Sustainability in E-Commerce: 7 Ways Your Brand Can Reduce Its Carbon Footprint
Global e-commerce is on the rise. Compared to 2019, e-retail sales worldwide grew by 27.6% in 2020, accounting for 18% of all retail sales around the globe. The growth of e-commerce consequently adds a growing number of delivery trucks to our roads.
Meanwhile, consumers are becoming increasingly sustainability-conscious with a pressing demand for sustainable e-commerce. A survey of 6,000 consumers in North America, Europe and Asia revealed that 72% of respondents are already actively buying greener products.
The shift towards more sustainable shopping together with the growing GHG emissions emitted by the e-commerce sector requires greener solutions. E-commerce companies benefit from this in many ways by strengthening their corporate reputation, being prepared for climate action regulations, remaining competitive in the industry and being particularly attractive to customers and employees.
Are you interested in learning more about the carbon footprint of e-commerce and ways to reduce yours? We will point out essential actions you can take to become carbon neutral. So let's dive right in!
The Carbon Footprint of E-Commerce
For most companies, the main drivers of carbon emissions lie primarily in Scope 3. This is also true for e-commerce companies. The example of pure-play home & living e-commerce platform home24 shows that Scope 3 emissions - those that occur outside the organisation, for instance, in the supply chain - dominate the corporate carbon footprint.
If we dive a level deeper into the categories of those Scope 3 emissions, we can see that the biggest Scope 3 emission driver for home 24 comes from transport and distributions. The reason is fairly simple: e-commerce companies rely on a complex logistics and delivery network, which is naturally reflected in the company’s carbon footprint. In fact, freight, delivery and packaging form the three main elements of an e-commerce company’s footprint.
According to logistics professor Alan McKinnon, last-mile deliveries are the most energy-intensive stage of a delivery footprint. With more and more people shopping online, the demand for last-mile deliveries is expected to grow by 78% by 2030, with e-commerce and food delivery companies competing to offer faster home deliveries. Unfortunately, speed deliveries almost triple the footprint of online deliveries. And if last-mile freight is not greened within the next couple of years, urban emissions will increase by at least 30% in the top 10 cities globally, resulting in 25 million tonnes of CO2 annually by 2030.
On top of that, e-commerce uses up to 10x more packaging compared to bricks-and-mortar. On average, a box is dropped 17 times during the shipping process. To make sure the customer receives the product in perfect condition, retailers are over-packaging. While many e-commerce providers already try and tap into sustainable packaging alternatives, packaging still often involves single-use material such as plastic.
How can we make e-commerce operations more climate-friendly? Tapping into the following 7 ways surely is a great way to start.
7 Ways for E-Commerce To Reduce its Environmental Impact
#1: Gain Carbon Transparency & Identify Your Biggest Emission Drivers
You can only manage what you can measure. Gaining carbon transparency and understanding your carbon footprint is therefore crucial to make your operations more sustainable.
Software solutions such as the Planetly Climate Impact Manager will help you understand your biggest emission drivers, including typical emission hotspots for e-commerce companies such as packaging and logistics.
Knowing where you stand will enable you to identify and implement high-impact actions to reduce your emissions over time.
#2: Switch to More Climate-Friendly Shipping Solutions
The demand for fast deliveries in e-commerce has never been higher. Already today, worldwide freight transport accounts for 8% of global carbon emissions, with last-mile shipping making up a large proportion of this footprint.
Effective ways to reduce the impact of shipping from e-commerce are already available and will continue to grow. Major carriers including DHL, FedEx and UPS have put climate action high on their agenda and offer environmentally-friendly programmes such as paperless invoicing, carbon neutral shipping via carbon offsetting and greener shipping options including bikes and electric vehicles.
You can also reduce last-mile delivery by establishing convenient pick up points near customers or partners so that orders can be dropped off in one stop instead of driving to each customer individually.
#3: Reduce Packaging & Make Unavoidable Packaging More Sustainable
How many times have you received a parcel and asked yourself what is inside such a big box?
Retailers often use standard boxes to ship all items and fill the free space with additional packaging material. Shipping items in smaller boxes will not only avoid unnecessary packaging material and waste, but also saves space on the transport, making it more climate-friendly. Given that packaging makes up 30% of the e-commerce carbon footprint, this is a very important reduction lever for your company.
E-commerce companies can also work towards avoiding non-disposable material such as single-use plastic and, instead, use recycled paper and other material for packaging and shipping. WILDPLASTIC, for example, collects discarded plastic from countries without proper waste disposal or recycling and brings it back into the production cycle by producing new materials and products from the recycled plastic. This saves up to 60% of carbon emissions. E-commerce companies like OTTO are already using shipping bags from WILDPLASTIC and also recycled cardboard boxes to deliver their orders. And then there are also end-to-end packaging partners such as Palamo who has made it its mission to make a lasting change in the way products are packaged, focusing on packaging solutions made of lighter weight and environmentally friendly materials.
#4: Increase Your Energy Efficiency
Sustainability for e-commerce goes beyond shipping and packaging. You should also look at your overall business operations, including the way you run your offices and warehouses.
In fact, electricity usage in your office and warehouses should not be underestimated and can be a key reduction driver for your company. Switching to a renewable energy provider would be the first essential step here, followed by making simple changes such as low energy lighting, reducing the temperature in the office and simply turning off any equipment that is not currently being used. Such behavioural changes will not only significantly reduce emissions but in turn also lower your energy bills - a win-win situation.
Footwear brand Allbirds is not only committed to run on 100% renewable energy for Allbirds owned & operated facilities, but also works closely with its finished good manufacturers on procuring 100% on-site renewables by 2025.
#5: Find Ways to Reduce Customer Returns
Returns currently cost retailers around € 70 billion a year. However, the cost for our planet is even greater: 15 million tonnes of CO2e and 2 million tonnes of landfill waste are created every year from US returns alone.
Research has shown that 30% of consumers purposely order more and return unwanted items when returns are offered for free. Stopping to offer free returns might make customers think twice before ordering additional items.
On top of that, creating detailed product descriptions, including high-quality images and/or videos as well as size guides, will help consumers pick products that they like and that will most likely fit them. Companies such as Mister Spex also offer digital fitting tools, using augmented reality or other technologies, enabling online shoppers to “try on” a product before purchasing it.
You can also look into solutions such as 8returns who offer a software for self-service returns that has a smart rules engine which prevents unwanted returns and offsets the carbon emissions of all remaining returns automatically. Plus, the software also reduces paper waste as paper return labels are no longer needed, and all returns are registered online.
For any returns that cannot be prevented, you should implement sustainable return policies and processes and ban returned items from being destroyed - unfortunately, this is still the reality for many businesses as throwing goods away is cheaper than reselling them.
#6: Start Your Move Towards Circularity & Give Products a Second Life
Typically, products are disposed of after being used for some time. The circular economy aims to extend product life cycles, reduce waste to a minimum and close the loop of supply chains. Establishing a circular system is estimated to halve industrial carbon emissions in the EU by 2050.
You can encourage your customers to become part of the circular economy by providing opportunities to resell used products and buy second-hand ones. Outdoor apparel brand Patagonia, for example, has created Worn Wear: Customers can send in used clothes which are then turned into new products. And companies such as refurbed built their entire business model on extending product lives.
#7: Compensate Emissions That Cannot Yet Be Avoided
Carbon offsetting is a great way to compensate for emissions that your company cannot yet avoid. You can financially support high-impact climate projects that help to avoid or reduce emissions by, for example, protecting rainforests or helping to scale renewable energy globally.
Etsy was one of the first major online shopping platforms to offset 100% of carbon emissions from delivery and packaging - remember, those are the two major emission drivers in e-commerce. Every time an item is purchased on Etsy, the company will compensate for the emissions at no extra cost for buyers and sellers on the platform. home24 also decided to offset unavoidable carbon emissions while, at the same time, making reduction and avoidance of emissions an essential building block of the company’s corporate actions from now on.
If you decide to make carbon offsets part of your climate strategy, you should make sure to support reputable projects that are certified by international standards such as the Gold Standard.
The Sustainable Way Forward For E-Commerce
The future of e-commerce needs to be green. To pursue a holistic climate strategy for your e-commerce business, you need to look at the entire product life cycle: Design, packaging, logistics solutions and end-of-life management.
At Planetly, we support your business every step of the way, from footprint analysis to reduction, offsetting and communication.
Reach out to us to get started right away!