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Cutting the environmental footprint of ecommerce is a win for all

Recycled cardboard price shot up during the pandemic

US Old Corrugated Containers (OCC) price ($)

Addressing the ecommerce problem

Packaging solutions

Ecommerce companies are increasingly having to confront the issue of sustainable packaging because of more environmentally conscious consumers, legal challenges from environmental groups5 and, particularly for the largest global players, reaching their operational capacities to meet demand.

Amazon’s “Frustration Free Packaging” initiative involves collaborating with brands to eliminate supply chain waste and redesigning packaging to be more sustainable. Coupang, the largest ecommerce platform in Korea, has introduced a packaging light model for some products and will accept used packaging for recycling. It has reduced packaging bulk by more than 60% and halved delivery distances while speeding up delivery times from 2018 to early 2020.

Cutting emissions

More companies like Amazon are starting to publish carbon footprint data to give investors a better sense of their emissions profiles. Uber, for example, tracks individual driver’s mileage, engine size and idle time to track emissions. It also requires drivers to only use hybrid or electric vehicles and has launched dockless e-bikes and electric vehicle products. In certain cities, Uber has added a small clean air fee to help the company become a zero emissions platform in European, US and Canadian cities by 2030 and globally by 2040.

Government initiatives

Where ecommerce companies are not seriously addressing their environmental footprints, regulators and governments need to step in. This can be necessary for small businesses, which are mostly focussed on growing market share, but local policymakers can often be effective in driving change early in the life cycle of new companies. While unit costs of compliance may be greater for smaller enterprises, they are more versatile and nimbler, which can make it easier to adopt new sustainability standards.

Sustainable packaging is a win-win situation

We are seeing significant innovation from companies in both developed and developing countries to deal with the challenge of sustainable packaging. Pressure from consumers, environmental groups and a gradual realisation from the companies themselves are helping to change ecommerce practices. Investors also play an important role by holding the industry to account for their delivery systems.

Solving the packaging waste and delivery problem can be a win-win scenario, where the environment and companies benefit. If an ecommerce business model is designed with sustainability in mind, it can be both economical and sustainable.

Footnotes

  1. groupm.com, December 2020
  2. Businesswire.com, June 2020
  3. Ibid
  4. Scientific American, January 2020
  5. https://www.greenpeace.org/usa/news/greenpeace-inc-sues-walmart-for-deceptive-recyclability-labels-on-its-plastic-products-and-packaging/

Important information

This content is for investment professionals only and should not be relied upon by private investors. The value of investments (and the income from them) can go down as well as up and you may not get back the amount invested. Investors should note that the views expressed may no longer be current and may have already been acted upon. Reference in this document to specific securities should not be interpreted as a recommendation to buy or sell these securities, but is included for the purposes of illustration only.