AI-Powered Digital Twins for Sustainable Industry 5.0: A Framework for SDG-Aligned Innovation and Circular Value Creation

This chapter examines the revolutionary potential of Artificial Intelligence (AI)-powered digital twins (DTs) as strategic enablers of sustainability and circular production within Industry 5.0 ecosystems. It posits that DTs, i.e., virtual replicas of physical assets, function as intelligent mediators between operational efficiency and environmental stewardship. Drawing on examples from manufacturing, energy, logistics, healthcare, and infrastructure, the chapter indicates how AI-driven DTs help organizations align with the United Nations Sustainable Development Goals (SDGs), particularly SDG 7 (Affordable and Clean Energy), SDG 9 (Industry, Innovation and Infrastructure), and SDG 12 (Responsible Consumption and Production). A framework is proposed to illustrate how AI integration, DT deployment, and sustainability metrics can jointly accelerate circular production and decarbonization. The analysis highlights how cognitive DTs foster human-AI collaboration, enabling adaptive decision-making and continuous improvement across business functions. The chapter concludes with managerial and policy implications, offering a framework for harnessing DT ecosystems to create resilient, inclusive, and future-ready industrial landscapes.