Stakeholders need to work together to make e-commerce more environmentally sustainable, including undertaking initiatives focusing on responsible and sustainable sourcing, energy-efficient logistics and production processes, and eco-friendly packaging and delivery solutions, according to a UN Conference on Trade and Development (UNCTAD) report.
UNCTAD has released its Digital Economy Report 2024 underscoring the urgent need for environmentally sustainable and inclusive digitalization strategies.
“As e-commerce continues to expand, understanding its various sustainability challenges, especially for goods, is crucial. E-commerce has reshaped consumption patterns and logistics, with multiple environmental effects. Precise impact assessments are hindered by data limitations. But e-commerce presents both opportunities and risks –from warehousing and storage to transportation and logistics, packaging, returns, and consumer behavior,” it said.
The report said governments and businesses have complementary roles in advancing environmental sustainability.
Governments can establish regulatory frameworks, provide incentives and engage in international cooperation, it said.
Businesses, on the other hand, can drive innovation, adopt sustainable practices and engage with stakeholders to integrate sustainability considerations into their operations and strategies, it added.
“Sustainable warehouse practices are essential for reducing environmental impact and promoting resource efficiency within e-commerce. Governments can adopt economic incentives, such as tax rebates and reduced VAT (value-added tax), to encourage e-commerce companies to invest in resource-efficient infrastructure and effective waste management in warehouses,” the UNCTAD report said.
Meanwhile, businesses should invest in energy-efficient solutions. This may involve installing energy-efficient lighting and opting for renewable energy sources, such as solar or wind power, to power warehouse operations.
“Businesses should also implement good practices to effectively manage waste, for example by optimizing inventory management to minimize overstocking or reducing packaging waste. They should also seek to separate different types of waste to facilitate recycling and proper disposal, and regularly monitor waste generation and disposal practices to identify opportunities for improvement,” it added.
The report also underscored the need for both governments and businesses to address employment, safety, and working conditions for warehouse workers to ensure social sustainability across the supply chain.
In terms of sustainable transportation and delivery, governments can introduce fiscal incentives to encourage e-commerce businesses to adopt eco-friendly delivery practices.
“This could include subsidies or tax breaks for investments in electric delivery vehicles and bikes, as well as support for low- and zero-emission zones. Exploring opportunities for integrating e-commerce deliveries with existing public transport networks or using public transport hubs as pick-up and drop-off points can help reduce vehicle miles traveled and promote sustainable transportation options,” it said.
Furthermore, developing credible sustainability labeling (eco-labelling) can help reduce negative environmental impacts and uphold good labor standards in e-commerce logistics, it added.
The report said efforts by businesses in this area are also important, including investing in electric delivery vehicles, cargo bikes, tricycles and scooters, alongside establishing charging infrastructure to support these eco-friendly alternatives.
“Businesses can incentivize more environmentally sensitive delivery methods, by encouraging consumers to choose slower and consolidated shipments to reduce emissions, optimize delivery routes, and offer click-and-collect options,” it said.
In terms of packaging, the UNCTAD report said governments should introduce legislations to regulate excessive e-commerce packaging, particularly focusing on reducing single-use packaging and cardboard boxes.
“A shift to more reusable, recyclable or biodegradable packaging can help to minimize waste and environmental harm. Initiatives promoting reusable containers, envelopes and capsules for product delivery are also recommended. E-commerce platforms and businesses have a key role in this context,” it said.
The report said consumers also have a central role to play, including by adapting their behavior towards more conscious and sustainable consumption and encouraging businesses to prioritize sustainability in e-commerce.
“More sustainable consumer behavior online can help to enable the demand for sustainable and ethically sourced products, minimize waste, conserve resources and enable a more sustainable lifestyle,” it added.
Likewise, international organizations can promote an environmentally sustainable e-commerce sector, including through research, capacity-building and training.
“Furthermore, partnerships with financial technology, e-commerce and digital companies should be fostered to drive investment in digital innovations that prioritize environmental and social sustainability, thereby advancing a more responsible and sustainable e-commerce ecosystem,” the UNCTAD report said.
