With the boom in online sales in recent years comes catastrophic environmental consequences. Emissions related to e-commerce operations, production, storage, and the global shipping of goods have skyrocketed and e-commerce companies such as Amazon and Alibaba are facing increased criticism from climate activists. To overcome the pressure, more and more companies have recently come up with greener strategies and sustainable solutions, however the problem remains. The industry is constantly expanding, and the goal of online retailers has remained unchanged: economic growth. Our modern capitalistic societies are founded on the idea of overconsumption and buyers are continuously tricked by efficiency and convenience, which lead them to oversee their actual impact on the planet. Until this changes, the strategies that e-commerce companies are adopting are not going to change the situation drastically. But what are these strategies and what else is needed to bring about the change that climate experts are calling for?
As we have explored in one of our recent articles, there is a misconception that online shopping is the least environmentally-friendly option for consumers. However, its degree of sustainability ultimately comes down to consumers’ behaviour. Researchers at the Amsterdam University of Applied Sciences and MIT found that the total amount of emissions generated by in-person or traditional shopping varies greatly depending on the means of transport in which consumers use to reach the store. Similarly, emissions deriving from online shopping depend considerably on the shipping method that consumers opt for. Indeed, these studies found that, when shoppers travel by car or similar means of transport, they have a much greater carbon footprint than when buying online, given that they do not choose express delivery. It is exactly the latter option, however, that worries experts.
In China alone, the amount of consumers choosing fast shipping is projected to more than quadruple by 2025. This concerning trend leads to a huge amount of carbon dioxide being released to the atmosphere, which comes not only from transportation of goods, as trucks are filled only half their capacity to ensure fast delivery, but also from packaging. When consumers place more than one good in a single order and ask for express delivery, companies are often forced to send these goods in separate packages, depending on the location of the warehouse that has them available, as they cannot afford to wait for all the products to come in before shipping them to the final destination.
Despite the huge success that the e-commerce sector has experienced over the last decade and the ever-rising growth of online shoppers, big companies are being constantly criticised by climate change experts and environmental groups for the catastrophic impact their businesses have on the environment. And in a world that is slowly starting to acknowledge and understand the threat of climate change, multi-billion-dollar e-commerce platforms are under increasing pressure from the public opinion, as they are asked to commit to more sustainable practices and greener operations.
Some of the world’s largest e-commerce companies, including the world leader Amazon, have indeed taken action to reduce their carbon footprint. Even China, who in recent years has quickly grown to be the world leader in e-commerce, is changing its approach. Its three largest online shopping companies – Alibaba, JD.com, and Pinduoduo – which alone make up 80% of the market and is worth more than over $2 trillion, have recently stepped up efforts to become more sustainable. However, the question remains: are the steps they have taken enough to counteract the impact that their constant hunger for growth has on the planet?
Amazon has grown exponentially in recent years to become the world’s largest online retailer by revenue and market cap. Jeff Bezos’ multi-trillion-dollar company has, not surprisingly, a huge environmental impact. In 2020 alone, the company was responsible for the equivalent of 60 million metric tons of carbon dioxide being released into the atmosphere, a 19% increase from the previous year. From the manufacturing of electronic devices to the storage, processing and worldwide shipping of millions of orders, Amazon’s business results in thousands of tons of carbon dioxide being released into the atmosphere as well as mountains of packaging. Furthermore, its more than 150 million “Prime”-members enjoy same-day or two-day shipping, resulting in more transportation-related emissions and huge amounts of waste, but at the same time also triggering consumers behaviour into overconsumption.
However, Amazon has also taken steps in the right direction. In 2020, the company invested massively into renewable energy and implemented it in 65% of its operations. Furthermore, it is said to have reduced the emissions coming from packaging, bringing the weight of outbound packaging down by around 36% and eliminating the equivalent of 2 billion shipping boxes. In 2019, Amazon co-founded The Climate Pledge, an agreement based on the targets of the Paris Climate Accord, and committed to adopting 100% renewable energy by 2025 and achieving net-zero carbon by 2040, as explained on the company’s website. Since then, more than 200 big businesses such as Visa, PepsiCo, Hermes and Heineken have signed the agreement. One year later, the company launched a US$2 billion Climate Pledge Fund to invest in companies manufacturing technologies and creating services to fight climate change. More recently, Amazon unveiled the Climate Pledge Friendly, a programme that helps environmentally-conscious consumers find more sustainable products in the company’s store, ranging from groceries and electronics to household and fashion goods. After facing criticism for its unethical and unsustainable packaging and shipping practices in 2019, the company responded with this new scheme, which it says will help lessen its impact on the environment. However, activists say it is only the ‘tip of the iceberg’, as the products labelled ‘climate-friendly’ are only an almost insignificant fraction of the millions of goods sold on Amazon.
The Chinese multinational technology company is another giant of e-commerce, owning the world’s largest marketplaces Alibaba.com, Taobao, and Tmall and other leading online commerce in China. The country is also home to the largest number of online shoppers in the world, where more than half of everything bought globally is projected to be bought online by the end of 2021. Taking advantage of online shopping’s growth in third-and -lower tier cities in recent years, as well as the expansion of electronic payment methods and cross-border online shopping, Alibaba has grown to be China’s largest e-commerce company, with 828 million active consumers. Over the past year, Amazon and Alibaba have been in a race to see who can offer the fastest global shipping, with both companies setting growth-related targets to capture a larger share of the global e-commerce market.
In December 2021, the Alibaba Group published the Carbon Neutrality Report, pledging, similarly to its western rival Amazon, to reach carbon neutrality by 2030. The company is planning to achieve this goal not only by making its supply chains, packaging, and transportation networks more sustainable, but also by “mobilising actions and behavioural changes among consumers, merchants and partners in China and around the world”, as the company’s chief executive Daniel Zhang explained.
Image Source: Alibaba Group
Concretely, Alibaba plans to invest massively in renewable energy, improve energy efficiency across its warehouses and shopping malls, develop smart transportation systems with autonomous and electric vehicles, and improve three aspects of its packaging: package “slimming”, packaging material and substitution as well as packaging recycling. The company had already announced changes in its packaging last year, when it pledged to use AI technology to optimise packaging size and weight.
Alibaba is also known for smashing record sales every year during Singles’ Day – taking place on November 11 every year – which has become China’s largest online shopping festival, surpassing sales of US popular shopping events Black Friday and Cyber Monday. It comes without saying that the nearly two billion orders placed on that day represent a huge burden to the environment. In 2021’s event, however, Alibaba highlighted environmental concerns, promoting green initiatives and sustainability amid China’s low carbon push. Nonetheless, many activists and climate-experts accused the e-commerce giant of not doing enough and claimed that Alibaba still lacks a comprehensive view of its actual environmental footprint. Indeed, in order to reach sustainability, the company should be clearer about its climate impact.
What Else Can Be Done?
Online shopping’s takeover of the commerce sector in recent years has brought tremendous environmental consequences. Capitalistic societies are responsible for shaping consumers’ behaviour and driving buyers towards overconsumption. It is certainly good to see e-commerce companies finally addressing sustainability and taking action to counteract the catastrophic impact that their operations have on the planet. While their multi-pronged efforts represent a step in the right direction, their actions amount to a fraction of what is truly needed to change the situation, given that the sector keeps expanding year by year at a rapid pace.
Ultimately, what benefits online retailers are the consumer’s choices. And, as long as companies keep promoting overconsumption, selling cheap goods and focussing on efficiency and convenience over environmental values, this industry will keep having catastrophic consequences on the environment. What is really needed, along with more sustainable production and selling strategies, is a change in consumers’ behaviour and this has to be triggered by companies themselves through a different approach and the promotion of new values that are more inclined towards sustainability rather than profit.