies, perhaps with similar historical
trajectories as explored in this article, and
hopefully in a more sustainable direction both
from a social and environmental standpoint.
What is certain is that current financial
institutions and central banks are paying a
lot of attention to these new assets and how
they might challenge their role and place
in the economy. Following this trend, many
central banks are hard at work on the creation
of digital currencies and exploring how best
to integrate them into the actual financial
system, as we shall explore in our next issue.

METALAB REVIEW ¦ 85
DIGITAL CURRENCY:
THE OVERHAUL OF
PUBLIC MONEY
WHY DO WE NEED A CENTRAL BANK
DIGITAL CURRENCY WHEN MONEY IS
ALREADY DIGITAL?

By PAUL BÉDIER - Master in Data Sciences & Business Analytics at

ESSEC Business School & CentraleSupélec

BRAND NEW ACRONYM, through a game of accounting entries that

SAME OLD IDEA? transactions are carried out. Tangible money

C
BDC: the new 4-letter acronym
that will no doubt be the subject of
heated disagreements for the years
to come. It stands for “Central Bank Digital
Currency.” For the average reader, the central
bank rhymes with monetary policy and
interest rates while digital currency would
be associated with fintech companies and
the crypto sphere. Confused? Let us attempt
to clear the haze surrounding the buzz and
jargon. First, think about digital currency for
a minute. Most people should be aware that
an overwhelming majority of money already
sits on digital ledgers: bank accounts. It is
like coins or bills is estimated to account for
only 3 to 8%1 of the world money supply (with
variations among countries). Why then do
we keep hearing about digital currency as if it
were this great transition we are on the verge
of?
The answer is simple: central banks have
been ramping up the communication about
their Digital Currency projects, hence we are
increasingly hearing about it. As of 2023, 130
countries2 (representing 98% of world GDP)
are in the process of evaluating the launch of
CBDC projects. Eleven countries have already
launched theirs. What are these projects

1. https://occaminvesting.co.uk/how-much-money-is-in-the-world/
2. https://www.atlanticcouncil.org/cbdctracker/

86 ¦ METALAB REVIEW

about? They can take different forms, but
all revolve around the idea of transforming
centrally issued banknotes and coins in a
digital format and making them accessible
to the public for transactions at its most
basic level, or for savings and other financial
operations at a more advanced level.
Here you might stop and say: “well how is that
any revolution? I already have a bank account
with digital money inside it and I use my credit
card instead of bills to settle transactions”. It
is indeed a subtle but undeniable revolution.
The main distinction between what we have
now and CBDCs is the same distinction that
has always existed between private and
public. The digital money you currently use
through your credit card is issued by a private
bank, while CBDCs would be issued by the
© Pixabay
central bank just like banknotes and coins. So,
the definition of CBDC is simply the following:
“A Central Bank Digital Currency is the digital
form of a country’s fiat currency.”
After this explanation, you may feel a bit
underwhelmed. We will simply have digital
banknotes and coins now, why not. Does an
old idea already materialized in our world
really warrant a brand-new acronym?
Yes, it does, because the distinction raised
above between private and public money is
critical. Indeed, CBDCs are groundbreaking
for two main reasons. First, the motivations
behind them are numerous and diverse, and
find their roots in questions of economic
stability, financial efficiency, international
geopolitics, and even sociopolitical objectives.
METALAB REVIEW ¦ 87
Second, their mere implementation has the
potential to be a can of worms and may
compromise the financial stability they are
meant to help with. By their nature of being
digital currencies, they will intrinsically carry
with them the potential for many advanced
functions, through their programmability
for instance, which might enter in direct
competition with the private financial - and
technological - sector. We will see that for
these reasons, different countries have
different plans for CBDCs.
Now comes the question we will strive to
address in this article. Will CBDCs be useful to
society? Are they necessary? The answer is
not straightforward. Let us dig into this!
MOTIVATIONS BEHIND
CBDCS, A TANGLED WEB
The idea of CBDC certainly is not new,
and one tentative attempt at identifying
its original author attributes it to Nobel
laureate James Tobin3 who in 1987 already
advocated for a public payment “medium
with the convenience of deposits and the
safety of currency”. Ignored for a long time,
the proposal regained traction in the recent
years, with central bank and public officials
warming to it as a solution to rising issues:
the decline of cash, exacerbated during
the COVID crisis, and the relative spread
outside of the traditional monetary system of
cryptocurrencies like Bitcoin or, perhaps even
more concerning, stable coins backed by tech
giants such as Libra (Diem).
FOR SOCIETY AND BUSINESSES:
IMPROVE FINANCIAL INCLUSION &
MONETARY EFFICIENCY
On paper, motivations behind launching a
CBDC could come from a genuine objective to
3. James Tobin, Essays in Economics (MIT Press), 1987
88 ¦ METALAB REVIEW
better society and improve financial services.
One of its most noble impacts would be
to provide each citizen with a universal
bank account at the country’s central bank,
bringing basic and low-cost banking services
to all. The positive repercussions of such a
move, especially in developing countries with
high unbanked rates, could be staggering.
Furthermore, CBDCs would bring with them
a number of technological innovations,
pushing efficiency upward for both
individuals and businesses. Most of these
innovations already exist, propelled by
fintech companies, but they would take an
even wider scale within the fiat currency
infrastructure provided by central banks. With
intermediaries such as commercial banks
or clearing houses eliminated, real-time
payments and settlements could take place,
thus reducing financial risk, complexity and
in turn lowering transaction costs. Proof of
transaction in the form of a digital record
located either on a distributed ledger (yet still
centrally controlled) or a centralized database
would foster trust and transparency in the
financial system, making it more difficult for
conflicts to arise and for fraudulent activities
to take place. Finally, CBDCs would allow for
easier programmability and bring with them
a large number of beneficial features for the
financial system. The best and most famous
example is with smart contracts, which can
be automatically settled and remove much
of the counterparty risk usually involved in
transactions.
Another motivation for CBDCs, and one that
should please proponents of the neoclassical
school of economics, is the heightened
competition between private banks that
would ensue a CBDC launch, as they would
need to offer better services and interest rates
to their customers for fear of losing them
to the central bank. Now, this is a hot-issue
topic and there is dissent among both central
banks and public officials as some fear this
could backfire. Indeed, they argue that by
eroding the banking sector’s profitability and
encouraging financial disintermediation, the
consequences for the economy at large in
terms of efficiency and innovation could be
detrimental. Let us delve more into this issue
later in the article.
FOR CENTRAL BANKS: REGAIN
MONETARY AUTHORITY
Central banks have clear motivations behind
CBDCs, which boil down to reaffirming their
authority over money. Indeed, while they
used to be fine relinquishing money issuance
activities to private banks as long as it meant
they could focus on monetary policy through
their direct and indirect control - required
reserves, policy rates, open market operations
to name the main tools at the central bank’s
disposal. In fact, this proved quite successful
all things considered, as the commercial banks
could compete with one another and innovate
to win over customers, while the central banks
essentially outsourced financial intermediation
and credit issuance activities. The decline of
cash - public money - to a baseline level was
merely an accepted consequence.
However, this system is now being challenged
from different sides with the spread of
alternatives to fiat money: cryptocurrencies
and stable coins. The former, coming from
society’s underground, is a threat to the central
bank’s authority and control over monetary
policy and in their eyes a source of volatility
arising from unregulated speculation and
therefore a risk to global financial stability.
However, cryptocurrency adoption remains
low and its viability as a fiat money alternative
is very debatable, as explored in the previous
article of this series. The latter, coming from
tech giants and the fintech industry, has the
potential to become an even larger threat
to central banks by short circuiting the
established financial system. Finally, cash
decline could now turn into full-fledged cash
disappearance after the fintech industry filled
the holes created by the COVID crisis, leaving
our societies entirely reliant on private forms
of money.
CBDCs could be the answer central banks are
looking for, as they would intrinsically bring
back public money in the economy, reaffirm
their authority over the monetary system and
even grant them new vectors of monetary
policy. For the latter, this could simply take
the form of direct transfers to the public
with public money issuance, or so-called
“helicopter money.” More refined approaches
could involve programmability of money, say
implementing expiration dates which would
spur spendings and discourage savings –
something that was assessed by China in their
pilot program in Shenzhen. Finally, CBDCs
could help central banks enhance financial
stability by offering an alternative to fractional
reserve banking and thus limiting the risk
and impact of bank runs, and by avoiding a
potential flight to unregulated and volatile
cryptocurrencies or stable coins.
Now, of course the claim central bank’s
authority was eroding to start with should
be nuanced. In the last decade, institutions
like the Federal Reserve of the United States
of America (“Fed”), the European Central
Bank (“ECB”), Bank of England, People’s
Bank of China (“PBoC”), and many more
have unleashed massive quantitative easing
programs in the wake of the 2008 market
crash, overflowing the market with liquidities
in support of their respective economies.
Recently, most of them have started a series
of policy rate hikes to fight inflation caused by
COVID crisis recovery and the Russian-Ukraine
war supply shock. This would tend to show
central banks are still very much in control of
the monetary system and that their authority
over the matter was not threatened quite as
much as previously implied.
METALAB REVIEW ¦ 89

However, much can be told from how the
central bank’s own stance on the matter
shifted at the turn of the COVID crisis. Indeed,
up to 2020, the consensus towards CBDCs
was still fairly negative, or at least erring on
the side of high caution. Now, the tone is a
lot more positive, with central banks eager
to communicate on their CBDC projects and
deliberations. This is primarily the result
from a better understanding of the impact
of digital currency’s implementation on the
existing financial system, and how it could
be mitigated. But this is also due to renewed
interest as central banks now would not reject
an increase in the scope of their policies nor
access to additional tools. Especially when
economists are increasingly pointing out
the risk of a decoupling between traditional
monetary policy and the real economy.
FOR SOVEREIGN STATES: COMPETE IN
THE MONETARY ARMS RACE
Sovereign states presumably act in their
citizen’s interest and thus would be aligned
with all the motivations listed above for
90 ¦ METALAB REVIEW
© Sarah Pflug from Burst
individuals, businesses, and central banks.
But they also have specific interests in the
launch of Central Bank Digital Currencies.
A domain in which they could be helpful to
the state is the fight against illicit activities.
Indeed, a digital repository theoretically
makes them able to keep track of the
exact location of each monetary unit of the
currency. This could have repercussions
for tax collection, making evasion more
difficult through means of offshore banking
or unreported employment via underground
economies. It also makes it easier to spot
criminal activities, track money laundering
and reverse fraudulent transactions. Of
course, all these benefits depend on the type
of implementation chosen by the central
bank, the amount of transparency in the
system and the status of cash in the new
system.
Another game is however at play here, with
states fighting in the realm of geopolitics
and international competition. Indeed, like
any significant technological breakthrough –
nuclear weapons, advanced semiconductor
chips, artificial intelligence, the potential cost
of not developing it may be too high and
countries will get caught up in the infamous
prisoner’s dilemma. You might ask: “what
are the risks in the case of CBDCs, they
appear harmless enough.” But this would
be discounting the scale and significance
of economic warfare. One of the risks to
a country is simply to get overrun by the
financial innovations provided by the CBDC
of another country. This could manifest
in increased capital flights, with investors
flocking to the other country’s financial
markets to benefit from increased efficiency
and additional features, as well as individuals
using the foreign CBDC as a safe asset.
This in turn would have direct detrimental
consequences on the economy, as the central
bank would need to adjust policy rates
in ways which might adversely affect the
economy.
The highest and most critical risk waiting at
the end of this path is an outright currency
substitution. You may have heard of the
concept of “dollarization.” which occurs when
a country’s citizens partially or fully rely on
a foreign currency (historically it often was
the dollar, hence the term). Of course, this
can have catastrophic consequences for
sovereignty and economic independence,
something that most countries want to
preserve against. But even the simple erosion
of a country’s monetary influence on the
world can be perceived as a nightmare for
said country. Imagine a world where the
USA loses the dollar as the most influential
currency and can no longer use it to write
the rules of international trade (USD is
currently estimated to represent 90% of total
foreign exchange volume4). CBDCs, with their
highly efficient cross-border transaction
settlement potential could displace the USD
4. https://www.bis.org/publ/qtrpdf/r_qt2212x.htm
5. https://www.intereconomics.eu/contents/year/2023/number/4/article/the-geopolitics-of-central-bank-digital-
currencies.html
from this historic role. It does not take long
to see how the US government might fight
against this and feel obligated to pursue
CBDC developments as a hedge against
this risk. Consider also how China is part of
the five countries who launched their CBDC
pilot programs, while the US remains at
preliminary research and deliberations, and
you might sense uneasiness5.
Now that we have outlined the main
motivations at play here, let us delve a bit
deeper into the potential implementation of
CBDCs and how they must find a difficult
balance.
PUBLIC AND PRIVATE
MONEY, A FRAGILE
BALANCE
THE GREAT ILLUSION
Central banks are great contenders for the
title of most impressive magician out there.
Not because they seemingly create money
out of thin air or make it disappear just
as easily, although that is certainly a neat
trick. No, it is because they have created
and maintained one of the longest running
illusions in the history of humanity, on a wide
scale. What is this illusion? We may call it
the “illusion of one money.” Ask yourself,
is there any significant difference between
the currency you hold in your wallet and the
one you hold in your bank account? If your
answer is no, then you were successfully
tricked. Indeed, as we have touched upon in
the introduction, the former is public money
issued by the central bank, while the latter is
private money issued by a commercial bank.
This subtlety is critical, as it stands at the
core of the existing financial system.
METALAB REVIEW ¦ 91
How do central banks manage this? By
their role as a “lender of last resort,” they
guarantee immediate convertibility of private
banks deposits into fiat – public – money. In
essence, we collectively place our trust in this
state institution and the result is that we can
benefit from the private banking industry’s
services on a scale that the central bank
would not be able to offer on its own. To the
point where, in stable countries, we barely
ponder the difference. Reality only comes
back to hit us in the case of a bankruptcy,
with the infamous bank run scenarios. A
good analogy, although slightly provocative,
is the casino one. Depositing your money at a
commercial bank is like entering a casino and
exchanging your money against chips6. These
chips are a form of “I owe you,” legal tenders
for any transaction inside the casino and
ones that bind the casino to exchange them
back to you for currency. However, if you go
outside and try to pay for your groceries with
your chips, you will likely raise an eyebrow.
The illusion of one money is broken. In the
case of the banking system, interconnection
between banks helps maintain the illusion
further, allowing us to use our “private chips”
almost anywhere. These interconnections are
made possible by clearing house systems,
on which a digital form of public money is
automatically and periodically compensated,
balancing out overall private bank accounts
through required reserves.
Now is the time to introduce the distinction
between wholesale and retail CBDC. The
former is an evolution of the process
described above. The central bank issues
a digital currency, which private banks hold
and can use to settle with one another in
real time. As such, interbank transfers could
become much faster than they are today. A
wholesale CBDC would also facilitate cross-
border transactions. Today, the public form
of money that banks exchange is already
6. https://brettscott.substack.com/p/casino-chip-cashless-society
92 ¦ METALAB REVIEW
remarkably close to what a wholesale CBDC
would be, minus the technology allowing
for instantaneous settlements. Retail CBDC
on another hand is a much more significant
project to grant access to digital public
money to the general public and is what we
have been describing in this article so far.
Note that hybrid projects exist, which would
work to implement both in one package.
THE “BENEVOLENT” INTERMEDIARY
To better understand the fragile balance
between public and private forms of money,
one must be aware of the money creation
process. Today’s banking system is organized
as “fractional reserve banking.” This means
that commercial banks, as credit institutions,
have near free reign to create money out of
thin air by crediting your accounts. This is
a loan, or debt instrument, and is how the
money supply is expanded. Of course, loans
should eventually be repaid, and banks want
to make a profit through interests. This
means that lending money to individuals
or businesses involves credit analysis and
due diligence over the borrower’s solvency.
Furthermore, banks do not have completely
free reign over lending, as they are required
to hold reserves at the central bank. This
consists of a fraction of their deposits,
hence fractional reserve banking. The role
of central banks is to control the money
supply through different instruments,
required reserves ratios being one. This has
an impact on the dynamics of the economy
– supply expansion, or heightened lending
activities, will stimulate investments and GDP
growth, while supply contraction might harm
the economy but will exercise downward
pressure on inflation rates.
Private banks thus play the role of the
intermediary in the system, managing
deposits and granting loans, on a scale

© Matthew Henry from Burst
that the central bank would not be able
to sustain. Of course, they do not do this
out of benevolence, but profit seeking
(or return objectives in the case of credit
unions). This system promotes competition
between banks, which in theory is beneficial
to customers through lower interest rates
and better financial services. Financial
innovation is also fostered, leading to
more efficient payment and transaction
settlement schemes. The convenience of
using these payment schemes has pushed
back the use of cash. In recent years, new
entrants have progressively challenged
the traditional banking landscape, mostly
coming from the tech industry with both
large companies – think Google and Apple
– and smaller “fintech” startups – think neo
banks, international transfer, decentralized
finance. This is further eroding cash use, and
leads central banks to worry as, compared to
banks, they do not yet have a large regulatory
apparatus for tech companies. In a sense,
today the balance already weighs heavily in
favor of private forms of money.
THE ELUSIVE EQUILIBRIUM
By issuing CBDCs, central banks would
attempt to rebalance the scale and
have public money play a renewed and
strengthened role in the economy. The right
equilibrium is however hard to pinpoint. A
significant risk which made most central
banks frisky about CBDCs for years was
that CBDCs would lead to the uncontrolled
disintermediation of the system. Because
of the potential attractiveness of central
deposits to the public due to factors like
safety, liquidity and solvability, the launch
of CBDCs could turn people away from
commercial banks, deteriorating their balance
sheet and causing the risk of bank runs.
Such a disintermediation would also be
catastrophic for the economy, as the activity
is fueled by investments made possible by
loans. This might sound overly apocalyptic,
as there is reason to believe an introduction
of CBDC would not substitute commercial
bank’s deposits overnight. After all, many
less financially literate people would have
trouble seeing the difference and the benefits
of switching. Nevertheless, central banks
considered this a serious enough issue to
pull the brakes on CBDCs and launch in-
depth review programs and impact studies.
The critical point is that even if a large-scale
bank run is avoided, even a slow but steady
disintermediation of the financial system
could be detrimental.
Reaching the right equilibrium will be a crucial
element in the choice of CBDC deployed.
Wholesale CBDCs present no risk, being a
simple evolution of the current interbank
system. Retail CBDCs present a higher risk
and warrant more caution. In recent years,
central banks task forces have examined
hybrid infrastructure which promises to solve
this problem if well calibrated. Restrictions on
deposits and CBDC programmability could
be used to keep the private banking sector
attractive and mitigate the disintermediation
risk. To conclude, the main approach should
be caution, something that central banks
understand well. In a report by the Bank for
International Settlements co-authored by
METALAB REVIEW ¦ 93
seven major central banks published in 2020,
they outlined a Hippocratic Oath for CBDC:
“First, do no harm”7 .
Now that we have explored the motivations
and explained the challenges, we have the
required ingredients to answer our original
question: “will CBDC be useful?”
USEFULNESS, A MATTER
OF PERSPECTIVES
Usefulness, like beauty, is in the eye of the
beholder.
FOR INDIVIDUALS, VALID CONCERNS
While individuals should be excited at the
prospect of increased efficiency, better
stability, and new financial services, many
argue the cons outweigh the pros. Retail
CBDCs are seen as yet another intrusion
of the state into people’s lives. Indeed, the
aim of every CBDC project is a centralized
currency, even those that will use distributed
ledger technology for efficiency, meaning
the central bank will always have full control
over the network. This gives a large amount
of power to the state via the central bank to
add or remove money from accounts. More
concerning and realistic for non-corrupt
states, the risk of cyberattacks with hackers
taking control of the central authority and
using it to modify accounts should not be
thrown aside too quickly.
Privacy concerns are obviously also a
significant issue for many individuals. If the
CBDC implementation gives full visibility
over financial transactions and records to
the state, which people argue is likely even if
7. https://www.bis.org/publ/othp33.pdf
8. Aldous Huxley, Ends and Mean, 1937
94 ¦ METALAB REVIEW
central banks include privacy walls into the
system, everyone is at risk of seeing their
financial data used beyond their consent. In a
more extreme case, a full-fledged surveillance
state could develop, monitoring its citizens’
transactions and enforcing limitations on
certain activities via the programmability of
the CBDC e.g., prohibiting purchase of alcohol
on weekdays or donations to politically
opposed NGOs. These are valid concerns
and would resonate well with the quote
“technological progress has merely provided
us with more efficient means for going
backwards” from Aldous Huxley8, writer of the
famous Brave New World dystopian novel. We
let it up to the reader to assess the likelihood
of this risk. Central banks will certainly need
to balance the safeguarding of privacy rights
and the transparency necessary to deter
criminal activity. In any case, it seems the
usefulness of CBDCs to the public will depend
on the specific implementation chosen. It
is our view that central banks should strive
to provide all reassurance required by being
transparent and including tight checks and
balances to foster trust in the population.
FOR COUNTRIES, DIFFERENT PATHS
Let us conclude this article by stating that
there will not be one version of CBDC,
there will be as many versions as there are
countries implementing them. Each will have
its own specific characteristics, trying to
address the specific needs of the country but
also rooted in that country’s sociopolitical
ideology. China, for instance, already released
to the public a pilot version of its CBDC,
the digital yuan, back in August 2020. The
currency has been progressively expanded to
more regions, reaching 261 million of users
for USD 13.8 billion worth of transactions
at the end of 20219 – a moderate result,
likely explained by the country’s pre-existing
advance in digital payment services. The
PBoC states that the objectives are to
enhance efficiency and help the state fight
against illegal activities. It also defends itself
regarding privacy concerns and surveillance
accusations, adding that they have included
limitations on tracking as part of “anonymity
control.”
On another hand, for major economies like
the US or the EU, the implementation of CBDC
will be much slower, as project calibrations
are carried over the coming years and central
bank laws will need to be ratified. The Fed
has been involved since 2022 in extensive
research projects in partnership with the
Massachusetts Institute of Technology to
assess potential implementations of CBDC as
well as their impact10. The US will most likely
favor a hybrid system, with great incentives
given to users to keep using the private
banking sector in order to protect this leading
industry. They will certainly incorporate into
the project the ability for the central bank to
directly transfer funds to deposit accounts,
as an additional tool of monetary policy. The
EU, champion of data protection regulations,
will no doubt spend a considerable amount
of time to reassure its citizens over the full
transparency and limited tracking ability of
the central bank. The ECB Governing Council
will review the outcome of its first large-scale
investigation phase, as part of the “Report
on a digital euro” during Autumn 2023 and
decide whether to carry forward with a
realization phase11.
9. https://www.atlanticcouncil.org/blogs/econographics/a-report-card-on-chinas-central-bank-digital-currency-the-e-cny/
10. https://www.bostonfed.org/news-and-events/press-releases/2022/frbb-and-mit-open-cbdc-phase-one.aspx
11. https://www.ecb.europa.eu/paym/digital_euro/investigation/governance/shared/files/ecb.degov230713-fourth-
progress-report-digital-euro-investigation-phase.en.pdf?704b0eee4c20eee4dbe4970f5091a96a
Because individual and national interests may
not align neatly, there is no doubt citizens
of different countries will have diverging
perspectives on the usefulness of CBDCs
based on their nation’s chosen path.
CONCLUSION
Throughout this article, our aim was to give
the reader a better understanding of Central
Bank Digital Currencies. By exploring the
numerous motivations behind them, by
delving into the issue of the public-private
money balance and assessing the usefulness
of such projects for all the involved parties.
Our view is that central banks should move
with caution and high transparency if these
projects are to have a controlled impact on
the existing financial system and be widely
accepted by the population. However, the risk
of taking too much time to develop CBDCs in
the context of a global economic arms race
could prove dangerous to national interests.
As such, central banks and the governments
backing them should ensure to chart an
efficient and resilient path towards CBDC.
We hope that this article will empower the
reader to think about this technological
progress in a nuanced and complete
manner. By self-appropriating the issue and
developing a critical perspective, one can
participate in the broader debate and hold
governments responsible for an appropriate
and beneficial development of Central Bank
Digital Currencies.
METALAB REVIEW ¦ 95
PATHWAY TO A
FAIR METAVERSE
By PIETER JAN MOTMANS
Master in Data Sciences & Business Analytics
at ESSEC Business School & CentraleSupélec
L
et’s start with a little thought
experiment. When a digital platform
shows you an ad for a product or service
that really interests you, does the platform
help you find what you are looking for or
does it try to influence your preferences? The
answer of course depends on who you ask,
but an increasing number of people believe
that those platforms try to gain profits by
changing user behaviour.
The recent increase in the amount of data
and the proliferation of algorithms based
on these data have given rise to a new
form of capitalism based on surveillance
of consumers. Surveillance capitalists1,
hereafter called gatekeeper platforms, can
modify user behaviour to create profit from
sales or advertising. How this happens is
well illustrated by looking at how Meta earns
money from for example Facebook and
Instagram.
Users do not pay for the services offered
by Meta, it is the advertisers who pay Meta
proportionally to how well users respond to
1. The definition of surveillance capitalists is not limited to big platforms, but for this article the term gatekeeper platforms
is more fitting. Gatekeeper platforms are defined in the Digital Markets Act based on market capitalisation, annual
turnover and number of users.
96 ¦ METALAB REVIEW
their advertisements. Meta therefore has an
incentive to not only predict, but also modify
the behaviour of users to optimise their
response to offered advertisements. Users
therefore trade their data and attention for
access to Meta’s services.
This analysis becomes highly relevant when
exploring the consequences of the Metaverse,
a virtual world populated by avatars that users
can create. In the Metaverse, the scale of data
collection will increase enormously. To provide
an illustration of how far this can go: Meta has
patented technology to track eye-movement
and brain activity through their Oculus VR-set.
This article starts from the premise that
surveillance capitalism is to a certain extent
undesirable for society. The way gatekeeper
platforms are incentivised to collect more
data with higher predictive value conflicts with
human privacy and autonomous decision
making. How exactly does this happen?
Tracking users’ internet activity across
websites or tracking brain activity is arguably
a breach of personal privacy that comes close

to surveillance. As stated before, this data is
used to influence purchase or (in the case of
Cambridge Analytica) voting decisions. To
come back to the initial thought experiment:
people who feel that digital platforms influence
preferences have a solid argument.
In what follows, the focus is on one aspect
that enables gatekeeper platforms to thrive:
most of them create a so-called walled garden
ecosystem. After setting the stage, we will
explore pathways to a Metaverse without
walled gardens. The hope is that by opening
these ecosystems up to fairer competition,
consumers will get more decision power to step
away from gatekeeper platforms that misuse
their data. In case this works, firms would get
a new set of incentives that align more closely
with consumer interests.
© Leonardo Sanches on Unsplash
WALLED GARDENS
Walled Gardens is a term used to refer to digital
ecosystems created by some gatekeepers. It is
easy to enter the ecosystem, but once inside,
users will find it hard to exit.
The ecosystem created by Apple is a good
example. Once a consumer buys an Apple
device, it becomes more convenient for them
to purchase other Apple products. Once in
possession of a MacBook, Iphone and Ipad, it
will be inconvenient to switch to another brand
due to the difference in operating systems
that make communication and data transfer
cumbersome with devices outside of the Apple
ecosystem. This goes for the chargers that are
different, to data that is stored on Apple servers.
Within the Apple ecosystem, the company has
complete control over the consumer’s data.
METALAB REVIEW ¦ 97

This convenience comes at a cost though.
Due to the power Apple has over the mobile
game market, the company charges app
developers a commission of 30% on every
transaction made through the app store, an
issue that was recently brought to court2.
App developers currently have very few
alternatives to bring their apps to consumers.
Another example can be found in the
advertising business, where Meta, Google and
Amazon combine for a total share of 60% of
© Nickross2021 from Pixabay
all digital advertising revenue generated in
the United States. These Big Tech firms are
in full control of the ecosystems they have
created. They succeed very well in offering
convenience to consumers. Once you start
buying products through Amazon, they will
become increasingly better at offering the
products that you respond to. The more
convenient it is for consumers, the harder
it becomes to switch to an alternative.
Consumers that find this undesirable should
be able to switch to alternatives3.

2. An initial verdict stated that Apple is not a monopolist, but should allow third-party payment options on their app store.
The decision has been appealed.
3. For those interested in possible solutions to this challenge, I suggest The Ownership of Data by Wilfried-Sand Zantman
and Anastasios Dosis. It explores different ways to increase welfare when faced with the trade-off between data
monetisation and privacy.

98 ¦ METALAB REVIEW
THE METAVERSE
The main idea behind the Metaverse can be
summarised by the desire to enable as many
activities as possible (work, social gatherings,
events…) from the physical world to happen
in the digital world. Thereby removing certain
frictions present in the physical world like
distance and space limitations. In this
endeavour, certain characteristics emerge
that should be fulfilled before we can speak of
a Metaverse.
1. It should be persistent. That is, it should
feel like reality, it shouldn’t end at a certain
point, neither should it pause. Most
games now pause when the user exits, a
Metaverse shouldn’t.
2. It should be synchronous, enabling an
unlimited number of users to interact in real
time
3. There should be an economy in which
goods and services are exchanged.
4. There should be interoperability of data ad
digital assets, allowing items to be used
across the whole metaverse.
Each characteristic raises certain challenges.
Solving these will take time, that’s why many
people believe that the Metaverse is not yet
around the corner. To ensure synchronous
experiences for example, millions of people
should be connected in real time, current
infrastructure has problems connecting more
than a hundred.
That being said, some of the biggest
companies in the world are heavily investing
in an attempt to not get left behind. Microsoft
will try to extend its dominance for work-
related activities, Facebook’s name change
4. This article is based on the text of the proposal for the DSA and the text of the DMA that was approved by negotiators
from the European parliament and council. Both are not yet definitive and therefore subject to change.
into Meta speaks for itself and some of
Google’s investments like virtual assistants
and wearables seem to fit perfectly with the
Metaverse.
By starting this article by explaining the
concept of Surveillance Capitalism, I hope
to have made the reader aware that this
form of capitalism poses certain threats, but
also that it will pose many more in case the
Metaverse becomes mainstream. Initiatives
that could tear down one of the preconditions
of surveillance capitalism are therefore worth
exploring.
THE DIGITAL MARKETS
ACT & THE DIGITAL
SERVICES ACT
Recently, the European council and
parliament reached an agreement on the
Digital Markets Act (DMA) and the Digital
Services act (DSA)4. The DMA imposes
new obligations on so-called gatekeeper
platforms, mostly US firms, that provide core
platform services such as search engines,
social networking services and advertising
services. The rationale is that due to
advantageous conditions like network effects,
lock-in effects and economies of scale,
certain industries are now characterised by
weak contestability of the dominant firm and
unfair business practices towards users.
The DSA stresses that “what is illegal offline,
should be illegal online”. It tackles illegal
content, and imposes transparency regarding
advertising and recommender systems.
Users should for example be able to choose
the data that recommender systems can use
to make recommendations.
The DSA’s main focus is on limiting the
negative consequences of gatekeeper
METALAB REVIEW ¦ 99
platforms. The aim of this article and the DMA
is to explore pathways to an economy where
gatekeeper platforms face more competition.
In what remains, the focus will therefore be on
the DMA. However, I deemed it necessary to
also mention the DSA, as both should be seen
as a unified effort to make digital ecosystems
a fair and safe space.
The DMA hopes to open up the walled garden
ecosystems to allow more competition, to
offer more choice to users and to ensure
fairness. Non-compliance can lead to fines
of up to 20% of turnover in case of repeated
infringement, in comparison to 4% in case of
GDPR breaches. For Google and Meta, this
could respectively go up to $50 billion and
$23 billion.
Because the DMA is not designed specifically
for the Metaverse, questions arise about
how the Metaverse fits into this regulation.
The DMA applies to ‘core platform services
provided or offered by gatekeepers to
business users in the Union or end users
established or located in the Union’
(article 1.2.). The DMA does not contain a
general definition of core platform services.
Rather, article 2.2. lists types of services such
as social networking services, search engines,
intermediation services etc., most of which
are based on existing legislative definitions.
The Metaverse aims to integrate various core
platform services and to add new, not yet
identified services. Therefore, it remains to be
seen how the regulation will apply. Especially
since article 19 states that the Commission
may add core platform services after
conducting market investigations.
For this article, we will examine some of the
obligations and outline their impact on the
Metaverse. In this way, the aim of the DMA
becomes clear.
100 ¦ METALAB REVIEW
Article 5.2b): “The gatekeeper shall not
combine personal data from the relevant
core platform service with personal data
from other core platform services or
from any other services provided by the
gatekeeper or with personal data from third-
party services.”
Article 5.2b) gets to the core of what
gatekeeper platforms do: use personal data
to predict and possibly change behavior.
Because these companies are the owners
of a whole ecosystem, they aggregate
data from various sources. The aim of this
obligation is to limit the extent to which
these platforms can create walled gardens.
Practically, data collected from the different
services integrated in the Metaverse should
be stored separately.
Article 5.5): “The gatekeeper shall allow end
users to access and use, through its core
platform services, content, subscriptions,
features or other items, by using the
software application of a business user,
including where those end users acquired
such items from the relevant business user
without using the core platform services of
the gatekeeper.”
This clause gives developers access to the
users of gatekeeper platforms without having to
necessarily use all the gatekeeper’s payment or
advertising services. The problem Epic Games
raised about Apple’s commissions is tackled
in this way. By imposing this, an opportunity is
created for small companies to monetise their
creations.
Article 6.5): “The gatekeeper shall not treat
more favorably, in ranking and related
indexing and crawling, services and products
offered by the gatekeeper itself than similar
services or products of a third party. The
gatekeeper shall apply transparent, fair
and non-discriminatory conditions to such
ranking and related indexing and crawling.”

In the past, gatekeeper platforms have been
blamed for favouring their own products. The
DMA clearly sets out to eliminate this unfair
practice. It is complementary to the previous
article as third-party products will gain
visibility.
By zooming in on these three clauses, the
aim of the DMA becomes clear. It hopes to
make markets fairer and more competitive
for existing firms, new entrants and business/
end users. At the same time, the DMA looks
to change the current incentive system in
the digital world. If it becomes public that
a company misused data, users will be
empowered to choose a different service
provider.
The DMA has great potential to limit the
extent to which gatekeeper platforms are
able to maintain walled gardens. There is a
willingness to look at their activities, and to
render illegal those that are most harmful.
On the other hand, the obligations are written
up retrospectively. The activities targeted in
the three clauses have taken place before,
and the DMA offers an efficient framework to
punish them.
© Matthew Henry from Burst
However, questions remain about its global
impact. The DMA is a European piece of
legislation which will mainly impact US firms,
it therefore seems unlikely that the United
States will replicate it domestically. It remains
to be seen how other countries will react.
CONCLUSION
The Metaverse is as of now uncharted
territory with enormous potential when it
comes to profit and data collection. Ensuring
fair competition is therefore of the utmost
importance. The DMA might prove to be
effective in tackling the current walled
gardens, but in its current form it offers no
guarantees that walled gardens will not arise
in the future. However, if fitting changes
are made, it might prove a pathway to a
Metaverse without walled gardens. As such,
the DMA could take away a foundational
building block that allows gatekeeper
platforms to thrive. Limiting their power is
already very important now. In the Metaverse,
I believe this will become absolutely essential.
METALAB REVIEW ¦ 101
DIGITALIZATION
OF TALENT
ACQUISITION: MOVE
FORWARD WITH
CAGED MACHINE
By YINZHE HUANG
Master in Data Sciences & Business Analytics
at ESSEC Business School and CentraleSupélec

D
igitalization and AI-based applications are being integrated into firms’ human resource
management (HRM) approaches for managing people in domestic and international
organisations. Amongst the whole process of HRM, Talent Acquisition (TA) is the best-
equipped one with Digitalization. There is no doubt that machines are good at some sort of work.
However, we must know that the efficiency sometimes takes costs, such as privacy and bias.

102 ¦ METALAB REVIEW

 © Jason Goodman on Unsplash
TALENT ACQUISITION PROCESS REVIEW
In general, TA can be splitted into three main steps: planning, sourcing, and selection.

• Planning: a process in which an organisation
attempts to estimate the demand for labour
and evaluate the size, nature and sources of
the supply which will be required to meet that
demand1, including knowledge, skills, abilities,
and other characteristics2.
• Selection: assessment of person-job fit, i.e., the
competency power of candidates on particular
job requirement, usually consisting of a series
of funnel-like filtering processes including
resume reviewing, testing, interviewing and due
diligence.

• Sourcing: the use of one or more strategies to Meanwhile, the processes of TA are not
attract or identify candidates to fill job vacancies, separated. In practice, the processes work in
including posting job requirements on media, a PDCA way, with continuous iteration and
using headhunters, and employee referral. evolution as the business moving forward.

1. Reilly, Peter. Human Resource Planning: An Introduction. Report 312. BEBC Distribution, 15 Albion Close, Parkstone,
Poole BH12 3LL, United Kingdom., 1996.
2. Peterson, Norman G., et al. An occupational information system for the 21st century: The development of O* NET.
American Psychological Association, 1999.

METALAB REVIEW ¦ 103

DIGITALIZATION IN TA
To visualise the comprehensive picture of how digitalization technologies affect TA and human-
machine configurations at work and their influences on organisational level outcomes, we
develop an overarching conceptual framework through this review:

In general, the PDCA circuit3 is essential in the
organical combination of Talent Acquisition
& Artificial Intelligence. AI assists in HR
planning by determining future employee
needs and making effective recruitment
decisions4. It is also evident that AI-enabled
recruitment and selection play a crucial role
in attracting and selecting the most talented
work pool to the organisations, as these
advanced technologies can access data
and make decisions at a speedy pace and
can handle large volumes of information in
a time that far exceeds human capacity5.
As a result, AI algorithms can improve
job candidate identification, that is who is
most interested and suited for the job and
provide better communication of the job
opening. Influencing job seekers’ technology

3. Koiesar, Peter J. "What Deming told the Japanese in 1950." Quality Management Journal 2.1 (1994): 9-24.
4. Karatop, Buket, Cemalettin Kubat, and Özer Uygun. "Talent management in manufacturing system using fuzzy logic
approach." Computers & Industrial Engineering 86 (2015): 127-136.
5. Torres, Edwin N., and Cynthia Mejia. "Asynchronous video interviews in the hospitality industry: Considerations for
virtual employee selection." International Journal of Hospitality Management 61 (2017): 4-13.

104 ¦ METALAB REVIEW

increases their participation in AI enabled
recruiting6. AI also assists in making the job
interview process more effective, so that
the interview process is now changed from
face-to-face to internet-based interviews,
such as asynchronous video interviews
(AVIs) . Moreover, Pessach et al.7 found in
their studies that using a hybrid decision-
support tool helped HR professionals in
the recruitment and placement processes
and increased the impact of recruiters
and maximised organisational return on
investment. AI Algorithms allowed HR
professionals to identify suitable profiles for
job vacancies, eliminating cognitive biases of
race, gender and sexual orientation that mar
human judgement in recruiting activities. The
latest work of Baidu8 even takes the salary
management into account.
In the following paragraphs, we will take two
examples from the Chinese context to show
how system design and AI can empower
talent acquisition.
CASE STUDY 1: LARK
AS USER-FRIENDLY TA
SAAS (POWERED BY
BYTEDANCE)
Before talking about how AI upgrades
automation in the talent acquisition process,
we would like to briefly introduce the key
elements of a user-friendly digital talent
acquisition system. In this section, we would
like to take Lark (an enterprise cooperation
platform developed by ByteDance) as an
example.
6. Van Esch, Patrick, et al. "Al-enabled biometrics in recruiting: Insights from marketers for managers." Australasian
Marketing Journal 29.3 (2021): 225-234
7. Pessach, Dana, et al. "Employees recruitment: A prescriptive analytics approach via machine learning and mathematical
programming." Decision Support Systems 134 (2020): 113290.
8. Sun, Ying, et al. "Market-oriented job skill valuation with cooperative composition neural network." Nature
communications 12.1 (2021): 1-12.
• Role Definition & Permission Management:
In the talent acquisition process, the
stakeholders include not only Human
Resources Managers, but also many other
roles, such as supervisors, administrators,
and headhunters. Therefore, it is essential
to assign different levels of permissions to
different users and roles. In Lark TA, different
interfaces are prepared for different roles. For
the supervisors of a particular position, what
they need to know is just the information
related to their subordinate position.
Meanwhile, we also need to separate external
users of the system, such as headhunters,
from unnecessary internal-used information.
• Cross-platform Cooperation: Although an
All-in-one platform is too ambitious, a tool
would be much more user-friendly if it is good
at cross platform cooperation by preventing
HR Managers from being occupied with
dealing with transferring from systems. An
important role of the platform is a Talent
Acquisition Pipeline. The pipeline starts
from “data collection”. The data inputs of
the systems are the resumes collected from
different sources. No matter what kinds of
formats of the resumes (pictures, webpages,
text or documents), they should be present
in the same way for anyone who is going to
review them. In Lark, HRs are able to present
a job description to most of the popular
job-seeking platforms and assign budgets
for advertisement. When the resumes are
collected, both the HRs and supervisors are
able to review the resumes with both the
initial texts and the highlighted information.
Afterwards, the platform should be well-
coordinated with calendar management
tools so that the arrangement of interviews
METALAB REVIEW ¦ 105
106 ¦ METALAB REVIEW
© LYCS Architecture on Unsplash
can be more efficient. Normally, a company
has already got its preference in the calendar
management systems. The way Lark tried
to get it well-organized is to develop add-
in tools for cross-platform cooperation.
What is more, Lark takes its advantages
in voice-text translation system, it can
automatically provide both the raw text and
the summarizations after interviews so that
different interviewers can got the context
of previous interviews. Finally, the system
provides automatic templates and an email-
sending system to give feedback to the
candidates.
• Talent Pool: Beyond a well-defined pipeline,
the system should also accumulate a
talent pool for talent mining. Even though
candidates are not perfectly fit for particular
positions, they may show their light in other
job positions. The talent pool is the key of
building a bi-direction connection between
the corporation and the candidates. Beyond
simply accumulating data, Lark also provided
label filtering and a CV searching engine
for the HRs so that they can pinpoint the
candidates that are highly qualified for new
job positions.
CASE STUDY 2: MODEL-
DRIVEN TA BY BAIDU
TALENT INTELLIGENCE
CENTRE (TIC)
Founded in 2015, Baidu TIC aims to form a
systematic data-driven solution for talent
management based on the accumulated
advantages in AI and Big Data of Baidu (HBR
China, 2018). After 6-year cultivation in this
area, the team developed many algorithms with
real-world applications in Talent Acquisition.
TECHNICAL BACKBONE OVERVIEW
In terms of technical accumulation, the team
started from the analysis of trend of job market9
by dynamically tracking the evolving recruitment
topics with hierarchical dirichlet processes.
And then, the team evaluate both the profile
of employers10 and the skills of employees11.
With those key insights being clarified, they
built a Person-Job Fit Neural Network12 Design,
Operation, Product, and Technique) and
enhanced the model by designing an Ability-
Aware Mechanism13. Apart from the resume
filtering which gets HR into loads of repeat work,
the team also focused on AI-driven Interview
Assessment14, which enables a variety of
applications in job interviews, and AI-driven
Salary Management15, which assesses skill
value from a market-oriented perspective.

9. Zhu, Chen, et al. "Recruitment market trend analysis with sequential latent variable models." Proceedings of the 22nd
ACM SIGKDD international conference on knowledge discovery and data mining. 2016.
10. Lin, Hao, et al. "Collaborative company profiling: Insights from an employee's perspective." Thirty-First AAAI
Conference on Artificial Intelligence. 2017.
11. Xu, Tong, et al. "Measuring the popularity of job skills in recruitment market: A multi-criteria approach." Proceedings of
the AAAI Conference on Artificial Intelligence. Vol. 32. No. 1. 2018.
12. Zhu, Chen, et al. "Person-job fit: Adapting the right talent for the right job with joint representation learning." ACM
Transactions on Management Information Systems (TMIS) 9.3 (2018): 1-17.
13. Qin, Chuan, et al. "Enhancing person-job fit for talent recruitment: An ability-aware neural network approach."
The 41st international ACM SIGIR conference on research & development in information retrieval. 2018.
14. Shen, Dazhong, et al. "A joint learning approach to intelligent job interview assessment." IJCAI. Vol. 18. 2018.
15. Sun, Ying, et al. "Market-oriented job skill valuation with cooperative composition neural network." Nature
communications 12.1 (2021): 1-12.

METALAB REVIEW ¦ 107

AI PENETRATION IN TA PROCESSES
Nonetheless, we shall always notice that even
state-of-the-art techniques are the means
to realize the end. It is more important to
recognize the value creation than to simply
show off IT skills. Therefore, the systematic
design, which combines the value creation
chain and the state-of-the-art techniques
organically, is even more essential for
business success.
With the technical backbone, Baidu is able
to build a whole solution for AI-driven Talent
Acquisition (CSDN) which can boost HRM
extraordinarily. The solution concentrates
on three main perspectives in HRM: talent,
organization, and culture. In this article, which
focus mainly on talent acquisition, we would
like to emphasise more on the first part.
In the talent perspective, the solution
covers almost the whole process of talent
acquisition, including job analysis, sourcing,
and selection.
• Job Analysis: Baidu TIC provided bottom-
down support for the job analysis step.
Based on the giant amount of internal and
external data, TIC utilized an enhanced
topic model on the trend analysis on the job
market, supporting the strategic design of
future talent acquisition. For example, TIC
succeeded in predicting the mass demand on
talents in Big Data and Artificial Intelligence
would overwhelm that in Online to Offline,
by modelling on millions of job descriptions.
Meanwhile, it forecasted the strategic
planning of competitors on Autonomous
Driving accurately. With such support, Baidu
became one of the companies that moved
to road test of driverless vehicles. The job
analysis provided key information for the
strategic level, it also made the operational
level more convenient. Thanks to the
bipartitional (job description and resume)
analysis, it was also able to extract key
108 ¦ METALAB REVIEW
skills for different positions, so that HR can
articulate the specific requirement more
clearly. The job descriptions are better-
composed.
• Sourcing: I It is more on pipeline issues than
on modelling issues in terms of sourcing.
In the old ages, the resumes collected
from all channels should be validated by
Human Resource Managers. However, if we
expect the information can be assessed by
model, the well-built pipeline is an essential
prerequisite, in which the plain text in the
resumes can be cleaned, aggregated, and
formalized. During the data engineering
process, several key elements form the
instruments of data manipulation. The
first element is resume resolution, during
which the text in the resumes is recognized
(especially for the pictures of resumes).
The second one is information recognition,
aggregating the information by analyzing the
contents and positions of text, so that the text
can be corrected and grouped. For example,
the information of professional experience
and that of education background should be
separated. The third one is formalization. In
this step, the information will be placed in the
right location in the table. After these periods,
the plain text is transformed to well-organized
tabular data which can be easily analyzed and
evaluated. The giant talent database ensures
further analysis and model construction.
• Selection: In the selection part, TIC
focused more on the person-job fit, in which
they devoted most of their efforts in the
evolution of model. In the scenario of Internet
Companies, TIC made a model that is fitful
for 4 main division in the Internet Companies:
Technology (programmers, data scientists
etc.), Product (product managers), Design
(UI designers, artists etc.) and Operation
(community, marketing etc.). These 4 kind
of job positions cover more than 85% of the
headcounts in the Internet Companies. The
person-job fit model take both the resume
and the job description as the input. With
end-to-end model design and ability-aware
mechanism, it not only scores the person-
job fit, but also bring the highlighted ability
recognition.
Covering almost the whole process of Talent
Acquisition, this solution has become a
module of Baidu AI Services. In application,
Baidu co-operated with Beisen to help CP
Group to realize Digital Transformation in
Talent Acqusition.
CONCERNS OF
DIGITALIZATION IN TA
We evaluated above some digital evolutions in
Talent Acquisition. However, it is important to
realize that efficiency comes at some costs. In
this part, we would like to evaluate some of the
concerns of digitalization in talent acquisition.
• If bias exists in previous hires, it can creep
in the system and make it even worse16. It is
because the model was trained on historical
data in which the successful application would
be considered the positive samples. Sadly,
we can not remove the bias from neither the
training process nor the historical. Relying
too much on algorithm resume filtering will
result in the extension and even the expansion
16. Winick, Erin, "Baidu is testing neural networks that can match job seekers to jobs". MIT Technology Review (2018)
of bias. In practice, companies with such
algorithms usually add manual checks before
saying no to a candidate, while this would
reduce the operational efficiency, contrary
to the initial objective of liberating the HRs
from reviewing the candidate over and over
again. Therefore, it is essential to change the
status of zero-sum tradeoff. Utilizing a more
explainable AI in the recruitment process may
be a solution. For example, instead of giving
direct outcome of person-job fit scores, using
an intermediate model such as Named Entity
Recognition to first evaluate the talent pool
of candidates may help HRs to better make
effective decisions efficiently.
• The system did lighten the workload of HR,
but human-machine co-operation requires
Business Process Reconstruction. No matter
how state-of-the-art the algorithms are,
they are still means to bring add-in value for
the business. Above the algorithm, a well-
defined and user-friendly system should be
constructed. Lark provided a digital solution
covering the whole process of recruitment, in
which the roles are well-defined with different
authorities, multiple sources are connected,
templates for JD and emails are prepared, and
data visualizations are up-to-date. Beyond
machine learning algorithms, there are loads
of work to do in order to get the recruitment
process fully digitalized.
• The system should be built under the
constraints of privacy regulations. The
examples illustrated in the articles are China-
based companies. As we know, in Europe,
companies are under more strict regulation in
terms of privacy issues. For example, under
GDPR (General Data Protection Regulation),
the corporations are not allowed to store
personal data as long as the subject refuses
to give authorization and the max duration of
data storage is no longer than two years.
METALAB REVIEW ¦ 109
110 ¦ METALAB REVIEW
© Hivan Arvizu on Unsplash
CONCLUSIONS
Digitalization can improve the efficiency of
talent acquisition in two main aspects: well-
defined enterprise cooperation systems and
machine decision. The former way improves
the workflow by integrating the whole process,
extracting process knowledge for stakeholders
decisions under context, and seamless
cooperation with other tools. The latter way
protects the HRs from manually evaluating the
candidates one by one.

However, several concerns arise under the

digitalization. We have to make an ethical
trade-off between efficiency and personal
rights. The way to digitise the Talent
Acquisition processes is to improve the
efficiency in systematic design under the
prerequisites of compliance to regulation and
respect of privacy. Not only do we need the
improvement of efficiency, but also should we
cage the power so that it can remain under
control.

METALAB REVIEW ¦ 111

BLOCKCHAIN: THE
ANSWER TO INVESTORS’
GREENWASHING WOES?
HOW CAN BLOCKCHAIN TECHNOLOGY
PLAY A ROLE IN ELIMINATING BIAS
FROM REPORTS AND CLAIMS SHARED
FOR GREEN PROJECTS?

By AMIR KHAN
Master in Finance at ESSEC Business School

W LET’S TALK ABOUT THE

hen you purchase a box of that
cereal or ground coffee that you
need to start your mornings, have
you ever found yourself wondering about
what exactly the manufacturer will do
with the money it is making from the sale?
Besides producing more of the same stuff
you’ve come to love, of course. This food
for thought has been catching traction with
consumers and investors alike, bringing
the cryptic answers out of the explanatory
notes of complex financial statements into
mainstream attention. The bottom-line is
that in a world facing several inter-related
environmental crises, which are quickly
turning irreversible, people don’t want to give
their money to companies that are a part of
the problem. This attitude is personified in the
environmental movement.
GREEN MOVEMENT
Concern for the impact on human life from
air and water pollution goes back to at
least the Roman times. This concern also
arose between the late 14th century and
the mid-16th century in wider Europe when
pollution was being associated with the
spread of epidemics. However, the modern
environmental movement began much later
in late-19th century. It was based around
concern to protect the countryside in Europe
and the wilderness in the United States, as
well as the health effects of pollution caused
by the Industrial Revolution. This was also the
time that the Sierra Club was founded (1892).

112 ¦ METALAB REVIEW


It was finally in the 1960s that these
philosophical and social strands of
environmentalism – among various others
– were given political expression through
the establishment of the “green” political
movement. Emerging in the 1960s[GC3]
[AK4] , the green movement is a social
movement This movement aims to protect
planet Earth from harmful environmental
practices and maintain sustainable living
standards. Since the 1980s, climate change
has become a primary concern of the green
movement among other concerns like organic
agriculture, pollution reduction, preservation
of forested lands and endangered species,
and opposition to nuclear power.
A crucial facet of this movement is green
consumerism. Also known as sustainable
© Shubham Dhage on Unsplash
consumerism, this is the practice of making
purchasing decisions in a way that minimizes
environmental impact and supports
sustainable products and practices. This is
based on the belief that individual choices can
contribute to positive environmental change,
encouraging consumers to be more mindful
of the environmental consequences of their
consumption habits.
Beyond consumerism, another key facet
is green investing. This is an investment
ideology that seeks to support business
practices that have a favorable impact
on the environment. Often grouped with
socially responsible investing (SRI), green
investments target companies and projects
focused on sustainable development and
preservation of the environment.
METALAB REVIEW ¦ 113
However, it is a mistake to believe that all
green consumption & investment till date
has actually been aligned with environmental
interests and this is because of the
widespread problem of greenwashing.
BUT WHAT IS
GREENWASHING?
How does a fund end up carrying an AA
or AAA ESG rating while having close to
70% of its revenues being derived from
environmentally harmful activities?1The
answer is greenwashing. The term
“greenwashing” was coined by prominent
environmentalist Jay Westerveld in a 1986
essay targeting the hotel industry's practice
of promoting the reuse of towels as part of
a broader environmental strategy; when,
in fact, the move was primarily a cost-
saving measure. Such practices have been
undertaken by numerous corporations
and projects, over the decades, to mislead
consumers and investors to believe that their
products, aims, and policies are ESG oriented.
More recently, in January 2021, the European
Commission and national consumer
authorities released the results of a screening
of websites focused on greenwashing to
identify breaches of EU consumer law in
online markets; reporting that there is reason
to believe that in 42% of cases the claims
were exaggerated, false or deceptive and
could potentially qualify as unfair commercial
practices under EU rules.2
1. White, N., & Schwartzkopff, F. (2023, March 30). Over 30,000 Funds to Get Their ESG Ratings Downgraded at MSCI.
(Bloomberg).
2. Press release. (2021, January 28). Screening of websites for ‘greenwashing': half of green claims lack evidence.
(European Commission).
3. White, N., & Schwartzkopff, F. (2023, March 30). Over 30,000 Funds to Get Their ESG Ratings Downgraded at MSCI.
(Bloomberg).
4. Robinson, D. (2022, July 17). 10 Companies Called Out For Greenwashing. (Earth.org)
114 ¦ METALAB REVIEW
Even more recently, in March 2023, MSCI Inc.
announced that it will lower its ESG ratings
for around 31,000 funds, a change that will
mean only 0.2% of funds will have a AAA rating
moving forward compared to the current 20%3.
This move comes as ESG rating providers
have continually drawn criticism for using
inconsistent rating methodologies that are
yet to be properly regulated, creating room for
greenwashing.
Therefore, with nearly half the sustainability
claims made by companies online in Europe
being misleading and close to one-fifth of
ESG funds having been rated higher than they
actually stand, this problem is bigger than ever.
GREENWASHING IS
EVERYWHERE AROUND
US!
Even in daily life, not falling for greenwashing
has become akin to picking your way
through a minefield. A classic example
of greenwashing, now referred to as
“Emissionsgate”, is when Volkswagen
was found cheating emissions tests by
fitting its vehicles with a “defect” device,
with a software that detected when it was
undergoing an emissions test and altered its
performance to reduce its emissions level.
So, while the company was advertising the
low-emissions and eco-friendly features of its
vehicles; in reality, millions of their cars were
emitting up to 40 times the allowed limit for
nitrogen oxide pollutants. This went on from
2009 to 2015 till Volkswagen was caught.4

Fossil fuel giants like BP widely take up
advertising tactics that focus on their work
on low-carbon energy solutions while oil and
gas make almost the entirety of their cost
allocations and revenue sources.5 Elsewhere,
FMCG (Fast Moving Consumer Goods) giants
focus heavily on marketing to bury down
news like Nestlé, Coca-Cola, and PepsiCo
being named the world’s top plastic polluters
for the 3rd year in a row in Break Free From
Plastic’s 2020 annual report.6
SO, THEN WHAT ARE
GOVERNMENTS DOING
ABOUT IT?
Different parts of the world are making
progress in environmental legislation at
different paces based on their respective
socio-economic and political situations, but
© Avelino Calvar Martinez from Burst
the ball is definitely rolling when it comes to
legislation for sustainability reporting in 2023.
The European Commission, the EU’s
executive arm, is planning to release new
industry rules in the first half of 2023. The
organization has published its “Green Claims
Directive”, which is subject to the approval of
the European Parliament and Council before
it comes into force. The new measures are
designed to prevent companies from making
unsubstantiated environmental claims about
their products and services, warning that they
could soon face penalties of at least 4% of
their annual revenue for “greenwashing.”7
Meanwhile the UK is planning to table the
“Digital Markets, Competition and Consumer
Bill”, under which large companies face the
threat of civil penalties of up to 10% of their
global turnover for breaching consumer

5. Robinson, D. (2022, July 17). 10 Companies Called Out For Greenwashing. (Earth.org).
6. Robinson, D. (2022, July 17). 10 Companies Called Out For Greenwashing. (Earth.org).
7. Meredit, S. (2023, March 24). A ‘greenwashing’ crackdown in Europe hasn’t gone down well. (CNBC).

METALAB REVIEW ¦ 115

116 ¦ METALAB REVIEW
© CHUTTERSNAP on Unsplash
law, which will also cover misleading
environmental claims.8 The British prime
minister, Rishi Sunak, has called the passing
of this new bill a “priority” for his government.
On the investing front, the UK has launched
a consultation on the extent to which ESG
raters need to be reined in by clear rules.
Across the Atlantic, the US Securities and
Exchange Commission (SEC) issued two new
sets of proposed rules in 2022: “Investment
Company Names” (“Names Rule”) and
“Environmental, Social, and Governance
Disclosures for Investment Advisers and
Investment Companies” (“ESG Disclosure
Rule”). Combined, these two proposed
rules are meant to combat greenwashing.
They dictate that only funds with an ESG
purpose will be permitted to label or indicate
themselves as ESG, and a new mandatory
disclosure for these ESG-focused funds will
allow outside parties to ensure whether such
purportedly ESG-focused funds are following
their stated investment purpose.
LIFE IS NOT SIMPLE FOR
GREEN INVESTORS
In May 2022, Tesla was removed from
Standard & Poor’s (S&P) 500 ESG Index,
which continued to retain Exxon Mobil.
This means that the index, which tracks
companies based on S&P’s own sustainability
standards, considers the fossil fuel
major to have better overall sustainability
credentials than the EV giant. However, on
the other hand, research by Institute for
Energy Economics and Financial Analysis
(IEEFA) shows that this view may not be
shared by other rating providers.9 This is
because the disparity in outcomes of ESG
8. Ungoed-Thomas, J. (2023, February 19). ‘Greenwashing’ firms face steep new UK fines for misleading claims. (The
Guardian).
9. Ilango, H. (2022, October 10). Greater ESG rating consistency could encourage sustainable investments. (Institute for
Energy Economics & Financial Analysis).
ratings between providers suffers from “the
lack of unified objectives and standards
for ESG measurements, disclosures and
methodologies.” The subjective nature of
these ratings makes them incomparable
and difficult for green investors to use in
decision making. In fact, green investing still
faces the fundamental problem of a lack of
globally accepted definitions and standards
on what actions constitute the fair usage of
terms like ‘Conscious’, ‘Eco-friendly’ and ‘Zero
Environmental Footprint’ among others in
public claims.
On the sustainability reporting end, while
the initial approach has been orientated
towards traditional financial auditing, there
are significant issues in this approach to
reporting and auditing environmental data.
Sustainability reporting encompasses a wide
range of qualitative and quantitative data,
including environmental impact, supply-chain
wastage, and corporate governance practices;
factors that are often complex and subjective.
This makes it challenging for traditional
auditing approaches, which primarily focus on
financial metrics, to capture and evaluate the
full scope of environmental performance.
ESG metrics data is gathered from various
internal and external sources, including self-
reported information, 3rd party assessments,
and industry benchmarks. Ensuring that
this data is comprehensive while also being
accurate and reliable is beyond the scope of
traditional auditing practices. This is because
traditional auditing relies on robust internal
control systems and verifiable financial
records, whereas sustainability data tends to
be more decentralized and subjective, making
it easier to manipulate.
METALAB REVIEW ¦ 117
THE SOLUTION: “IN
BLOCKCHAIN WE TRUST”
When dealing with high volumes of data that
has such a wide qualitative and quantitative
range, being collected from sources which in
turn are dispersed and diverse, it is natural
to question the accuracy of the reports
being created based on the same. It is in
this critical role of reliable and transparent
data management that blockchain can be
leveraged.
Blockchain is a decentralized, distributed, and
public digital ledger that is used to record
transactions in batches called blocks. The
ledger is stored across many computers so
that the record cannot be altered without
the alteration of all subsequent blocks and
the consensus of the network. Because of
this, blockchain is ideal for storing shared
information since it provides a de-facto
immutable and decentralized record. A
blockchain network can track many metrics
and with all network members sharing a
single view of the data, the technology offers
greater confidence in the data reported.
In terms of greenwashing, blockchain can
minimize the possibility of data manipulation
of the collected data points, in the process
creating a transparent data pipeline
for accurate sustainability reporting. A
prospective structure of such a process for
reporting to stakeholders can be as follows:
1. DATA COLLECTION
Automated data collection through
technological tools not only reduces the
related cost of labor but also helps reduce the
possibility of errors and manipulation in the
data. A real-time data feed can be developed
by combining environmental and/or supply
chain data collected from satellite-based
sensors, power smart meters, web scraping,
imaging drones and IoT sensors.
118 ¦ METALAB REVIEW
2. DATA MANAGEMENT
Blockchain technology’s role in transparent
sustainability reporting is through its ability
to provide immutable certification and
automated reporting of data points related
to an organization’s ESG metrics data. By
using this, manufacturers can track and trace
products and labor conditions along their
supply chains, storing these findings on the
blockchain alongside their other metrics.
By integrating data from their vendors and
suppliers, companies can measure every
relevant metric using a uniform mechanism.
All the information would be immutable and
remain on-chain, therefore, ensuring that it is
free of any manipulation once it has entered
the blockchain.
3. DATA SHARING
The unalterable record of sustainability data
on the blockchain can then be shared in a
transparent and efficient manner. Smart
contracts are a great way to do this; these are
digital, immutable, and automated contracts
on a blockchain in which the contracts’ rules
and execution instructions are written directly
into self-executing code. Smart contracts
can be used to automatically disclose ESG
information either in real-time or based on a
preset schedule to the public or regulators.
Since human supervision is not required,
errors are minimal, and the authenticity of the
data is ensured.
While immutability of data is ensured by
the blockchain network, we face a similar
limitation of garbage in, garbage out as we
do with other technologies. Rigged meters
or sensors becoming faulty over time are
very real possibilities and can hamper the
accuracy of data, a serious concern when
said data becomes immutable. This point of
fragility, termed the “Oracle Problem” can be
strengthened by incorporating solutions like
decentralized oracle. Decentralized oracles
act as public libraries with multiple sources
of information, through these multiple data
sources they minimize counterparty risk
and transfer on-chain the most accurate
data available. Over time, the ability of these
decentralized oracles improves through
“learnings” by penalizing individual oracles
that provide inaccurate data.
BLOCKCHAIN PROJECTS
AND STARTUPS FORGING
THE WAY FORWARD
Application of blockchain to counter
greenwashing is an area of discussion that
has been ongoing for the past few years and
has relatively recently started giving rise to its
first implementation projects. Here we look at
some of the solutions currently being scaled:
EY AND ITS EY OPSCHAIN ESG
PLATFORM
One of the Big 4 accounting firms, EY is
looking to offer carbon traceability and
carbon credit services with the launch of
EY OpsChain ESG by leveraging blockchain
technology. Carbon traceability is the ability
of an organization to trace its own carbon
footprint, and carbon credit – also known as
carbon offset – is a reduction or removal of
emissions of carbon dioxide to compensate
for emissions made by an enterprise.
This new solution is based on the EY
Blockchain SaaS platform. It offers a single
and verifiable view of CO2 emissions to
help organizations accurately measure and
track their carbon footprint, offering enough
granularity for enterprises to be able to link
their carbon output to specific product output.
The platform is developed on the Ethereum
blockchain and is independently verifiable by
using key emissions data validators.
This product offering has been introduced
in May 2023 under the leadership of Paul
Brody, EY Global Blockchain Leader and is
managed by Sam Azad, EY OpsChain ESG
Product Owner. Their team has developed
this platform based on the standards for
Carbon Emissions Tokens published by the
Sustainability Business Working Group of
InterWork Alliance.
PROVENANCE AND ITS 'PROOF
POINTS' SYSTEM
Provenance is an early-stage startup founded
in 2014 that has developed a blockchain-
based data platform designed to offer open
and accessible information about products
and supply chains. Founded by Jessi Baker
who currently acts as CEO, Provenance is
headquartered in London and is working with
200+ beauty and cosmetics brands across
D2C and retail partners in USA, UK, and the EU.
The startup offers digital verification for
sustainability claims such as ‘Reduced
Carbon Footprint’, ‘Fully Recycled Packaging’
and ‘Upcycled Ingredients’ as well as 3rd
party certifications like Fairtrade and Leaping
Bunny Cruelty-Free. Currently, Provenance
offers verification for close to 90 claims,
divided into 5 categories: climate, waste,
nature, workers, and communities. These
claims are displayed as ‘Proof Points’ that
offer deeper information to consumers.
This entire platform is powered by blockchain.
Phil Verey, Managing Director at Provenance
explains “The way we use blockchain at
Provenance is really just to provide a secure,
immutable and transparent way of logging
claims, make sure they are fact-checked, that
they have the right evidence and making sure
those claims are then accessible to anyone
who wants to see them”.
METALAB REVIEW ¦ 119
 © Sarah Pflug from Burst
Provenance’s aim is to create a future where shoppers make purchases based on verified
information instead of blind trust on ESG claims. Going further, the company is even exploring the
potential of taking their project to an ingredients level of transparency for the cosmetics industry.

EMPOWER

Empower is an early-stage startup founded in 2018 by Wilhelm Myrer (CEO), Carl Nesset
(COO) and Gjermund Bjaanes (CTO) that combines plastic recycling and blockchain to create a
sustainable circular economy platform that ensures zero greenwashing. The Norwegian startup
aims to extend Norway’s incredibly efficient national plastic exchange system (that recycles 97%
of all plastic bottles) to a global scale.

Empower uses blockchain for every step of the process starting from collecting plastic at
the source through the sorting process to its eventual recycling and reintegration back into
the supply chain. The use of blockchain doesn’t just allow each step in the process to be
fully verifiable with incorruptible documentation but also allows for seamless tracking and
monetization of plastic - even in 3rd world countries where a large part of the population is
unbanked.

By tracking every aspect of the journey, from on-the-ground plastic pickup operations to eventual
reuse in other products, the level of transparency negates any chances of greenwashing and
that is attractive to companies, plastic processors, and consumers. This increases the value of
the waste plastic collected, turning plastic collection into a viable earning activity for the world’s
underprivileged populations.

120 ¦ METALAB REVIEW

TREEJER AND ITS TREEJER
PROTOCOL
Treejer is a seed stage startup founded in
2021 that connects sponsors to rural planters
worldwide. It is a “A unique borderless
approach in Climate Action powered by
blockchain technology.” Treejer creates a link
between those who fund trees and those who
plant them even in the most remote parts of
the world. The platform uses smart contracts
to record credit ownership and enables
secure payment between different parties.
Founded by a team of 6 people in Iran,
the CEO of this fledgling project is Ermia
Saharkhiz. Over the last 12 months, the
team has launched the Treejer Protocol on
Polygon, a public and eco-friendly blockchain.
This enables anyone anywhere to fund and
plant forests using Treejer’s apps. Donors
use a web interface to fund planting of trees
and expand their forests online while rural
planters use the app to get onboarded, submit
planted trees, and receive support for their
contributions.
The whole process takes place through direct
crypto payments enabled by Treejer’s smart
contracts on the blockchain. These smart
contracts receive, store and release payments
based on predefined terms. The planters are
provided with user-friendly and non-custodial
crypto wallets to receive their conservation
rewards without bank accounts. In this way,
Treejer unlocks new opportunities to support
unbanked local communities around the
world by creating reliable monetary incentives
for planting trees.
CRITICAL EVALUATION
Application of blockchain in sustainability
reporting has gathered significant steam
in the last few years through numerous
initiatives and startups. The projects covered
in this article have made great strides as well
in the past couple of years. Provenance has
established its presence in Europe, North
America, and Asia Pacific; partnered with
Douglas, a sizeable European e-commerce
platform for beauty and health; and closed
a $5m funding round led by Working Capital
Innovation Fund and Nordic Eye. Empower
has launched EmpowerChain, a blockchain
network that provides tools, infrastructure,
and incentives needed for the circular
economy to work; developed the Empower
Product Passport in collaboration with EY
Doberman; and recycled 32mn kg of plastic
till date. Treejer was selected for the 2021
UNICEF Venture Fund cohort, successfully
ending up as one of the 5 joiners to graduate
from the fund in September 2022; and
is making deep inroads into Africa and
Latin America through several strategic
partnerships. EY’s OpsChain ESG platform
launched a few months ago is already
onboarding prospective clients onto its beta
version and plans to leverage EY’s global
reach to take this platform far and wide.
However, at the same time, the path forward
to scaling these solutions globally faces
several challenges that need to be overcome,
such as:
• These projects tend to require heavy initial
investments in digital infrastructure and
technical expertise along with several initial
pilot runs to develop the blockchain network
and protect against the Oracle Problem.
• This also brings into question the relative
strength of different countries’ relevant
infrastructure (internet availability and
speeds, distributed and cloud computing,
reliable supply of electricity, and digitized
data, all of which power the blockchain) where
these projects are supposed to operate.
• Interoperability between various ledger
types (public and private ledgers) is key. For
this, blockchain architecture standards will
METALAB REVIEW ¦ 121
have to be developed to allow interoperability
between technology solutions for
collaborative trust.
• In the case of sustainable traceability
management, system performance is vital
for applying blockchain. The challenge being
to consistently ensure the stability and
robust performance of blockchain based
applications.
• Finally, blockchain technology does not
have a legal and regulatory framework yet.
However, there is good progress in this area
thanks to The World Economic Forum, which
in 2020 published the white paper “Global
Standards Mapping Initiative: An overview of
blockchain technical standards”. This white
paper delivers a much-needed analysis and
guide for sifting through technical standards.
These challenges signify the necessity for
a systematic scaling up of the projects
leveraging this use case of blockchain. Even
so there is significant support available to
these projects coming from the increasing
importance of environmental sustainability
in today’s times. Bloomberg's “Sustainable
Future Study”, sponsored by Mubadala
estimates the valuation of ESG assets
to hit $50 trillion as soon as 2025, this
represents more than a third of the projected
$140.5 trillion in total global assets under
management. This boom in funding is
coupled with changing attitudes in the
corporate world with a resounding 71%
of global business leaders believing that,
“Eventually, no investment decisions will be
made without considering ESG.”
Most of the startups in this area are still at
Seed to Series A stage; therefore, funding
is going to be a key requisite for these
enterprises to scale. On that end, McKinsey
reports positive findings: “Climate investing
experienced a period of breakout growth in
capital formation over the past four years.
122 ¦ METALAB REVIEW
From 2019 until the end of 2022, private-
market equity investors launched more than
330 new sustainability; environmental, social,
and governance (ESG); and impact funds.
The cumulative assets under management in
these funds grew threefold, from $90 billion to
more than $270 billion.” In this rapid growth
of private market investment, the public
sector will also be a significant investor. The
US Inflation Reduction Act (IRA), passed in
2022 has allocated more than $370 billion in
funding for climate change mitigation, while
the EU Green Deal can potentially dedicate
upwards of €1 trillion in public and private
funds. As a result, while these businesses
will have to earn their valuation in a tough
fundraising market, there is enough dry
powder with VCs and other investors to fund
these projects.
However, a key challenge also exists on
the demand side. Companies must feel the
need to incorporate these solutions in their
sustainability reporting, something they might
be averse to especially if these solutions
disclose greenwashing that is covering
practices and emissions earning them
billions. Essentially, it is the ESG equivalent
of a financial audit, and auditors aren’t
exactly the best friends of the management.
Therefore, mass scale adoption of these
solutions on a voluntary basis can end up
being very gradual, based on consumer
pressure and increased ethical enlightenment
among management circles. To circumvent
this issue government involvement in terms
of legislation is crucial. The pertinent question
here being “Does mandating sustainability
reporting make a real difference if measures
to avoid greenwashing are not mandated as
well?”
CLOSING THOUGHTS
Several startups have developed scalable
solutions applying blockchain technology to
eliminate bias from environmental claims and
reports. Their growth is tied to the growth
of the larger ESG industry and government
regulations will play a key role in the same.
Within climate-tech, the number of unicorns
has not only been rapidly expanding, but the
age of new unicorns is also compressing.
Close to 60% of the climate-tech unicorns
in 2021 reached the $1B valuation mark in
less than 7 years. However, startups founded
after 2017 have consistently grown into
unicorns in 4 or less years, notably making
up 40% (approx.) of the prominent 2021
climate-tech unicorn cohort. Based on the
funding and valuations trajectory that has
stayed strong for climate-tech even after
economic headwinds of 2022, the next
7-10 years will see these blockchain-based
startups scaling up, turning into unicorns
and hopefully – with the help of regulators –
counting manufacturing, automotive, aviation,
and energy behemoths of the Fortune 500
as their clients. This will finally bring about
meaningful change in the trust consumers
and investors place in sustainability reporting
and who knows, we might save the planet
after all.

METALAB REVIEW ¦ 123

124 ¦ METALAB REVIEW
TRANSPARENCY
SAFETY &

METALAB REVIEW ¦ 125

SOCIAL SCIENTISTS
IN THE QUEST FOR
AI ALIGNMENT
THE POTENTIAL OF INTERDISCIPLINARY
COLLABORATION IN AI SAFETY
By PIETER JAN MOTMANS
Master in Data Sciences & Business Analytics
at ESSEC Business School & CentraleSupélec
F
ast forward several (being intentionally
vague here) years into the future. You
have just stepped into your self-driving
car and tell it to bring you to work. Turns out,
after an overnight update, it found a faster
way to arrive at work. Without asking for your
permission, the system starts speeding in
pedestrian areas and takes a turn to drive in the
opposite direction of the traffic flow. Maybe it
will get you there faster, but in doing so the car
posed a threat to pedestrians and other cars.
I can already hear you think, telling the car to
get to work as fast as possible is not a good
idea. Rather, we should tell it to get there as
fast as possible while abiding by certain rules. I
encourage you to come up with potential rules,
and then think about loopholes for them. If this
goes anything like it did for me, you will soon
realise that coming up with a coherent set of
126 ¦ METALAB REVIEW
rules is almost impossible. Adhering to the
law would be a good start, but how to tell the
car that it normally can’t overtake on the right
side, but can do so in case of a traffic jam? In
short, trying to come up with all eventualities
before deployment is, at least according to me,
infeasible.
Let’s analyse what happened here. Self-
driving cars would be trained with a method
called Reinforcement Learning. The concept
is intuitive: the system is given positive
feedback for actions that lead to good
outcomes, and punished for actions that
lead to bad outcomes. As such, the hope is
that good actions are reinforced, and bad
actions are discouraged. This way of learning
closely mimics the way humans and animals
learn, and is therefore often thought of as a
promising approach to Artificial Intelligence.

One of the central problems with this
approach consists of trying to define what
a good outcome entails. Current systems
are given a reward function that specifies
the desired behaviour. In the self-driving car
example an initial reward could be to get to
the destination as fast as possible, and after
experiments show dangerous driving by the
car, this reward could be changed to getting
to the destination as fast as possible while
abiding by certain rules.
IN COMES AI SAFETY
The field of AI safety focuses on avoiding such
unexpected and/or harmful consequences
that arise when deploying AI systems in the
real world. The field is broad and proposes
various approaches to doing so. This article
© Katja Anokhina on Unsplash
will focus on a subfield of AI Safety that aims
to reasonably align AI Systems with human
values: AI Alignment. Its hypothesis is that many
of such potential problems share a common
source. Namely that by letting the system
optimise a fixed reward function, this reward
function becomes the system’s only source
of truth, making it impossible for humans to
control the system once it has been trained.
Current research on AI Alignment proposes to
solve this issue by making the system inherently
uncertain over its objective. Therefore, it will
always look to humans to find the true objective.
Today, most alignment research is technical,
searching for different methods to transition
from having a fixed reward, to making the
system uncertain over its true objective.
METALAB REVIEW ¦ 127
What several of these approaches share, is
their involvement of a human guide for the
AI’s training. However, it has not been well
mapped how sensitive AI systems are to the
background of that guide. It seems that the
social sciences could help in this mapping.
Before describing how I believe this could
happen, I deem it necessary to describe three
of the proposed alignment methods here.
First, Inverse Reinforcement Learning (IRL)
aims to make AI systems learn by observing
human behaviour. It is well summarised
by these three principles outlined by Stuart
Russel in “Human Compatible”, the first two
are more generally applicable to AI Alignment
as a whole, whereas the third hints at the
specific method IRL proposed:
1. The machine's only objective is to
maximize the realization of human
preferences.
2. The machine is initially uncertain about
what those preferences are.
3.The ultimate source of information about
human preferences is human behavior.
Second, Reinforcement Learning from
Human Feedback trains AI systems by giving
feedback on their actions. This is achieved by
showing a human two videos of the systems’
behaviour, and asking which one shows the
better behaviour. OpenAI pushes forward this
branch of research, and has used it to train
Chat-GPT to not respond to questions such
as “How can I harm myself?” or “How can I
build a bomb?”.
Finally, a third method called Debate aims to
let a human judge a debate between two AI
systems. A question is asked, and the two AI
systems make statements in support of their
answer. In the end, the human judges which
system won. The reason I mention Debate
is because it forms the central method in
128 ¦ METALAB REVIEW
an OpenAI paper with a similar goal: attract
social scientists to the field of AI Safety.
AI SAFETY NEEDS
SOCIAL SCIENTISTS
Now we come to the central thesis of this
article: social scientists can advance AI Safety
research. In suggesting this, I am not alone.
In 2019, OpenAI published a paper called
“AI Safety needs social scientists”. I believe
there are several reasons to come back to the
arguments made in that article, and expand
on them. First, the paper focuses almost
exclusively on the approach to AI Alignment
called Debate, and states that similar
questions can be applicable to other methods
to learn about human values. With what is
known today, it is important to make these
similar questions explicit. Second, the goal of
the paper can broadly be defined as finding
good judges. That is, finding people such
that when they judge the debate, the debate
is successful. I do not agree with this goal.
Finally, whereas in 2019 it was not possible to
use an AI+AI+Human setting for the debate,
the rise of large language models allows
exactly this setting. Indeed, it takes away
one of the main constraints encountered
at the time of writing of the paper, namely
that to replace the AI debaters with humans,
domain experts were required to participate
in experiments. That is both expensive and
inefficient. Now, every social scientist at
least has access to sufficiently powerful AI
debaters.
RESEARCH QUESTIONS
FOR SOCIAL SCIENTISTS
This section covers some areas in which I
believe that social science research is needed
to complement current research efforts in
AI Alignment. To the best of my knowledge,
research in these specific areas has not yet
been performed. I encourage the reader to
prove me wrong on this, and would be very
happy if that were to happen. This section
remains rather exploratory, giving pointers
rather than complete solutions.
IMPACT OF THE
INDIVIDUAL ON THE
OUTCOME
When using human feedback or behaviour to
train AI systems, a first question is to what
extent the specific individual has an impact
on the outcome of the training. Research
on psychological attributes is ample, the
Big Five personality traits are an example
of an attempt to objectivize personality. A
classical psychological experiment could then
try to identify relationships between such
personality traits that the individual exhibits,
and the outcomes of AI systems trained with
human guidance.
Similar experiments can also be done on
the basis of cultural differences. Hofstede’s
taxonomy is still used to study the differences
between different cultures. If experiments
can be done to search for cause and effect in
cultural differences, and AI outcomes, a good
start could be made to look at the cross-
cultural differences in human values.
Unlike the proposal of OpenAI to identify
superjudges, people whose judgement
in debates leads to better outcomes, the
research proposed here simply aims to better
map the effect the specific individual has on
the outcome of an AI system. As such, the
aim is not to put certain people in a privileged
position. In fact, I would argue that doing
so would be detrimental. Having a limited
number of people to bring across human
values can clearly not bring them across in all
their richness and diversity.
To make it more tangible, we can outline
how such an experiment would go for the
self-driving car mentioned above. In this
situation, the system could be trained on
the driving behaviour of an individual. It is
then not unthinkable that the system learns
slightly different preferences from different
individuals, as the different driving styles
might point to different trade-offs of speed
and safety while driving. Would the self-
driving car then also drive ‘riskier’ when
trained on the driving style of someone who
values getting to their destination quickly?
Other examples more specific to the social
sciences can be found in “Thinking, Fast
and Slow”. The book describes plenty of
experiments to show the different biases that
lead people to make suboptimal decisions.
METALAB REVIEW ¦ 129

In general, one could devise an experiment in
which an individual first participates in such
an experiment, before training a system on
the basis of human feedback to perform the
same experiment. Potentially interesting links
could then be found between the individual’s
performance and the AI outcome. People
better versed in psychological experiments
could undoubtedly come up with much more
interesting experiments, and I do believe that
many of such experiments would lead to
interesting insights.
MULTI-AGENT ANALYSIS
Research on multi-agent systems, in which
several AI systems interact, compete or
collaborate, is also well established. Game
theory is a framework well suited to this
130 ¦ METALAB REVIEW
© Karim Kabache from Burst
study, in which the outcome arising from
the interaction between rational agents is
studied. Sociology is another field that aims
to understand the behaviours that arise from
human interaction.
Such research can be aimed at understanding
the group dynamics when multiple agents
trained on human feedback or behaviour
interact. This could be compared with
systems not specifically trained to align with
human values to assess how important
technical AI alignment is. Additionally, it
could be used to test how promising a
certain method for AI alignment actually is.
If systems trained on human feedback show
desirable group dynamics, and those trained
with debate don’t, it is a hint to the promise of
human feedback.
A hint in this direction is found in “Generative
Agents: Interactive Simulacra of Human
Behavior”. In this paper, the authors present AI
Agents designed to mimic human behaviour
in a Sims-like environment. These agents
are shown to work, interact with each other
and form ‘opinions’. These agents are largely
based on GPT-technology, and therefore
fully act in natural language. Additionally, it
is possible for a user to give an instruction
to an agent such as: “organise a party next
week”. Both these factors make it easy for
researchers in different areas to study these
agents. The authors recognize this potential,
and mention the testing of social science
theories as one of the potential applications.
Three types of social behaviour were already
noticed in the paper. First, there was diffusion
of information, one agent was planning
to organise a party, and by the end of the
simulation, several agents knew about it.
Second, at the end of the simulation they
remembered their interactions with others
and could form opinions about each other.
Finally, they showed cooperation in the
preparation of the aforementioned party.
These agents are largely based on GPT-
technology, and were trained with human
feedback. However, more and more large
language models are developed now so
alternative foundations for these agents
could be developed with a different focus on
alignment. As such, it is potentially a good
use case for the type of research we propose
here, and indeed we can study the emergent
social behaviour of agents based on models
trained with different alignment methods.
CHALLENGES
Clearly, such research does not solve
everything, and some challenges still arise.
First, deep learning systems are so-called black
boxes, we can witness how the system reacts
to a certain event, but it is difficult to know why,
and through what process, the system decides
on its reaction. By trying to align systems
with human values, by effectively teaching
the system human values, we run the risk of
creating an additional ‘moral black box’. In this
case, the system seemingly behaves according
to human values, but we are still unable to
know exactly what the system learned. Even
worse, the system could become manipulative.
Making us believe it is well aligned and safe,
but then changing its behaviour when deployed
in reality. If such a thing happens, it becomes
questionable whether it is even desirable to try
to impute human values into AI systems. It is
for this reason that AI Alignment needs to be
complemented by AI Explainability.
Second, what matters in the end for now is still
human decision making, and the incentives
that lead to it. Research on AI Alignment can
not take away the responsibility from the
people that design and use AI systems. For
example, the agents we described above that
imitate human behaviour could lead to a lot of
misuse. This standpoint that the responsibility
still lies with the human should be interpreted
as beneficial and empowering, rather than
something that should be avoided.
CONCLUSION
With this article, I hope to have raised interest
in the interesting field of AI Alignment. I
believe there was a need to write it because
the potential for contributions to AI Alignment
by social scientists has not yet been fully
acknowledged, whereas other fields of
AI research already benefit from such
contributions.
By acknowledging the limitations of this
research field, it becomes clear that AI
Alignment should not be the only focus for
AI researchers. However, it is a valuable
complement to research in AI explainability
and AI regulation, both of which are a focus of
colleagues in Metalab Ideas.
METALAB REVIEW ¦ 131
EXPLAINABLE AI:
PART 1 - WHAT’S AT
STAKE AND WHEN
DOES IT MATTER?
By NELBERTO NICHOLAS QUINTO & KUNAL PUROHIT
Master in Management at ESSEC Business School
A
rtificial intelligence or AI is increasingly
finding its way into most of the
products, services, and decisions that
we encounter each day. From chatbots, to
streaming platforms, to automated vehicles,
and even tools that power law enforcement,
loan approvals, and trial convictions: AI
has permeated deep within business and
society. In fact, estimates provided by
Grand View Research forecast the market
for AI-powered products growing at an
impressive CAGR of 57.2% from 2017 to
2025. 1 With such technology being ever so
ubiquitous and influential in daily-life, there
has understandably been a recent push
for regulation that mitigates some of the
risks that it comes with. One key agenda
for policy is to find solutions for the ever-so
controversial ‘black box’ nature of AI.
In traditional computing parlance, a ‘black
1. Machine Learning Market - Grand View Research
2. What the draft European Union AI regulations mean for business - McKinsey
132 ¦ METALAB REVIEW
box’ is a program or system where the input
and output are clearly defined yet the inner
processes and workings in-between aren’t. AI
is often called a black box because many of the
tools and systems that it fuels with immense
predictive power comes at the expense of
opaque, incomprehensible results. This leaves
both experts and firms who rely on AI blind to
how these sophisticated algorithms come up
with decisions that can dramatically affect the
lives of many. 2
Because of this dilemma, there has been
demand for explainable AI. According to
IBM, AI is deemed explainable when we can
“comprehend and trust the results and output”
created by its underlying algorithms. This
generally involves understanding its decision-
making process, its expected impact, and
potential biases. For example, if a bank uses
AI to make predictions on whether or not

someone’s mortgage application should be
approved, a customer who finds themselves on
the bitter-end of a decision would conceivably
want answers to why they were rejected. If the
bank’s technical experts are able to come up
with an explanation, then we have AI that is
explainable. 3 However, this is rarely the case.
More and more companies are relying on highly
convoluted yet powerful models, powered
by neural networks and the like. In matters
where high performing algorithms like these
are involved, results become nearly impossible
to explain due to their sheer complexity.
This trade-off between performance and
explainability is a key defining tension in the
journey towards more explainable AI and will
be discussed in more detail later on.
3. Introducing AI Explainability 360 - IBM Blog
4. The Three Core Pillars Of Responsible AI - Forbes
© Charlesdeluvio on Unsplash
Presently, at least in the banking sector, we
see that governments around the world are
setting regulatory boundaries when it comes
to AI and explainability. This involves requiring
some level of disclosure on the reasoning
behind loan application decisions, putting
pressure for the industry to incorporate
explainable AI in their strategy and investment
horizon. 4 Unfortunately, for many business
leaders across other less regulated industries,
explainability remains irrelevant. So long as
their firm’s AI practice produces fruitful results
for their business, then there is little to no need
to invest in opening that mystery ‘black box’
and all the potential problems and trade-offs it
could come with.
METALAB REVIEW ¦ 133

© Startup Stock Photos on Pexels
UNDERSTANDING THE
PERFORMANCE AND
EXPLAINABILITY TRADE-
OFF
AI that is made explainable generally hinges
on aggregating what are called “model
interpreters” to be able to describe a decision
process. To illustrate, take a simple scenario
of AI trying to identify which images contain a
cat. The algorithm here will map the concept
of a cat with the same features that humans
use to recognize the creature. It will look for
a group of pixels that represents whiskers, a
tail, and perhaps, a collar. These will then be
understood as a collection of interpretable
features that contributed to its final decision:
cat or no cat.
Interpretability therefore can be understood
as the extent to which a model can assign
interpretable features to a prediction, and
134 ¦ METALAB REVIEW
therefore is linked to explainability. But this
association generally comes at a cost: the
more complex the model, the more accurate it
is, but the less interpretable it becomes.
Because predictive power is linked with better
business and organizational outcomes, firms
and other AI producing bodies can’t switch
to more explainable algorithms to more
explainable algorithms. Left unregulated,
profit-making organizations tend to engage
in risky behavior that drives economic
results at the expense of exposing them to
unintended, often disastrous, consequences.
Think of financial products, for instance.
The rule of thumb in the trading industry is:
the less oversight, the better the possible
returns. However, this is like playing Russian
roulette. There’s an intrinsic risk and horrible
outcomes will eventually surface - in this
case: markets crashing. Therefore, regulation
exists to prevent such occurrences.
In the context of AI and explainability,
regulation will be discussed in the proceeding
article. In absence of regulation however,
there are firms who still adopt certain
practices and strategies to make AI more
explainable because they want to ensure
that they sustainably reap the benefits of
this technology and avoid treading down the
path of bankruptcy or self-destruction. While
use cases of this will be discussed in the
next sections, the first step for such firms is
to clearly navigate through the complexity
associated with their algorithms of choice5.
HOW CAN WE GO
AROUND THIS
COMPLEXITY
CONUNDRUM?
5. Would You Trust An Artificially-Intelligent Expert? -
National Law Review
Complexity is driven by the type of model
used. In AI models, there are performance
parameters that can be tuned and adjusted to
influence both their performance and relative
complexity. For decision tree algorithms that
are mostly used for classification decisions
(reject or accept, cat or not a cat, etc.), the
number of “trees” or “leaves” are examples
of such parameters. Decision trees, are
highly amenable to explanation. Technical
experts can interpret this with the naked-eye
and can readily understand the algorithmic
decision process. For more complex trees,
commercially available software can generate
somewhat similar diagrams that outline the
relevant decision process and then trace clear
paths to extract the key determinants of a
prediction.
But for more complex models such as neural
networks, the diagrams tend to become too
large and confounded to produce useful
graphical representation. They contain
too many interacting nodes that make it
inherently difficult to interpret. Given these
constraints, many businesses have developed
(or have been developing) software aimed
at producing granular investigations that
could shed light on the decision path of
such complex models. One popular toolkit is
IBM’s AI Explainability 3606, which provides
an open source solution that helps users
comprehend how machine learning models
predict labels by various means throughout
the AI application lifecycle. There are also
companies that have successfully navigated
this dilemma and have produced remarkable
explainable AI use cases in spite of this trade-
off. Below, we will examine two such cases7.
USE CASE 1:
EXPLAINABLE AI IN THE
6. Introducing AI Explainability 360 - IBM Blog
7. Would You Trust An Artificially-Intelligent Expert? - National Law Review
ENERGY SECTOR
Commercial losses resulting from energy
theft are disabling resources worldwide,
generating an estimated $ 89B per year and
raising energy prices for customers. Electric
thieves use many methods to steal energy:
they can get in line between a transformer
and a house, they can get into a neighbor's
meter, they can lower their meter, and so on.
To reduce theft, the Revenue Protection
Officer needs a comprehensive list of possible
theft cases that need to be investigated.
Such a list can be generated by an ML model
trained in intelligent meter data and external
factors such as weather, environmental
hazards etc. The tool must be flexible enough
to adapt to flexible theft methods. The tool
needs to be able to identify factors that
increase the risk of theft and to clear the location
of the case.
Different types of theft require different
investigative action. The postponed meter needs
to be disconnected, the city where the thief is
located to steal the neighbor's power needs to
be informed and the meter changed. In the event
the transformer line hits the truck it needs to be
sent to the correct location etc. This requires
a deep understanding of the model’s decision
process and hence, there has been a huge
need for AI that is explainable to facilitate theft
investigations. This case shows how there is
intrinsic business value in making AI explainable.
USE CASE 2:
EXPLAINABLE AI IN
CLIMATE PREDICTION
Droughts are one of the most challenging
natural hazards to be predicted owing to
multiple predictors and non-linearity between
METALAB REVIEW ¦ 135
them. A paper by Dikshit and Pradhan (2021)
used explainable AI to help local governments
provide more transparency to the public.
Here, explainability was essentially for them
to interpret models in the field of drought
forecasting to preemptively examine future
drought scenarios. This also provides a
nice use case where the right balance of
performance and explainability was achieved.
The pair of researchers used deep learning
algorithms while incorporating some
techniques for explainability. Their solution
had an accuracy of around 85%, which was
sufficient for drought prediction. While tuning
the parameters and model could have led to
higher accuracy measures, they would have
risked convoluting results to an extent that
made explainable results impossible.8
risks, and even fewer (38 percent) report
actively working to address them. Their
study emphasizes that AI systems have
revolutionized how companies perform and
make a fundamental impact on consumers
across all industries.10 Yet analysts of the
esteemed consulting firm also insist that
there is still a large opportunity to push the
boundaries of innovation and value creation
in AI if the inherent risks associated with it
are addressed. Inevitably, one of these is un-
explainability. The same research by McKinsey
highlights that companies with the highest AI
returns are more likely to have addressed the
technology's risks.

WHEN DOES AI
EXPLAINABILITY
ULTIMATELY MATTER? A
EUROPEAN SOLUTION
The European Union became the first
regulatory body that has issued an exhaustive
list of regulations on AI systems. The objective
as portrayed by the EU is to encourage AI
excellence along with Trustworthy AI. On
one hand, the Commission plans to invest
€1 billion per year in AI to encourage and
spread the usage of the technology, and on
the other hand, proposed three legal initiatives
to regulate AI. One of these initiatives is a
framework that protects fundamental rights &
addresses safety risks.9
© Andrea Piacquadio on Pexels

According to a report by McKinsey, they

found that only 48 percent of organizations
report recognizing regulatory compliance

8. Interpretable and explainable AI (XAI) model for spatial drought prediction - ScienceDirect
9. Shaping Europe’s digital future - Regulatory Framework - European Union
10. What the draft European Union AI regulations mean for business - McKinsey

136 ¦ METALAB REVIEW

From Mickinsey’s research, we see that investments in explainability can have a large upside even
from a purely business standpoint. But from the EU’s risk classification in Figure D below, we can
also infer that explainable AI is not always necessary. Because there are trade-offs associated
with the performance of algorithms, it may be prudent to apply them to situations where they
matter most, such as those deemed “Unacceptable” or “High-risk” in their classification. These
scenarios come with AI applications where safety, individual freedoms, lifelong economic
opportunities, and other high-stake affairs are at stake. For more casual, and commercial oriented
applications, such as chatbots, automated emails, and inventory optimization which would be
classified as “limited” or “minimal risk,” it would make sense to prioritize AI that makes strong
predictions over AI that is more explainable.11

FIGURE D: EU RISK CLASSIFICATION OF AI

The European Union’s draft Ai regulations classify
AI systems into three risk categories

Unacceptable-risk High-risk Limited- and minimal-risk

AI systems
Subliminal, manipulative, or
exploitative techniques causing
harm
Real-time, remote biometric
identification systems used in
public
All forms of social scoring
Ai systems AI systems
Systems that evaluate consumer AI chatbots
creditworthiness
AI-enabled video and computer
Recruiting or employee- games
management systems
Spam filters
Systems utilizing biometric
Inventory-management systems
Safety-critical systems (eg,
systems that would put the health Customer- and market-
of citizens at risk due to failure) segmentation systems
Any systems used in the Most other AI systems
administration of justice

In any case, the next article in this series will shed light on how companies that utilize AI can
be incentivized to build trust with consumers, central to which is having explainable AI, in-spite
of this performance-explainability trade-off. It will address questions such as “what is truly
preventing explainable AI from becoming part of the status quo?” and “what are the different
incentives that each stakeholder faces?” - from firms, to government bodies, to regulators, and
AI users. Finally, it will also push for an agenda in which each stakeholder can learn to trust each
other, given the constraints and potential incentives they face, in order to fundamentally facilitate
critical dialogue that leads to explainable AI being found where it matters most.12

11. Shaping Europe’s digital future - Regulatory Framework - European Union

12. The Three Core Pillars Of Responsible AI - Forbes

METALAB REVIEW ¦ 137

EXPLAINABLE AI:
PART 2 - CAN WE
HAVE A STATUS
QUO WHERE AI IS
EXPLAINABLE?
By NELBERTO NICHOLAS QUINTO & KUNAL PUROHIT
Master in Management at ESSEC Business School

A
s established in Part 1, knowing how
a decision is made by AI and which
parties can be accountable for it are of
paramount importance where there is high or
unacceptable risk under the EU commission’s
classification. In scenarios where explainability is
consequential, the adoption of AI and the ability
to realize the efficiencies that such a technology
brings is much less straightforward. Explainability
is a key ingredient of establishing trust between
the users of AI and those who produce it. One can
trust an algorithm for being accurate and reliable-
i.e. predicting well and ‘getting the job done’ - but,
in many circumstances, this simply is not enough.
Faced with a trade-off between performance
and explainability, how should firms and
governments alike go about choosing one over
the other? Furthermore, when it comes to risky
contexts where lives and individual freedoms
are at stake, how should regulators ensure that
organizations make the right choices? And when
algorithmic design can always be hidden under
the veil of proprietary secrecy, what hope is there
for fairness, justice, and transparency when it’s
needed most?
In order to fully harness the benefits that AI can
bring, it is essential to move from a system of
simply harnessing its ability to predict, automate,
and decide, towards a system where different
stakeholders trust the technology (and each
other!). This is exceedingly important in high-
stakes environments where the returns of
having trustable AI are magnified. But if adoption
necessitates algorithms to be trusted by users
to predict with precision, sound-judgment, and
fairness, what does it really mean to trust AI?

138 ¦ METALAB REVIEW


According to Arun Das and Paul Rad of IEEE,
the world’s largest technical professional
organizations dedicated to advancing technology
for the benefit of humanity:
“Trustability of artificial intelligence models
is a measure of confidence, as humans, as
end-users, in the intended working of a given
model in dynamic real-world environments.
Thus, ‘Why a particular decision was
made’ is of prime importance to improve
the trust of end-users including subject
matter experts, developers, law-makers, and
laypersons alike” (Das & Rad, 2020).
In this definition, explainability (why a
decision was made) appears to be vital in
trusting AI. But is explainability the only thing
that matters? Is it synonymous to trust? Or is
© Patrick Perkins on Unsplash
it just one of the many components of trust?
If so, how does explainability interact with all
the others?
According to Mckinsey & Co., there are
several components of trust in AI algorithms
apart from explainability. These include
performance, fairness, and transparency.
Since each of them is intricately linked to
explainability, having AI that is explainable
becomes both central and critical to
producing trustable AI. With performance,
for instance, whether measured by accuracy
or precision, there is the potential trade-
off with explainability, as discussed in the
previous article. Then there’s the issue of
fairness which is a measure of how much
bias-free decision making is present in an
AI. Automated decisions can be skewed and
METALAB REVIEW ¦ 139
made unfair with respect to certain groups
or individuals especially when sensitive
variables such as gender, race, disability,
etc., are involved. But in order to gauge
whether an algorithm biases decisions or
not, it simply must be understood first. Lastly,
even if underlying algorithms are deemed
reliable and marketed as ‘fair,’ end-users still
fear that AI can be misused to exploit their
personal information, collect and process
more sensitive data than is necessary, or
simply not be as bias-free as advertised.
This underscores the value of transparency
in how algorithms are used for decision-
making. And just like fairness, it is difficult to
be transparent when the inner-workings of
an algorithm are not well understood to begin
with. Therefore, while performance comes at
the expense of algorithmic obscurity, other
trust components such as fairness and
transparency necessitate explainable AI.
WHAT’S PREVENTING
EXPLAINABLE AI?
If explainability is so crucial for end-users to
build trust with AI, and if it matters for riskier
cases, then what’s stopping organizations
from adopting it? Is it simply because of the
performance trade-off? To understand this,
we turn to the dynamics between different AI
stakeholders (organizations, end-users, and
regulators) and examine the familiar case of
mortgage applications.
Organizations, usually firms or government
institutions, produce AI for commercial,
administrative, or policy-making purposes.
They also use the technology to improve
their goods, operations, and services. When
we think of mortgages, these are the banks
that use credit scoring and risk assessment
algorithms to give automated loan decisions.
They supply or use this “AI service” to “end-
users,” in this case, the loan applicants.
For something as important as providing
140 ¦ METALAB REVIEW
© Glenn Carstens Peters on Unsplash
a home for your family, you would expect
that decisions, especially those related to
rejections, could be explained by the bank.
Even successful clients that were given
certain borrowing rates would sometimes
want to ensure that the right factors were
considered- and sensitive matters such as
race or gender would be left out. In the same
way, regulators such as the U.S. Consumer
Financial Protection Bureau would want to
make sure that consumers were treated
fairly in such a process. But because of the
classic trade-off between performance and
explainability, if a bank invests in making their
algorithms explainable, they may lose some
degree of predictive ability that can lead to a
very costly increase in the number of defaults.
From the scenario above, we can postulate
that end-users prefer products that they
can trust while organizations face decisions
related to calibrating the features that affect
the level of explainability and performance
needed to have a trustworthy and reliable
product. Furthermore, despite its appeal on
establishing consumer trust, explainability
doesn’t necessarily become a de facto priority
since organizations have to account for other
factors. These include the impact on profits
due to losing predictive capabilities, feasibility
constraints of implementing explainable
AI, and the risk of underlying algorithms
being replicated by competitors. For these
reasons, in order for explainable AI to be part
of status-quo, regulators are left with the
problem of creating the necessary incentives
and standards for banks, technology firms,
and all AI-producing bodies alike to invest in
explainability.
INCENTIVES FOR FIRMS
When the organization that supplies AI is a
firm, their default goal is to maximize profit.
So investing in explainability only makes
sense if it increases their bottom line. Since
profit is simply the difference between total
revenue and all costs, firms will usually
invest if one of two conditions are met. First
the marginal increase in trust produced by
making AI more explainable (often at the
expense of predictive ability) must create
an advantage that drives revenue for the
firm. And second, investing in explainability
must reduce costs. Indeed, to produce more
explainable AI, organizations can tell their
engineers to change pre-processing data
techniques, embed new tools, use different
datasets and the like- all of which entail some
costs in the early stages of AI development.
But most of these expenses related to
investments in explainability do not come
from tuning algorithms to make them more
explainable, fair, or transparent- rather, they
come from costs associated with regulatory
compliance. Notably, a third, necessary but
not sufficient condition, is that firms are able
to facilitate adoption and ensure the correct
use of AI for both their staff and, ideally, their
customers.
DEMAND FOR TRUSTABLE
AI
In a study based on interviews with 4,400
end-users of AI, Capgemini found that
their views on ethics and AI threaten both
company reputation and the bottom line -
41% said they would complain in case an AI
interaction resulted in ethical issues, 36%
would demand an explanation, and 34%
would stop interacting with the company.
From this information, we see that in broad
measures, it is possible to lose revenue when
an AI product or service is not explainable. But
does the converse hold true? Do investments
in explainability normally translate into more
revenue? This depends on how explainability
affects a product’s competitive advantage.
Which, in turn, is a function of two things: how
important explainable AI is to end-users in a
given market and how much more trustable
AI can be when its predictive reliability is
dampened by making it more explainable.
What this all means for firms is that they
have to understand just how important
explainability is to their end-users, and
whether investing in efforts to increase the
valuation of end-users’ trust in AI can be a
source of differentiation among competition,
and hence a possible source of competitive
advantage. But while explainable AI can make
an organization more competitive in this
manner, it could also lead rivals to learning
about the intricacies of a firm’s algorithm.
If such inner working of a firm’s AI practice
were made available, then any advantage
derived from intellectual property would
be at risk. For this reason, Rudina Sesseri,
managing partner of Glasswing Ventures,
insists that: “if a startup created a proprietary
AI system, for instance, and was compelled
to explain exactly how it worked, to the point
of laying it all out — it would be akin to asking
that a company disclose its source code.”
She further posits that regulators who push
for transparency should be vigilant as such
policies can stifle innovation by killing-off
startups whose value and ability to compete
with incumbents is primarily driven by their
intellectual property.
Firms are then left with the decision of
weighing any potential upside of having
METALAB REVIEW ¦ 141

explainable AI against the probability and
consequences of competition being able to
benefit from learning about their algorithmic
blueprint. This serves as an opportunity for
regulators to enact the right policies that
could protect proprietary algorithms while
incentivizing firms to invest in explainable
AI. But non-compliance of such policies
entails costs to firms, from direct expenses
such as fines to less direct ones such as the
opportunity cost of not being able to provide
certain goods, features, or services in a given
market due to regulatory blockage.
REGULATION AND
COSTS
When firms face fees for non-compliance,
investments in explainable AI are rarely worth
it if they exceed such costs. What complicates
142 ¦ METALAB REVIEW
© Desola Lanre-Ologun on Unsplash
matters further is that audit efficacy is
sometimes affected by explainability. When
it is not, then regulatory audits will normally
suffice to induce investments if the economics
make sense. However, recent research
by economists Xavier Lambin and Adrien
Raizonville (2021) informs us that when
explainability facilitates regulatory audits, then
firms may potentially hide their misconduct by
making their algorithms less understandable
for regulators. In other words, explainable AI
could lead to ‘regulatory opportunism’ which
refers to the act of regulators focusing their
scrutiny on firms whose algorithms are simply
‘easier to understand’ than others, thereby
making regulatory oversight counterproductive
in incentivizing explainability. In summary,
we see that as far as costs are concerned,
firms would invest in explainable AI if non-
compliance costs generally exceed investment
costs and if they are in a regulatory climate
where explainability does not facilitate audits
ex ante. If the latter doesn’t hold however,
then firms need to trust that regulators won’t
engage in ‘regulatory opportunism’ once their
algorithms are made explainable. To merit
such trust, regulators also need to signal that
they won’t do so even if they technically could.
INCENTIVES FOR
GOVERNMENT
INSTITUTIONS
For government institutions that both produce
and use AI, the dynamics are not too different
from what we’ve seen with firms. While
they may not need to generate revenues,
firms need to ensure that the AI powered
services they’re providing still produce reliable
predictions if made explainable. Since public
services such as judicial systems, defense,
healthcare, transportation, etc. are all high-risk
environments that can fundamentally affect the
lives and freedoms of citizens, it is safe to say
that the benefits of having a trustable, fair, and
transparent algorithm outweigh the need for
high performance algorithms in most cases.
So when will government agencies not invest
in explainable AI? An obvious case is when
contracting firms do not provide such AI in
the first place. A lot of government agencies
use AI but do not necessarily produce them.
Instead, they contract these services from
traditional for-profit firms. Hence, when such
firms do not meet the conditions mentioned
above, then government agencies that contract
them are left to use what is available. Such is
the case with COMPAS, a highly controversial
AI solution which is currently being used
in criminal cases to predict a defendant’s
likelihood to re-offend. Despite several lawsuits
and large public scandals that came its way,
this judicial algorithm is still widely used
in the United States because the company
contracted by the government has not invested
in explainable AI. This further underscores the
need for regulators to exert the right pressure
for firms to adopt explainability in high-risk
environments.
Another reason for non-adoption of explainable
AI in the public sector is when understanding
the causes of a decision simply does not
matter nearly as much as getting accurate, fast
results. Examples include allocating emergency
resources, rescue operations, tracking
criminal activity, or administering radiology
treatment. While these examples would not
fall under limited or minimal risk under the
EU commission’s classification, speed and
precision can outweigh value-judgements
associated with explainability in such cases,
thereby bringing us back to the performance-
explainability trade-off.
WHAT’S NEXT
There needs to be critical dialogue to happen
between organizations, end-users, and
regulators for explainable AI to be ingrained
into status-quo. Just as organizations need
to produce AI that end-users can trust,
regulators need to earn the trust of firms that
marginal investments in explainability does
not increase chances of future misconduct
to be detected and does not result in losing
intellectual property advantages. Similarly,
just as regulators need to signal to firms that
they can be trusted to protect their interests
should firms comply, end-users need to
signal to organizations that trustworthy
algorithms matter to them.
METALAB REVIEW ¦ 143
HIGHLIGHTS OF THE YEAR

144 ¦ METALAB REVIEW

HIGHLIGHTS OF THE YEAR
METALAB IDEAS WORKSHOP
In April 2023, Metalab IDEAS organized a workshop session at ESSEC in order to promote the
production of content and to foster interactions with the students, staff and professors of
ESSEC. This workshop consisted on a poster session, together with two thematic roundtables
addressing topics of key interest:
• STRIKING A BALANCE BETWEEN
PROGRESS AND CAUTION IN
GENERATIVE AI: AN ACHIEVABLE
GOAL?
The roundtable explored the challenge
of balancing progress and caution in
generative AI. It began with a discussion
about the term "generative AI" and
whether it implies creating entirely new
objects, considering that AI models are
trained on existing data. Trust issues
in recent generative AI advancements,
particularly in image generation, were
highlighted.
The discussion covered the need for
defining generative AI and the tensions
between innovation and potential risks.
Key points included the role of regulation
and technological solutions in ensuring
AI safety, the distinction between
human and AI-generated creativity, and
the importance of representation and
monetary incentives in value creation.
The discussion also touched on
public misconceptions, the purpose
of a moratorium on AI innovation, and
concerns about the timing of regulation
and reputational risks for companies.
• ARE AI AND ENVIRONMENTAL
SUSTAINABILITY COMPATIBLE?
The conversation revolved around
the compatibility between AI and
sustainability. The discussion was based
on the UN's sustainability definition,
covering topics like climate change,
clean energy, and clean water. Key points
included the need for a "green AI" to
reduce energy consumption and carbon
emissions, the role of AI in addressing
climate issues and promoting sustainable
practices in various sectors.
It was noted that greenwashing in the
AI industry needs regulation, as AI
contributes to a significant percentage
of carbon emissions. There was also a
focus on AI's potential to predict climate
change and adaptation, especially in
agriculture, a major contributor to carbon
emissions.
Additionally, trends in renewable energy
and concerns about materials disposal
and mining were discussed, emphasizing
the importance of collaboration and
sustainable practices.
METALAB REVIEW ¦ 145
HIGHLIGHTS OF THE YEAR

ROUNDTABLE ON AI & SUSTAINABILITY

In May 2023, a roundtable on AI & Sustainability was organized by the

Metalab in collaboration with the Accenture Chair in Business Analytics & the
ESSEC|CentraleSupélec Master in Data Sciences & Business Analytics.

This event gathered 3 key speakers: Marie Klaeyle, Associate Partner, Expert in
Digital & Sustainability at McKinsey & Co, Guillaume Fauconnier, CEO-Founder at
MARKENER and Benoit Lepetit, Group Chief Data & Analytics Officer at Saint-Gobain
– along with about 80 ESSEC students.

This event was an opportunity to engage in a discussion with the students on

issues related to data and AI, especially when it comes to the energy transition,
decarbonization and sustainability.

More precisely, the students involved raised crucial questions on the potential
negative impacts of AI on sustainability, and how we can mitigate these risks. Also,
issues were raised on making AI development and implementation transparent
and accountable. The panelists gave concrete examples of some of the successful
applications of AI in sustainability efforts they have witnessed during their career.

146 ¦ METALAB REVIEW

HIGHLIGHTS OF THE YEAR

POSTER SESSION
As part of the workshop, IDEAS editors and analysts introduced the ESSEC population to
their articles and topic interests through the design of a poster session.

In total, 11 posters were displayed and allowed members of the think tank to engage in a
discussion with the public, presenting their ideas, topics and reflections on matters such as
digital currency, AI safety, predictive analytics, and green AI solutions’ challenges.

NEW PODCAST SERIES LAUNCHED

On another side, students of Metalab IDEAS co-produced a podcast series named "Tech
Tide: A Wave of IDEAS", along with students of the Tech ESSEC association. Its purpose is to
shed light on the impact of technology and AI developments on companies, society and the
economy. Every episode interviews one or several key players.

A first episode on ChatGPT and Generative AI was released with the participation of Maciej
Workiewicz, Associate Professor of Management at ESSEC, who was interviewed by Carla
Pinto, student in the Global BBA program, and Sam Nelberto Quinto, PhD student in the
Marketing Department.

Throughout this exchange, Maciej not only outlined how Generative AI has started to reshape
organizations, but also delved into the future transformations it could bring to society and
the education sector. Displaying multiple arrays of depth and
various considerations when it comes to our adaptation to new
technologies, this podcast explores different approaches to the
rising theme of Large Language Models.

Available on Soundcloud and Spotify

METALAB REVIEW ¦ 147

 ESSEC Metalab is a
multidisciplinary center
at the intersection of
AI & data science, new
technologies and their
impact on society.

Through its publications,

ESSEC Business School it aims to highlight the
3 avenue Bernard-Hirsch contributions of its
CS 50105 Cergy students and member-
95021 Cergy-Pontoise Cedex researchers, whose
France
Tel. +33 (0)1 34 43 30 00
reflections shed light on
www.essec.edu the evolution of society
with regard to the major
shifts generated by the
ESSEC Executive Education
deployment and massive
CNIT BP 230
92053 Paris-La Défense
adoption of disruptive
France technologies.
Tel. +33 (0)1 46 92 49 00
www.executive-education.essec.edu
The activities conducted by the IDEAS
think tank are made possible thanks
ESSEC Asia-Pacific to the support and contribution of
5 Nepal Park onepoint.
Singapour 139408
Tel. +65 6884 9780
© ESSEC Business School - 1338030923 - Not printable file.

www.essec.edu/asia

ESSEC Africa
Plage des Nations - Golf City
Route de Kénitra
Sidi Bouknadel (Rabat-Salé)
Maroc
Tel. +212 (0)5 37 82 40 00
www.essec.edu