Unless you’ve been living under a rock, you know that sustainability and environmental issues are among the top concerns today. As we’ve witnessed the hottest days on record this year, our worries surrounding greenhouse gas emissions are coming to fruition. The route is clear: we all must do something now if we are to avoid catastrophe.
The ecommerce sector is a large contributor to GHG emissions. In fact, MIT found that freight cargo is responsible for at least 8% of global GHG emissions, and it is on track to be the largest GHG emitter by 2050. Of course, not all freight comes from ecommerce, however, the growth of ecommerce has influenced a boom in the freight industry. Therefore, ecommerce companies have a duty to ensure that they are limiting their carbon footprint as much as possible, particularly when it comes to shipping.
Ideally, it would be the goal of all ecommerce companies to become carbon neutral and create sustainable shopping experiences. However, this isn’t a simple task. Let’s take a look at what carbon neutral ecommerce means and some ways that your company can achieve carbon neutrality.
What does it mean to be carbon neutral?
So, we know that carbon neutrality is important. But, what does it mean to be carbon neutral?
A carbon neutral ecommerce company is one that has a net zero carbon output. This should be primarily done through carbon emission reduction, and the carbon emissions that cannot be removed from operations can then be offset. The Net Zero Standard, a trusted carbon neutral framework, states that at least 90% of a company’s carbon output needs to be reduced, and the remaining 10% or less can be offset, in order to claim neutrality.
Companies cannot simply claim neutrality on their own. Their carbon footprint must be analyzed and confirmed by a trusted third party, such as the Net Zero Standard. Furthermore, it must take into account its supply chains’ carbon footprints as well as its own. According to Scala Group, up to 90% of a company’s carbon footprint comes from its supply chains. In order to be truly carbon neutral, a company must ensure that all aspects of its operations are clean.
The environmental impact of ecommerce
Although it is widely believed (even if it’s not fully proven) that ecommerce has a smaller environmental footprint than brick-and-mortar stores, its footprint is still significant. Its greatest areas of impact encompass excessive packaging (much of which is plastic) and GHG emissions, especially associated with shipping and deliveries.
The ecommerce sector has grown significantly, initially triggered by stay-at-home orders during the pandemic, and persisting post-COVID. According to Morgan Stanley, ecommerce sales currently stand at $3.3 trillion, and they could grow to $5.4 trillion by 2026. As such a huge sector, it has a massive impact on the environment, and its influence will only grow.
Undoubtedly, shipping is the biggest impact of ecommerce. Besides the carbon footprint associated with cargo freight, delivery methods can increase an ecommerce company’s carbon footprint, too. For example, long-distance transportation increases emissions production, and even fast options such as overnight or one-day shipping can increase carbon emissions as well. This means that companies that offer international products with a quick delivery time will have a much greater carbon footprint than those that supply their products regionally.
But, shipping isn’t the only way that ecommerce companies increase their carbon footprint. The production of plastic packaging comes with its own significant carbon footprint—in 2019, it was found that plastics were responsible for 3.4% of GHG emissions, 90% of which came from plastic production. Additionally, the mere act of running a website has its own carbon footprint. This is due to energy consumption in data centers and the disposal of electronic waste.
The reduction of carbon emissions within the ecommerce sector (and other sectors) is imperative for the future of our planet. According to the United Nations’ Net Zero Coalition, global temperatures should not rise more than 1.5ºC above pre-industrial levels. As the Earth is currently about 1.1ºC above pre-industrial levels, the situation is dire. This is why the Paris Agreement calls a 45% reduction in carbon emissions by 2030 and a net zero goal by 2050.
Ecommerce companies big and small have a carbon footprint to contend with. This footprint only becomes bigger as the company grows. It’s important to start taking responsibility now before your carbon footprint becomes overwhelmingly large.
What is the benefit of being carbon neutral?
The benefits of being carbon neutral are threefold: it has a positive impact on the environment, it enhances brand reputation, and it drives innovation in sustainable business practices.
Many studies have shown that consumers demand sustainability from the brands that they support. In a 2020 survey by McKinsey & Company, 66% of all respondents (and 75% of Millennial respondents) stated that climate impact is a consideration when making a purchase. Furthermore, the Harvard Business Review found that companies promoting sustainable products saw 5.6 times higher growth than companies that didn’t.
Customers aren’t the only ones paying attention to sustainability. A 2021 survey by the EY Global Institute discovered that 74% of investors would divest from companies with poor sustainability performance, and 90% said that they pay more attention to key environmental and social factors when making investment decisions.
Besides the improved brand reputation among investors and customers, pursuing carbon neutral ecommerce helps your company become a leader in its industry and push innovations in corporate sustainability. It’s no secret that business is competitive. If your company is growing as a result of its sustainability achievements, it pushes other companies to do the same. When this happens, it creates a market standard of carbon neutrality that ultimately benefits the planet.
Want more information? Download our State of Sustainability report.
What is carbon neutral shopping?
Carbon neutral shopping allows customers to offset the carbon footprint of their online shopping carts. For just a few extra dollars, they can opt to invest in offsetting projects to alleviate the carbon emissions associated with the shipment of their purchase.
This is especially important to individuals who pay attention to their carbon footprint. These are shoppers who bring their own reusable bags, steer away from companies that use plastic packaging, and do the best that they can to minimize their impact in their daily lives through sustainable shopping.
It’s important to note that although these carbon neutral shopping add-ons (like those offered through EcoCart) create a way for customers to offset their footprint, they should not be a crutch for ecommerce companies to use and claim carbon neutrality from these add-ons alone. Offsetting programs should only be offered as a way to take responsibility for carbon emissions that cannot be eliminated. When a company offers a sustainable cart, the add-on must only be one small piece of its carbon neutral ecommerce strategy. Providing a truly sustainable shopping experience requires a comprehensive strategy, including supply chain audits, minimizing returns, local or regional sourcing, and more.
Implementing carbon neutral strategies in ecommerce
Carbon neutrality is not an easy goal to achieve. It requires a thorough analysis of your internal operations, supply chains, freight and delivery, and more. Achieving carbon neutrality is not something that will happen overnight. It will take years.
But, don’t let this put you off. The sooner you start working toward carbon neutrality, the sooner you can start controlling your company’s carbon footprint. Here are some things that you can do to start moving toward carbon neutrality.
- Assess and measure your current carbon emissions. To reduce your carbon footprint, you need to know where you stand. This shouldn’t be done internally. Instead, invest in a trusted disclosure entity, like the CDP, in order to gain a comprehensive report on where you stand. From there, you can build your strategy.
- Invest in sustainable packaging. Plastic packaging has many adverse impacts on the environment, including the carbon footprint associated with its production. To reduce both your carbon footprint and your plastic footprint, invest in sustainable packaging options, ideally, that which is biodegradable. It’s important to remember, when choosing sustainable packaging options, you should make sure that the alternative you opt for doesn’t have a large carbon footprint associated with its production. Otherwise, this negates part of the reason for pivoting away from plastic.
- Optimize transportation and logistics. This will include things like improving protocols so that you receive fewer return requests, sourcing local materials and products to decrease transportation time, incentivizing multi-day shipments to your customers, or investing in delivery services that make use of electric vehicles or other cleaner methods. This will likely be the area where the most improvement can be made.
- Use green energy solutions for data centers. High-trafficked websites can actually amass a fairly large carbon footprint due to energy use. You can improve your footprint by either using green energy for your data centers or using a web host that uses green energy and/or has its own carbon neutrality strategies.
- Invest in carbon neutral shipping. On top of pursuing transportation and delivery that has a small carbon footprint, you can offset the carbon emissions that you are unable to eliminate through carbon removal projects. Your company can do this through carbon credits, and it can allow its customers to take control of their carbon footprint, too, with a carbon neutral shopping add-on. Just be sure that you avoid greenwashing in your messaging; you can only claim carbon neutral shipping if the off-setting add-ons are combined with other emission-reduction efforts.
Becoming a carbon neutral ecommerce company isn’t easy. This is why many companies choose to hire a consultant or create an entire team dedicated to the task. When developing your strategies, you must do more than change one or two things so that you look good on paper. Take plenty of time to ensure that your strategies are thorough and effective. Sometimes, it can take months or even years just to come up with a strategy.
What is a carbon neutral website?
The carbon footprint of the Internet is actually larger than you might think. Data centers require huge amounts of energy, which carries carbon emissions. Furthermore, carbon-neutral e-commerce needs to take into account things like its suppliers, the transportation of materials and products (both to the customer and from the supplier), and more.
A carbon-neutral website is one that can claim net-zero carbon emissions once all operations and supply chains have been audited. This should be done primarily through carbon emission reduction and fractionally with offsetting projects. It requires collaboration with suppliers and partners, and perhaps even some help from customers with offerings like carbon neutral orders.
Although carbon neutrality cannot be claimed until a comprehensive strategy has been implemented, you can partner with your customers to help bring you a little closer to your goals. Providing the option to offset some of the carbon footprint associated with delivery can help your customers feel good about their shopping decisions and create a more sustainable ecommerce shopping experience.