Addressing the Environmental Footprint of E-Commerce

The landscape of global commerce has shifted dramatically since 2000, with the number of online shoppers surging from fewer than 100 million to more than 2 billion by 2021. UN Trade and Development estimates that the total value of e-commerce sales by businesses grew to USD 27 trillion in 2022 from USD 17 trillion in 2016, based on the 43 developed and developing economies constituting 60% of global GDP for which data are available.

Assessing the environmental impact of e-commerce is no easy task, especially given the scarcity or absence of reliable data.

Most of these sales are domestic, but international e-commerce is growing. At the same time, the shift to e-commerce has only just begun in most developing countries, particularly least developed countries. As UN Trade and Development's Digital Economy Report 2024 highlights, e-commerce is disrupting business models, economic processes, and consumption patterns, bringing with it both opportunities and challenges for environmental sustainability. Assessing the environmental impact of e-commerce is no easy task, especially given the scarcity or absence of reliable data. The overall effect, however, hinges largely on how businesses manage key operations such as warehousing, transportation, logistics, packaging, and the handling of returns.

The convenience of online shopping has spurred consumerism. Together with the logistical demands of delivering goods, this contributes to a substantial environmental footprint of e-commerce through carbon emissions from transportation to increased individual packaging waste and high return rates.

Not Just Waste and Carbon Emissions

Warehousing is a critical component of the e-commerce supply chain contributing to the environmental footprint. Distribution centres, especially when located on the outskirts of cities due to space and cost constraints, increase the distance goods must travel to reach consumers, exacerbating carbon emissions. These facilities also consume vast amounts of energy for lighting, heating, and cooling, further contributing to their environmental impact.

Warehousing is a critical component of the e-commerce supply chain contributing to the environmental footprint.

Packaging is another feature of e-commerce's footprint. Online purchases require more packaging than traditional retail, often involving multiple layers of materials designed to protect products during transit. This has led to a surge in packaging waste, much of which is plastic, which is difficult to recycle and contributes to pollution on land and in oceans.

The environmental challenges of e-commerce extend well beyond carbon emissions and waste. The need for speed in the digital marketplace is driving demand for faster deliveries, often involving air transport, which is far more carbon-intensive than other forms of transportation. High return rates generate further environmental costs, as returned items often travel long distances, sometimes crossing international borders for repackaging multiple times before they are resold or, in many cases, discarded.

The environmental impact of e-commerce is a complex challenge that requires a concerted effort across all stakeholders. The question then arises: Who bears responsibility for steering e-commerce toward a more sustainable future?

The answer is clear: governments, the private sector, consumers, and the international community must all play pivotal roles in developing and implementing solutions that balance economic growth with environmental stewardship.

Can Governments Lead the Charge?

Governments are uniquely positioned to shape policies that mitigate the environmental impact of e-commerce. Their role is crucial in setting the framework within which the private sector operates. At the national level, governments need to introduce and enforce regulations that impose environmental standards on the sector. This includes mandating the use of sustainable packaging, requiring companies to report on their carbon emissions, and encouraging the adoption of renewable energy sources across logistics and warehousing operations. For instance, subsidies or tax incentives could be introduced for companies that invest in green technologies, such as electric delivery vehicles or solar-powered distribution centres.

Urban planning also falls under the government's purview and must be revisited to optimize the location of warehouses and distribution centres. By strategically placing these facilities closer to urban centres, the distance goods must travel to reach consumers can be reduced, thus lowering transportation-related emissions. Additionally, governments could implement regulations that incentivize the use of slower, more environmentally friendly delivery options, such as rail or sea freight, over faster but more carbon-intensive air transport.

For developing countries, where resources are limited, development cooperation partnerships with regional organizations, multilateral finance institutions, and public-private partnerships can be instrumental in building the necessary infrastructure for sustainable e-commerce. This could involve investing in renewable energy sources, developing recycling and waste management facilities, and improving public transportation networks to support more sustainable logistics operations. Kenya's initiative to integrate solar energy into its logistics sector is a prime example of how developing countries can lead by example and create blueprints for sustainable practices jointly with growing the sector.

What Role Should the Private Sector Play?

The private sector, particularly large e-commerce platforms, holds great influence and bears significant responsibility for reducing the environmental footprint of online shopping. Companies must lead by example, adopting practices that not only enhance their bottom line but also contribute to environmental sustainability.

A key starting point for businesses aiming to minimize waste and reduce carbon emissions lies in optimizing their supply chains. By leveraging data analytics, companies can enhance route planning, cutting down the number of kilometres travelled and lowering fuel consumption. Alibaba's Green Packaging Program, which integrates biodegradable materials and reusable packaging, provides a compelling example of how sustainability can be effectively woven into the fabric of supply chain operations. Another critical area is the management of product returns, which represents a significant environmental burden. Companies can adopt policies that discourage excessive emissions by discontinuing free returns and improving product descriptions so consumers can make more informed purchase decisions. Additionally, businesses can explore ways to repurpose or recycle returned goods rather than discarding them in cases where they cannot be resold. Patagonia's post-consumer program in the United States, which repurposes returned items to reduce waste and conserve resources, can serve as a model for other firms to follow.

The private sector must also prioritize investment in renewable energy to power its operations. Several e-commerce firms have already begun to lead the charge. Daraz, for instance, has fitted solar panels on the rooftops of its warehouses, while Alibaba's commitment to renewable energy has led to substantial emissions cuts, with plans to extend solar power to all its logistics facilities by 2030. Other businesses should follow suit, incorporating solar, wind, or alternative renewable sources to reduce their dependence on fossil fuels and lower their carbon footprint.

How Can the International Community Drive Global Change?

With growing cross-border e-commerce, the sector's environmental impact is a global issue that requires a coordinated international response. Collaborative efforts across countries are critical to address the carbon footprint associated with logistics, the growing problem of packaging waste, and the integration of renewable energy into supply chains.

International cooperation is crucial to support developing countries to engage in e-commerce, especially as they adopt sustainable practices in their growing digital economies. A key priority is to bolster the sector's sustainability alongside consumer trust in online transactions, which could be achieved by adhering to the United Nations Guidelines for Consumer Protection. Multilateral and regional financial institutions can also contribute by offering both financial and technical aid for infrastructure projects that underpin e-commerce and the broader economy.

A critical aspect of this international cooperation is the promotion of dialogue between the digital and environmental policy communities. Fostering these conversations can lead to the establishment of good practices, such as the use of energy-efficient logistics and eco-friendly packaging. By encouraging the exchange of knowledge and resources on a global scale, countries can collectively find workable approaches to reduce the environmental footprint of e-commerce.

International organizations also have a vital role to play in promoting sustainable e-commerce. They can drive progress through research, capacity-building, and the dissemination of best practices that enable countries to embed sustainability into their e-commerce policies. Additionally, their efforts to improve data collection on the sector's broader environmental impact, beyond just carbon emissions, are crucial. In essence, collective international action is vital to curb the growing environmental footprint of e-commerce.

What Position Do Consumers Hold?

Consumers play a central role in the sustainability of e-commerce, as their behaviour greatly influences the sector's environmental footprint. The convenience and variety offered by online shopping have boosted consumption, but consumer habits-such as omnichannel shopping and frequent purchases-can exacerbate negative environmental impacts. Practices such as showrooming and fragmented, impulsive purchases contribute to overconsumption, increased transportation emissions, and packaging waste​.

While online marketing encourages a culture of consumption, younger generations, especially Gen Z and Millennials, are becoming more environmentally conscious, with surveys showing that more than 90% of these consumers are concerned about sustainability in their purchases. Nevertheless, challenges remain, as many consumers lack access to reliable sustainability information and are influenced by fast delivery options, which further elevate the carbon footprint of e-commerce.

Efforts to empower consumers through transparent information, public campaigns, and business incentives, such as eco-friendly packaging and slower delivery options, can drive more sustainable behaviours​. Ultimately, informed consumers are crucial to shaping a greener e-commerce model​.

The environmental challenges posed by e-commerce are formidable, but they are not insurmountable. With concerted efforts from all stakeholders, e-commerce can evolve into a driver of sustainable development. The following agenda for action outlines the steps needed to achieve this goal:

• promote better e-commerce practices: Businesses and governments must work together to nurture practices that reduce the environmental impact of e-commerce. This includes encouraging the adoption of renewable energy across logistics and warehousing operations, optimizing delivery routes to minimize emissions, and reducing the excessive use of packaging materials. Governments can support these efforts by providing incentives for companies that adopt sustainable practices and by enforcing regulations on sustainable practices, including reporting on their environmental impact.

Businesses should also explore innovative approaches to reducing the environmental footprint of returns, such as by offering virtual try-ons or more detailed product descriptions to help customers make informed purchasing decisions. Additionally, retailers can offer incentives for customers who choose more sustainable delivery options, such as slower shipping methods that are less carbon intensive.

• encourage environmentally conscious consumer behaviour: Consumer behaviour plays a crucial role in the sustainability of e-commerce. Public awareness campaigns can educate consumers about the environmental impact of their online shopping habits and motivate them to make more sustainable choices. For example, campaigns could highlight the reduced environmental impact of selecting slower delivery methods, opting for reduced packaging, and buying from firms that prioritize environmental sustainability.

Businesses have a vital role in shaping consumer habits by offering incentives for greener choices. Highlighting sustainably sourced products and rewarding slower, less carbon-intensive delivery options can drive more environmentally responsible behaviour.

Businesses have a vital role in shaping consumer habits by offering incentives for greener choices.

Governments should also regulate online shopping events such as Black Friday and Cyber Monday, which fuel overconsumption and environmental harm through aggressive marketing. Policies encouraging transparency and sustainable business models during these periods could mitigate their negative impacts. Overall, informed consumers and proactive businesses can accelerate the shift toward a more sustainable e-commerce landscape.

• improve the evidence base for informed policy-making: To develop effective policies for sustainable e-commerce, governments and international organizations need access to accurate data on the environmental impact of online shopping. This requires investment in research and data collection to build a robust evidence base. Governments could establish national databases that track key indicators, such as carbon emissions from logistics operations, the amount of packaging waste generated by e-commerce, and the environmental impact of product returns. Additionally, governments should require companies to disclose the environmental impact of e-commerce.

International organizations, including the International Telecommunication Union, the International Organization for Standardization, and the United Nations Environment Programme through the CODES initiative, play a vital role in coordinating global efforts to address the environmental impact of digitalization. By ensuring consistent and standardized data collection across countries, these bodies enable more accurate comparisons and better-informed policy-making. Building a strong international evidence base will allow governments to identify effective interventions and optimize resource allocation, fostering environmentally sustainable digital transformation.

The Path Forward

Digitalization created new opportunities for economic growth, particularly in developing countries. However, the environmental costs of this transformation are becoming increasingly clear. If e-commerce is to fulfill its potential as a driver of sustainable development, it must be managed in a way that minimizes its environmental impact.

This requires action at all levels-from governments and businesses to consumers and international organizations. By working together, the global community can create a digital economy that is not only economically inclusive but also environmentally sustainable. The insights from the Digital Economy Report 2024 provide a roadmap for how e-commerce can become a contributor toward environmentally sustainable progress.

This requires action at all levels-from governments and businesses to consumers and international organizations.

The stakes are high, but so are the rewards. If we succeed, we will not only protect our planet, but we will also ensure that everyone shares the benefits of e-commerce.

Shamika N. Sirimanne is Director, Division on Technology and Logistics, at UN Trade and Development.

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