Sustainable eCommerce: Meeting market demands while safeguarding the environment and social systems
Sustainable eCommerce is the processing of online transactions in a way that does not degrade the natural environment, while also supporting social systems (communities and employees).
The need for sustainable eCommerce has never been more pressing. As the demand for online goods and services skyrockets, attention sharpens around the sustainability credentials of this industry.
In 2020, over two billion people purchased goods or services online, with sales surpassing $4.2 trillion worldwide. By 2025, it’s estimated that eCommerce sales will exceed $1.3 trillion. With this boom, we’ve seen a shift in consumer expectations for an anytime, any-place service. As such, it’s estimated that by 2030, the number of delivery vehicles on the road will grow by 36% in the top 100 cities worldwide. This will raise emissions from delivery traffic by 32%. In addition, packaging waste – namely plastic – from eCommerce sales has also soared, increasing from 2,077 million pounds in 2019 to 3,027 million pounds in 2022.
Business owners! Your sustainability journey starts here – with your initial green vision. To help you achieve this vision, the Green Business Bureau (GBB) is on hand to support you and negate the environmental and social impact of your online company. In this article, we will help you structure your eCommerce company around sustainability. Use this article as your sustainability guide, which will give you 12 top tips on how to develop a sustainable eCommerce business.
Understanding the issues associated with the expansion of the eCommerce industry
As already mentioned, the main environmental issues associated with the growth of eCommerce sales are:
- Excess greenhouse gas emissions, caused by the transportation and delivery of goods.
- Excess packaging waste, caused by the transportation and delivery of goods.
For instance, in 2019 alone, the eCommerce giant Amazon shipped more than 7 billion packages, generating some 465 million pounds of waste in the process.
Yet, the sustainability issues within eCommerce are not limited to the above. For example, an eCommerce business owner must also think about the environmental impacts of the actual products produced and the environmental footprint of digital operations.
In addition, sustainability also needs to address business effects on social systems. E.g. eCommerce allows customers to overcome geographical barriers and take their custom outside the local market. As such, reports have shown that 56,000 local retail stores and 670,000 jobs have been lost in the U.S. since 2008 – a change attributed to the expansion of online shopping.
Sustainable eCommerce in action: Real-life examples of an effective sustainability strategy
With these issues in mind, numerous forward-thinking companies have successfully incorporated sustainability into their overall business model to varying degrees of success. To illustrate this, we take the example of the online store Tropic Skincare. The latter Australian-based company is built with sustainability as a business foundation, e.g. they use responsibly sourced and cruelty-free ingredients. What’s more, Tropic Skincare is carbon-neutral certified, and partners with United World Schools to help fund education in impoverished communities.
In another example, the outdoor clothing brand Patagonia lives up to its commitment to sustainability in numerous ways. The apparel company ranks among the most sustainable companies in the world, and this sustainability extends to the brand’s eCommerce division. E.g. one notable development is Patagonia’s work to keep its products out of landfill sites. The company is further committed to social sustainability, by paying workers a living wage. It’s no wonder their loyal customers keep coming back. Aspiring entrepreneurs should thus look to Patagonia’s successful sustainable eCommerce model for inspiration.
Building a sustainable business online
The aforementioned companies have succeeded in large because they never wavered from their initial sustainability mission, to create a better business world. Aspiring entrepreneurs with a similar mindset can likewise play their part to keep sustainable eCommerce alive, starting from the ground up.
As far as business sustainability is concerned, there’s a myriad of business-specific benefits that must be highlighted. These benefits are detailed in our article “Why Is Sustainability Important In Business?“. We summarize these main benefits below:
- Business sustainability creates business value: For instance, a 2021 Morningstar U.S. Sustainability Leaders Index report found companies that scored well on key sustainability credentials returned a 33.3% higher return over one year, beating the broader market by 8%.
- Business sustainability meets the needs of your customers: Millennials represent the second biggest spenders, with a spending power of $600 billion (a figure only set to increase). Of these Millenials, 80% felt sustainability is “important” or “very important“.
- Business sustainability meets investor demand: According to a 2021 EY Global Institutional Investor Survey, 74% of institutional investors are more likely to divest from companies with a poor sustainability performance, with 90% stating they will pay more attention to an organization’s performance on key environmental and social factors when making investment decisions.
- Business sustainability attracts and engages top talent: 40% of millennials have taken a job because of a company’s sustainability credentials and would take a pay cut to work for an environmentally responsible business – with millennials making up the largest proportion of the workforce. In addition, sustainability can create a lasting positive workplace culture and environment. Workers are more productive when they’re happy, according to legal experts, and sustainable initiatives bring about a sense of purpose, which boosts employee happiness.
- Business sustainability reduces business costs: By improving efficiency, a sustainability strategy will reduce energy use and waste. These efficiency improvements will in turn boost operational profits by as much as 60% according to McKinsey. In addition, a sustainable business model addresses legislation pressure, helping organizations stay ahead of the compliance curve.
- Business sustainability improves brand reputation: On the contrasting end of the spectrum, not abiding by proper social and environmental practices poses a significant business risk. Any public relations disaster will cost a business money, and ruin an organization’s image.
Your 12-step guide to sustainable eCommerce
When starting an online business that’s committed to sustainability, there’s a lot to consider. Sustainable eCommerce involves the mindful consideration of packaging, energy needs, carbon output, shipping distances, impacts on local communities, employee welfare, and beyond. To build a solid foundation for your sustainable eCommerce business, follow the 12-step guide below.
Initiative #1: Reduce emissions from the delivery of goods
The Climate Portal at MIT reports that freight cargo is responsible for 8% of global greenhouse gas emissions, and trucks are the primary culprit. To reduce carbon emissions from business-related transport, consider shipping locally and sourcing from local and regional suppliers whenever possible.
Thinking about the latter, this initiative will have a positive social effect by financially supporting local businesses. The Local Multiplier Effect (LME) is a very valuable and hidden feature of our economies. This term refers to how many times dollars are recirculated within a local economy before leaving through the purchase of an import. Putting theory into action, one study found that for every $100 spent locally, $45 of secondary local spending was generated, compared to only $14 for big-box chains.
Emissions from the delivery of goods can be reduced further by consolidating deliveries on a circular route – shown to reduce emissions by ~90%. In addition, bill out logistic networks that deliver goods using urban fulfillment centers for direct-to-home deliveries. Urban fulfillment centers close to the consumer – rather than centers outside the urban core – can save 0.5Gt/year if all vehicles are upgraded to more efficient models.
However, your ultimate goal would be to revamp your delivery fleet to use electric options. Electric vehicles will eliminate your company’s scope 1 emissions (emissions from the direct burning of petrol and diesel fuels). GHG emissions from electric vehicles are counted as scope 2 emissions (emissions from energy bought) and can be eliminated by switching to renewable forms of electricity.
Initiative #4: Work to reduce the number of delivery returns
According to a survey by NRF, retail returns jumped to an average of 16.6% in 2021 (compared to 10.6% in 2020). Each year, it’s estimated that these returns amount to 5 billion pounds of waste. In addition, when an item is returned, it enters a reverse transportation chain, doubling emissions. Estimates from the sustainable returns company Optoro suggest that product returns release 15 million metric tons of C02e into the atmosphere.
As a sustainable eCommerce business, you must work on your returns policy. You want to clearly communicate to your customers the environmental consequences of unlimited shopping returns. You could even go as far as to provide your customers with the opportunity to waive their return choice – e.g. offering a discount for doing so.
Ultimately though, you need to be proactive and prevent the need for a product return in the first place. Provide customers with clear, accurate, and up-to-date product information. Use descriptive and understandable terminology.
Initiative #5: Make the switch to use sustainable packaging
Championing this initiative is the online clothing provider, TOMS. TOMS uses packaging that’s mainly made from recycled waste material (80%) and printed soy ink – even the retailer’s products are made from natural hemp, organic cotton, and/or recycled polyester.
As an eCommerce business following in the footsteps of TOMS, you’ll need to reduce packaging waste from delivery processes, and the packaging used for the marketing and containment of your product.
For the former, refer to our article 10 Eco-Friendly Packaging Alternatives for Your Business’s Shipping Needs.
For the latter, there are a few simple rules to abide by:
- Reduce or stop using non-biodegradable materials such as plastics or foams. Look for biodegradable plastic alternatives, such as polyhydroxyalkanoates (PHA) plastics.
- Choose the appropriate packaging size to prevent wasted material. Look to remove excess packaging, and ensure that all packaging used is practical.
- Make the switch to cardboard or recycled packaging, and packaging that can be recycled by the end user.
- Implement a packaging return system. For instance, the online clothing retailer PureWaste launched their RePack program, a reusable and returnable delivery packaging system. This simple solution is claimed to reduce trash and the release of CO2 emissions by 80% when compared to single-use packaging options.
Initiative #6: Make the switch to use greener shipping options
One study reported that, if they had a choice, 86% of Germans would rather choose environmentally friendly shipping options. In response to this consumer pressure, major courier services including DHL, GoGreen, DPD Total Zero, and GLS ThinkGreen offer climate-neutral shipping solutions. Reduce business emissions caused by shipping by partnering with greener courier services as such. Alternatively, you can offer climate-neutral shipping as part of your business offering.
For the latter, to help you get started, you can follow in DHL’s footsteps. DHL‘s climate-neutral shipping option calculates the C02e emissions according to ISO 14064 standards. Emissions are then offset using DHLs own climate projects according to the goals and specifications laid out in the Kyoto Protocol.
Note that greener shipping options will use a combination of zero to ultra-low-emission vehicles. Fuel options include biofuels (biomethane, bioethanol, and biomethanol), ammonia and hydrogen, and synthetic carbon-based fuels (methanol and synthetic methane).
Initiative #7: Reduce paper use
Accumulatively, retail receipts in the US consume 250 million gallons of oil, 10 million trees, and 1 billion gallons of water annually. Hence, making the switch to using digital receipts will significantly reduce the environmental impact of your online business. And this is a shift your consumers will support, with 89% stating they would like retailers to offer digital receipts as an option.
Yet, reducing the amount of printed paper used goes beyond simply doing away with paper receipts. You could also create a system that does not require your customers to print out their return slips by instead providing a return code. When a customer wants to return their item, all they’ll have to do is show this return code to the delivery company. Customers can then mark why they’re returning an item online rather than marking this information on a physical piece of paper.
Initiative #8: Provide high-quality goods to reduce consumption
As the clothing brand Levi, your eCommerce business needs to provide quality products that are designed to last. This keeps materials out of landfills, reduces resource demand, and gives added value to the consumer – sustainability and product quality go hand-in-hand.
Outlets such as Levi demonstrate how you can run a successful business by selling quality over quantity. That is, your brand needs to promote minimalism by meeting the needs of your consumers with products designed to last a lifetime.
Initiative #9: Expand your business offering by taking advantage of the resale marketplace
Expand your business offering by introducing a resale service that will allow customers to sell their used items. For instance, you can take initiative from H&M’s Close the Loop program that encourages consumers to trade in their old clothing in exchange for a voucher towards their next purchase. In another example, Patagonia also runs a trade-in values scheme, whereby customers gain in-store credit for used brand items that are returned
You can also expand your business offering by providing a repair service, which your consumers can use to repair items rather than throwing damaged goods away.
Initiative #10: Switch to a green web host
The environmental and social benefits of operating a digital business over running a traditional brick-and-mortar enterprise are still in debate. By removing the need for physical stores and operating within the cloud, by nature eCommerce businesses demand less space and resources. Yet, this doesn’t mean such businesses have no environmental or social footprint to be addressed. Thinking about this, of most significance for the digital business is the carbon footprint of running the online store.
It’s estimated that the average website produces 6.8 grams of CO2e per page view. Now, say that webpage then received 10,000 page views per month, this would produce 816kg of C02e per year – which is more than the emissions produced for a flight from New York to London.
A green web host is an online service that allows you to publish your website files onto the internet, yet the environmental impacts of doing so are mitigated. The environmental impacts are mitigated using programs such as carbon offsetting. For instance, Green Business Bureau member DotEasy – a Canadian web hosting company – runs their data centers using renewable energy while maintaining the centers using energy-efficient water-cooled chillers.
Initiative #11: Calculate your carbon footprint with the aim of offsetting business scope 1,2 and 3 emissions
If you’re looking to reduce your total business emissions, you’ll need to calculate your carbon footprint. A carbon footprint measures the amount of C02 released into the atmosphere as a result of a particular organization’s activities. An accurate carbon footprint measure will take into account direct business emissions (scope 1), and indirect emissions (scopes 2 and 3). Calculating business emissions can be a complex affair, which is why you need to utilize online carbon calculator tools.
To help, when you sign up for the Green Business Bureau, you’re granted access to our online carbon footprint calculator powered by Aclymate. The Aclymate platform is simple to use; offers accurate emission calculations; provides monthly emission tracking, reporting, and trends; is easy to integrate with Quickbooks, and provides automated sorting of GHG emissions.
Measuring your carbon footprint via Aclymate means you’ll be better placed to target emission hotspots to reduce overall business emissions. Whether that’s by implementing the initiatives already discussed, or by other means.
You’ll also need to categorize business emissions as per emission scope. Refer to the following articles for more information on business scope 1,2 and 3 emissions and how to reduce each:
- GHG Protocol: Scope 1 Emissions Explained
- GHG Protocol: Scope 2 Emissions Explained
- GHG Protocol: Scope 3 Emissions Explained
- How to Calculate Corporate Emissions Using Scopes 1 2 3 (With Examples).
For emissions that can’t be reduced, look to purchase carbon offsets. Use your carbon footprint calculations to guide your offsetting program. Refer to the following articles on carbon offsetting to help you create an effective and robust carbon offset portfolio:
- Carbon Offsets vs Carbon Credits: The 5 Rules of Carbon Offsetting
- How To Buy Carbon Offsets: 6 Certified and Vetted Options
Initiative #12: Make your home office eco friendly
Remote work cuts carbon emissions caused by traveling to and from the office, while also lowering demand for office heating and cutting back on office waste. Yet, this does mean that when thinking about creating a sustainable work environment, you must support remote workers in designing an eco-friendly home office.
Examples of green initiatives the remote worker can implement include:
- Home composting and recycling schemes to reduce waste.
- The installation of smart appliances such as a programmable thermostat and energy-efficient HVAC systems – for a less wasteful means of controlling the internal home temperature.
- Turning off appliances when they’re not in use to prevent energy wasted from vampire energy loss.
- Switching at-home bulbs to use energy-efficient LED alternatives.
Find out more about how you can create a sustainable home office by referring to the following articles:
- Optimizing the At-Home Office For Green Efficiency
- Eco-Friendly Office: Creating the Ideal Green Home Office Environment
Showcase your commitment to sustainability using the Green Business Bureau
As the world continues to feel the negative effects of climate change, the importance of business sustainability is readily apparent, no matter your industry. You can bring about lasting change by starting your eCommerce company down a sustainable path from the outset and keeping environmental and social stewardship in mind at every stage of your business plan.
Working hard to create a sustainable business is not something that should go unnoticed. It’s important your efforts are recognized through accurate and honest communication. This allows your stakeholders to make informed choices, and it also propels sustainable development by creating an open environment for collaboration and communication between businesses, the community, and governmental bodies. And this is where the Green Business Bureau (GBB) can help.
Running through GBB’s EcoAssessment and EcoPlanner means organizations are well-positioned to measure, manage and track how their business is performing on the sustainability agenda. Organizations can target specific initiatives, and check off those initiatives once they’ve come to completion. Successes can then be communicated to stakeholders using an organization’s public EcoProfile. Once more, the business will receive a green seal of approval to showcase their efforts.
Click here to sign up for the Green Business Bureau to build a better, greener, eCommerce business.