rethink sustainability
Making e-commerce more sustainable: smart solutions that are turning the tide
Video published on https://lombardodier.lesechos.fr/ on 3 May 2021
Digitalisation and access to technology has transformed our consumption patterns and habits. And with Covid-19, worldwide lockdowns and an increase in working from home, online sales grew by 28% according to Statista, to $4,280 billion worldwide, in 2020.
And we are loving it.
Food, clothes, home furniture... all delivered to our doorstep in just a few clicks and in record time. While this rising trend has had positive impact on the emergence of new digital business models, widened the range of products available online and created more transparency when it comes to supply chains and product composition, it’s also taking a toll on the environment. In 2018, for the first time, giant online retailer Amazon acknowledged its massive carbon footprint. The company reportedly “emitted 44.4 million metric tons of carbon dioxide that year, a number that comes close to pollution rates of some small nations”1.
So what are the solutions to this one click-shopping culture? As we’re transitioning towards a net zero future and building a Circular, Efficient, Inclusive and Clean (CLIC™) economy, investing in change is essential.
Automated robots are taking to the streets
“Online shopping can in fact be much less damaging to the environment than traditional, in-store shopping—but only if we do it the right way”2. And this starts with a sustainable transport system. With online shopping, a single truck can replace multiple car trips done by multiple households, to stores. Yet, the problem sits with what we call the urban last-mile delivery. According to the World Economic Forum (WEF), “there could be 36% more e-commerce delivery vehicles driving around inner cities by the end of the decade – meaning more emissions, pollution and congestion”. And that’s not all, with urbanisation on the rise, demand for last-mile delivery3 is expected to grow 78% by 20304.
Solutions coming from automated robots to hydrogen-powered trucks can reduce CO2 emissions and tackle congestion. The company Starship, for example, offers robots for delivery service. Seamlessly bringing medicine, food and other supply to consumers, their technology is both cost-efficient and hygienic. Contactless, electronically powered and secure, these self-driving robots made business boom during the pandemic.
“Investing in such solutions could reduce CO2 emissions by 30%, congestion by 30% and delivery costs by 25% by 2030 according to the report”, according to the WEF’s report on The Future of the Last-Mile Ecosystem5.
Durable and low impact packaging
With an increase in online shopping comes an increase in packaging, single-use plastics, and therefore, waste. In the US, for instance, nearly a third of solid waste comes from e-commerce packaging and if we do nothing, this will only worsen. Today, most deliveries comes in artificial packaging, non-recyclable material and are difficult to reuse. Packets often include plastic wraps, thick polystyrene (PS) and the famous bubble wrap, all non-biodegradable.
Read also: What are our top tips to reduce plastic pollution?
Demand for both secure and sustainable packaging is expanding exponentially. French start-up Living Packets has developed an innovative solution. Their innovation? The Box. Created in Nantes, France, their packaging is made of extremely durable material and is infinitely recyclable. It can last up to 1000 trips before it needs reconditioning. What’s more? It’s smart and secure. Using cutting-edge technology, the box has integrated sensors to check the humidity, shocks and temperatures inside the box. It is also a cost-efficient solution for both e-commerce companies and customers, as it’s highly modular and reusable.
Get to know Living Packets in our video with Les Echos to find out more about their innovative packaging solution:
From consumers to investors, change must be global
Online shopping could be on its way to becoming a sustainable shopping alternative. Europe largest fashion-retailer Zalando announced in 2019 that it would become carbon neutral. The company said that around 90% of its operations use renewable energy and that it offsets carbon emissions caused by deliveries and returns as well as aims to be single-use plastic free in its own packaging by 2023. This is a good start. Yet, at Lombard Odier, we believe offsets cannot be the primary source of emission reduction. Companies must adapt their business model to reach carbon neutrality. Electric fleet, renewable energy, sustainable packaging will help reduce the sector’s carbon footprint.
Read also: How to reduce a company's carbon footprint in the race to net zero
But changes must be come from all fronts.
Consumers too, should, when possible, choose sustainable options, avoid returning items, buy in bulk and be patient. Last minute deliveries are putting immense pressure on transportation and supply chain systems.
As investors, our priority is to assess and assist the decarbonisation process so that we can manage associated risks and opportunities.
1 https://abcnews.go.com/Technology/wireStory/middle-herd-amazon-tackles-climate-change-65729200
2 https://www.nytimes.com/wirecutter/blog/shop-online-sustainably/
3 Last mile is a term used in supply chain management and transportation planning to describe the last leg of a journey comprising the movement of people and goods from a transportation hub to a final destination. This last mile very often takes place in inner cities increasing congestion and pollution.
4 https://www.weforum.org/agenda/2020/01/carbon-emissions-online-shopping-solutions/
5 idem
Important information
This document is issued by Bank Lombard Odier & Co Ltd or an entity of the Group (hereinafter “Lombard Odier”). It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document. This document was not prepared by the Financial Research Department of Lombard Odier.
Read more.
share.