Measuring the Downside Risk of Green IT Investments: An Inequality-Theoretic Approach

This paper establishes an innovative analogy between the measurement of economic inequality and the financial risk management of sustainable technology investments. The transition to green computing—encompassing energy-efficient hardware, renewable-powered data centers, and carbon-aware algorithms—entails substantial financial uncertainty and pronounced downside risk. Conventional risk measures often fail to capture the unique volatility and relative scale of potential losses associated with these initiatives. Drawing inspiration from economic indices that quantify wealth dispersion [3, 6], we adapt and extend these frameworks, most notably the Zenga index [25], to assess the downside financial variability of investments in green IT, energy-aware computing, and sustainable systems. Building on the theory of deviation measures [19], we introduce a novel framework that accounts for the relativity between minor cost overruns and major financial shortfalls, a critical dimension for evaluating the economic sustainability of green technological transitions. The proposed model is implemented through a structured three-step procedure—data characterization, inequality-based risk quantification, and comparative analysis. These applications demonstrate how the proposed indices can guide investment decisions and prioritize risk mitigation in sustainable computing initiatives.