As demand increases, online ordering is becoming more efficient, leading to a rise in the popularity of e-commerce.
Businesses and the planet must prioritize decarbonization to promote sustainability. Customers expect companies and supply chains to take responsibility for their actions while maintaining high standards of service and quality. As a result, enterprises must think outside the box and find various solutions to adopt environmentally friendly business practices and decrease the carbon emissions associated with e-commerce.
Analyze All Scopes of Emissions
Online ordering has fewer emissions than brick-and-mortar stores, but it doesn’t excuse the emissions inherent to the industry.
Online ordering is increasing, and side hustles, like dropshipping, make solopreneurs more reliant on third-party suppliers. As a result, e-commerce is expected to increase by 10%-20% yearly. Hyperconsumerism will force the sector to invent creative and permanent solutions to maintain resilience as volume soars. These are some of the most prominent sources of emissions within e-commerce:
- Website hosting
- Procurement and logistics
- Property and warehouses resources
- Energy and fuel
Most of these sources are outside the storefront in corporate partners’ hands. They come from the supply chain or web domains, which fall under Scope 3 emissions. These indirect emissions are traceable to customers and supply chains with how they source, handle and dispose of products in their lifetime.
E-commerce shops must look outside Scope 1 and Scope 2 emissions — direct impact and utility emissions, respectively — to collaborate with suppliers and customers. The goal is to more comprehensively adjust processes and minimize impact. Decarbonizing on all fronts will reduce e-commerce’s carbon footprint more noticeably.
Use Sustainable Packaging
Packaging and shipping account for a significant portion of e-commerce emissions. Decarbonization requires focusing on optimized, lightweight and sustainable materials. These variables must balance with a sturdiness that can withstand impacts and climate yet still get the package to its destination in one piece. Recycled materials are ideal, but here are some other ways to make things more sustainable:
- Use appropriately sized boxes
- Replace packing peanuts and other hard-to-recycle buffer materials with more eco-friendly alternatives
- Adjust products for easy stacking to maximize space and weight for trucks
- Eliminate putting boxes within boxes
- Consolidate and ship multiple items to the exact location in one package instead of numerous individual shipments
E-commerce’s carbon footprint can be further reduced if companies look beyond optimizing packaging for shipping and consider its end of life. Can customers recycle the packaging or use it to promote a circular economy? Are there options for sending resources back to the store for repurposing?
Leverage IoT for Reporting
Environment, social and governance (ESG) goals are becoming more mainstream, and tracking and reporting carbon footprints is vital to maintain customer loyalty and prove they aren’t engaging with greenwashing tactics. It promotes transparency, especially as environmental compliance becomes more popular. E-commerce shops must provide evidence that they adhere to regulations to minimize impact.
Internet of Things (IoT) devices with advanced sensors can connect with databases to collect information about waste, fuel and energy use, and carbon footprints. This data is helpful for process discovery and implementing ways to decarbonize e-commerce further. It reveals the most significant impacts to guide companies on what to prioritize.
There could be oversight regarding supply chain efficiency or countless tons of unrecorded waste heading to landfill that the company previously ignored. Technology can monitor these facets without needing immense time commitments from staff.
Cryptocurrency still needs to be regulated in most regions of the world, and it has no central authority to monitor its use. It’s known for its carbon footprint, as mining digital currencies uses significant amounts of power. It can become more eco-friendly, but solutions are still in the works and won’t become standardized until legislation passes in multiple countries. Many e-commerce companies are international, meaning collaborating to adhere to each unique regulatory body will require juggling and compromise even after laws pass.
E-commerce companies can reduce offering cryptocurrencies as a payment method until regulation and research catch up in finding ways to make it more sustainable.
Offering it as a payment option provides customers with more opportunities. However, it encourages a financial system with minimal environmental justification. Instead, e-commerce companies can focus on eco-friendly payment methods emphasizing flexibility while accentuating sustainability.
Invest in Meaningful Offsets
Most companies today focus on carbon offsetting. They’re investing in third-party outfits to take care of the climate responsibilities when investigations prove most of these efforts are phantom credits that amount to nothing.
There are tree-planting companies and transaction plugins to donate a portion of purchases to climate-friendly nonprofits. However, companies must invest in relevant, meaningful offsets related to their industry instead of defaulting to popular solutions like tree planting.
E-commerce companies can invest in startups directly impacting the industry, such as fleet electrification technology or biodegradable packaging research. Some projects invest resources into waste and landfill management, which e-commerce contributes to significantly.
The goal of identifying which carbon offsetting option is suitable for e-commerce is identifying where the sector is responsible for the most environmental damage and attempting to rectify those pain points.
The Carbon Footprint of E-commerce Is Fixable
Before demand gets even more intense for the industry, companies can tackle emissions now to get ahead and stay competitive. Progressive operations recognize the importance of reducing their carbon footprints and focusing on becoming more eco-conscious, as more consumers are demanding. E-commerce can look at innovative technologies and strategies to minimize impact while the world collaborates to change.
This article elucidates the escalating carbon footprint of e-commerce due to an increasing reliance on online ordering and the need for companies to focus on sustainability.
It discusses various sources of emissions within the e-commerce industry, such as packaging, transportation, returns, website hosting, procurement, logistics, property, and warehouses resources, and energy and fuel, most of which fall under Scope 3 emissions. Emphasizing the need to look beyond direct impact and utility emissions, the article suggests methods like optimizing packaging, leveraging IoT for reporting, considering the impact of cryptocurrencies, and investing in meaningful carbon offsets. The goal is to create a more sustainable, eco-conscious industry that aligns with consumer expectations and regulatory requirements.
The article encourages e-commerce platforms to rethink their strategies to minimize their carbon footprint. This can be achieved by using sustainable packaging methods, optimizing reporting using IoT technology, reconsidering the use of cryptocurrencies due to their significant carbon footprint, and investing in effective carbon offset solutions that directly impact the industry. It emphasizes that addressing the e-commerce sector's environmental impact is not only beneficial for the planet but is also crucial for maintaining customer loyalty and staying competitive in the marketplace.
Frequently Asked Questions
What are the main sources of emissions in e-commerce?
The main sources of emissions in e-commerce include packaging, transportation, returns, website hosting, procurement and logistics, property and warehouses resources, and energy and fuel.
How can sustainable packaging contribute to decarbonizing e-commerce?
Sustainable packaging can reduce carbon emissions by optimizing material use, eliminating unnecessary layers, and using eco-friendly materials that can be easily recycled or repurposed.
What is the role of IoT in e-commerce sustainability?
IoT devices can collect data on waste, fuel and energy use, and carbon footprints, helping to identify areas for improvement and track progress towards sustainability goals.
How does cryptocurrency affect the carbon footprint of e-commerce?
Cryptocurrency, particularly the mining process, consumes significant amounts of power, thus increasing the carbon footprint of businesses that accept this form of payment.
Why is it necessary to invest in meaningful carbon offsets?
Meaningful carbon offsets, such as investments in fleet electrification technology or biodegradable packaging research, can directly address the environmental damage caused by the e-commerce sector.
How can e-commerce businesses reduce their Scope 3 emissions?
Businesses can reduce Scope 3 emissions by collaborating with suppliers and customers to adjust processes, optimize packaging, and manage waste effectively.
What are Scope 1 and Scope 2 emissions?
Scope 1 emissions are direct emissions from owned or controlled sources. Scope 2 emissions are indirect emissions from the generation of purchased energy.
What are some examples of eco-friendly packaging alternatives?
Eco-friendly packaging alternatives include recycled materials, appropriately sized boxes, eco-friendly buffer materials, and methods that enable efficient stacking and consolidation of shipments.
How does environmental compliance affect customer loyalty in e-commerce?
Transparent reporting of adherence to environmental regulations can increase customer trust and loyalty, as customers increasingly value sustainability.
Why should e-commerce companies reconsider offering cryptocurrencies as a payment method?
Cryptocurrencies, due to their unregulated nature and high energy use for mining, can significantly increase an e-commerce company's carbon footprint.
What are phantom credits in the context of carbon offsetting?
Phantom credits refer to the ineffective or non-existent outcomes of some carbon offset investments, which do not effectively contribute to carbon reduction.
Why is focusing on the end-of-life of packaging important for e-commerce companies?
Focusing on the end-of-life of packaging can promote recycling and a circular economy, reducing waste and environmental impact.
How can e-commerce contribute to the circular economy?
E-commerce can contribute to the circular economy by encouraging sustainable practices like recycling and repurposing, especially in packaging and product lifecycle management.
How does the increase in online ordering impact carbon emissions?
Increased online ordering can lead to higher emissions due to increased demand for packaging, transportation, and energy for website hosting.
How can e-commerce companies stay competitive while reducing their carbon footprint?
Companies can stay competitive by leveraging technology for efficient operations, adopting sustainable practices, and aligning with customer values and regulatory requirements for environmental sustainability.