HOW DIGITALISATION ENABLES DECARBONISATION: A SYSTEMATIC REVIEW OF MECHANISMS, PATHWAYS, AND BOUNDARY CONDITIONS

Abstract

This systematic literature review examines how digital transformation and Industry 4.0 (including IoT connectivity, cyber-physical systems, advanced analytics, big data, and AI) translate into green/eco-innovation and measurable climate outcomes, especially decarbonisation and reduced carbon emissions, rather than rebound effects or efficiency-driven growth. Building on the observation that digitalisation is not inherently “green” and may raise energy demand and emissions in early adoption phases, the review synthesises fragmented evidence across firm, sector, and country-level studies to clarify the mechanisms and boundary conditions that shape environmental payoffs. Using a structured systematic review process, an initial 1,653 records were screened and progressively refined through time-bounding (2024-2026), subject-area filtering, keyword screening, and eligibility criteria, culminating in 80 open-access, peer-reviewed articles retained for thematic synthesis after full-text review. The findings indicate that digital transformation most often affects emissions indirectly through conversion pathways particularly green technology innovation, circular economy operationalisation, and governance/finance mechanisms rather than through direct emissions reductions.