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Policy

brief

Policybrief

#117

January2025

UNCTAD/PRESS/PB/2024/3(No.117)

Fosteringenvironmentallysustainableelectronic

commerce

KEYPOINTS

Developingcountriescanleveragee-commercetoboosteconomicgrowthanddevelopment

Thee-commercelogisticschain(warehousing,packaging,transport,returns)needstoberethought,tolimittheenvironmentalimpactsofthisgrowingsector,particularlyofemissionsandwaste

Governments,businessesandconsumersneedtoworktogethertoreduceenvironmentalimpacts,byregulatingenvironmentalimpacts,promotingeco-friendlypractices,encouraginginformedconsumerbehaviourandimprovingtheevidencebaseforinformedpolicymaking

Globalinternationale-commerceanddigitaltradediscussionsneedtoexplicitlyintegrateenvironmentalsustainabilityconcernsandmakeuseofinternationalcooperationandtechnicalassistancetoaddresssuchconcerns

1

Policy

#117

brief

January2025

Electroniccommerce(e-commerce)isreshapingtheglobaleconomy,transformingconsumptionpatternswhiledrivingeconomicgrowth.Thevalueofthesectorrivalsthatofglobaltradeingoodsandservices,andkeepsexpanding.E-commerceplatformshelpmillionsofbusinesses,manyofwhicharesmallandmedium-sizedenterprises,sellonline,overcomingbarrierssuchasphysicalmarketaccess,infrastructuregapsandsocialconstraints.However,thebenefitsofe-commerceremainuneven,withmostdevelopingcountrieslaggingintheadoptionofonlineshopping.Itisalsocriticaltoensurethatthisglobaltransformationdoesnotcompromiseenvironmentalsustainability.Theenvironmentalimpactofe-commercedependsonthetype;business-to-consumere-commerceimpliesagrowingnumberofsmallerpackages,deliveriesandreturns,whilebusiness-to-businesse-commercemaybemoreefficient,withbulkordersrequiringlesspackagingandallowingforstreamlineddelivery.Thedifferentstagesofthebusiness-to-consumere-commercelogisticschainforgoods(warehousing,packaging,transport,returns)areexaminedinthispolicybrief,alongwithchangingconsumerbehaviour.Inaddition,theneedtorethinktheseelementsishighlighted,toreducetheenvironmentalfootprintofe-commerce,whilecreatingaregulatoryframeworkthatbalancesenvironmentalsustainabilitywitheconomicgrowth.1

E-commerceasacatalystfordevelopmentindevelopingcountries

Reducingemissionsthroughtheuseofrenewableenergyandoptimizedlogistics

Warehousinganddistributionarecentraltobusiness-to-consumere-commercebutsignificantlyaddtothecarbonfootprint.Large-scalewarehousesusedforinventoryandorderfulfilmentoftenemitmoregreenhousegasesthantraditionalretailcentresduetoincreasedtransportationandenergyusefromheating,coolingandlighting.E-commercetypicallyreliesonlarge,centralizedwarehousesfarfromurbanareas,increasinglast-miledeliveryemissions.However,emerginginnovationscansignificantlyreducetheenvironmentalimpacts.Forexample,inChina,in2023,solar-poweredlogisticscentresusedbyonee-commerceplatformreducedemissionsbyover21,000megatonsofcarbondioxideequivalent.2InPakistan,ane-commerceplatformusessolar-poweredfacilitiesandacouriercompanyhasadoptedsolarair-conditioninginordertoreduceenergydemand.3Inaddition,locatingwarehousesclosertoconsumerscanreduceemissionsbyshorteningdeliveryroutes.Forexample,inKenya,theintegratedlogisticshub

1Thispolicybriefbuildsonthefindingsinchapter5ofUNCTAD,2024,DigitalEconomyReport2024:

ShapinganEnvironmentallySustainableandInclusiveDigitalFuture(UnitedNationspublication,salesNo.E.24.II.D.12,Geneva).

Note:MentionofanyfirmorlicencedprocessdoesnotimplytheendorsementoftheUnitedNations.

2See

/en-US/document-1620276223567462400

.Note:AllwebsitesreferredtoinfootnoteswereaccessedinJanuary2025.

3See

/2021/08/22/daraz-revitalizes-the-e-commerce-ecosystem-with-

·100-recyclable-packaging-and-tree-plantations/

and

/fedex-sustainable-

warehouse-technology/

.

2

Policy

brief

#117

January2025

ofonecompanyreducedvehicletripsandcarbondioxideemissions.4However,suchmicro-levelfulfilmentcentresalsoposechallenges.Theuseofsmallersitesclosertoconsumersmayincreaseenergyconsumptionandinventoryacrossmultiplesitesandmightadverselyaffectthehealthoflocalpopulations.5Therefore,businessesshouldbalancelogisticsoptimizationandenvironmentalsustainability,byadoptingtechnologiesthatstreamlineinventoryandreduceexcessstock.

Recommendations

?Governments:Provideincentivesforrenewableenergyuseinwarehouses;andpromotelogisticscentresthatreducelast-miledeliveryemissions

?Businesses:Investinrenewableenergyandsmartwarehousemanagementsystems,tominimizeenergyconsumptionandemissions

Reducingpackagingandwastethroughinnovationandregulation

Excessivepackagingisahighlyvisibleelementofe-commerce.Goodspurchasedonlineoftenrequiremorepackagingthanthosepurchasedattraditionalretailcentres,toprotectindividualitemsduringtransit,increasingtheuseofcardboardandsingle-useplastics,aswellascarbondioxideemissionsandwaste.Forexample,intheRepublicofKorea,astudyfoundthate-commercegeneratednearlyfivetimesmorepackagingwastethanbrick-and-mortarretail.6Someinnovativepracticesinsustainablepackagingareemerging.Certaincompaniesshipproductsintheiroriginalcontainers,withoutadditionalpackaging.Forexample,inIndia,Amazonhasreplacedsingle-useplasticswithrecyclablepaper-basedmaterialsandinLatinAmerica,MercadoLibreusesForestStewardshipCouncil-certifiedpackaging,toensuresustainablesourcing.7Inaddition,Governmentsareincreasinglyregulatingpackagingwaste.Forexample,inChina,policieshavebeenimplementedtoreduceplasticsuseinlogisticsandinRwandaandothercountries,plasticbagshavebeenbanned.

Recommendations

?Governments:Strengthenrecyclingsystems;promoterecyclableand

biodegradablepackaging;andprovideincentivesforbusinessesusingeco-friendlypackaging

?Businesses:Userecyclablebiodegradablematerials;andadoptinnovative,waste-minimizingdesigns,suchasright-sizepackaging

4See

/news/jumia-opens-integrated-warehouse-facility-to-reduce-delivery-time

.

5BuldeoRaiH,2023,Urbanwarehousesasgoodneighbours:FindingsfromaNewYorkCitycasestudy,TransportationResearchInterdisciplinaryPerspectives,19.

6KimY,KangJandChunH,2022,Isonlineshoppingpackagingwasteathreattotheenvironment?EconomicsLetters,214.

7See

https://www.aboutamazon.in/planet/improving-packaging

and

https://sustentabilidadmercadolibre.

com/en/iniciativas/sustainable-purchasing

.

3

Policy

brief

#117

January2025

Reducingemissionsfromtransportationandlast-miledelivery

Transportingonlineorderssignificantlycontributestogreenhousegasemissions,particularlyduringlast-miledeliverytoconsumers.Emissionsareduetotheuseoffossil-fuel–poweredvehiclesandinefficientroutesandthedemandforfastshipping,whichoftenrequiresairtransportandroutesthatprioritizespeedoverthereductionofemissions.Incertaincircumstances,e-commercecanresultinlowerlevelsofemissions,forexampleifconsumerschoosehomedeliveryinsteadofdrivinglongdistancestobuyasingleitematastore.However,theuseofexpeditedshippingoftenoffsetssuchbenefits.Theprovisionofsame-daydeliverycandoubleemissionscomparedwithstandardshippingtimes.8Toaddresssuchchallenges,somee-commercebusinessesadopttheuseofelectricvehiclesandalternativedeliverymethods.Forexample,inChina,astudyfoundthatreplacingfossil-fuel–poweredvehicleswithelectricbicyclesforthelast-miledeliveryofbooksreducedemissionsbyupto71percent.9Governmentscansupportsuchshiftsbyinvestingininfrastructureforelectromobility,suchaschargingstations.Encouragingconsumerstochooseslowerdeliverytimesthatenableoptimizeddeliveryroutesandmoresustainabletransportmodescanfurtherreduceemissions.

Recommendations

?Governments:Promotetheuseofelectricvehiclesforlast-miledeliverythroughsubsidiesandinfrastructureinvestment;andcreatepublic

awarenesscampaignstoencourageslower,sustainableshipping

?Businesses:Investinlow-carbondeliveryfleets;andoptimizedeliveryroutesusingartificialintelligenceanddataanalytics

Reducingreturnrates

Returnratesine-commerce,particularlyforclothing,arehigherthanintraditionalretail,oftenduetoinaccuratedescriptionsandpoorsizing.In2022,returnsintheUnitedStatesofAmericaledto$816billioninlostsales.10Moreover,returnsinvolvepackagingwaste,transportationemissionsand,attimes,thedestructionofunsoldgoods,whichisparticularlyharmfulsincedisposalgenerates5–20timesmoreemissionsthanreuseorresale.11Innovativesolutionssuchastheuseofaugmentedrealitytechnologycouldhelpreducereturnsbyallowingconsumerstovirtuallytryproductsbeforebuying.Inaddition,someretailers,toencouragemoredeliberatepurchases,chargenominalreturnfees.InAfrica,Jumiauses“keep-and-refund”practices,reducingreverse-logisticsemissionsbypermittingcustomerstokeepcertainlow-valueitemsratherthanreturningthem.12

8See

/stories/how-online-delivery-in-asia-hurts-essential-workers-and-the-

environment

.

9ZhangLandZhangY,2013,Acomparativestudyofenvironmentalimpactsoftwodeliverysystemsinthebusiness-to-customerbookretailsector,JournalofIndustrialEcology,17(3):407–417.

10See

/media-center/press-releases/2022-retail-returns-rate-remains-flat-816-billion

.

11See

/circular-examples/frances-anti-waste-and-circular-economy-

law

.

12See

/news/jumia-shares-first-environmental-social-governance-report-highlighting-

its-current-sustainability-practices

.

4

Policy

brief

#117

January2025

Recommendations

?Governments:Bandestructionofreturneditems;andencourageeco-designprinciples,fordurableandrepairableproducts

?Businesses:Improveproductdescriptions;usedigitaltoolssuchasaugmentedreality;chargenominalreturnfees;andadoptimprovedreverse-logisticssolutions

?Consumers:Makeinformedpurchasingdecisionsbyreviewingproductinformation;andavoidover-ordering,toreduceunnecessaryreturns

Drivingchangethroughconsumerbehaviour

Consumerbehavioursignificantlyimpactstheenvironmentalfootprintofe-commerce.Theconvenienceofonlineshoppingdrivesoverconsumption,impulsivebuyingandthemakingoffrequentsmallpurchases,increasingemissionsandwaste.Marketingtacticssuchasflashsalesandpersonalizedadvertisementsfurtherexacerbateoverconsumption.Youngerconsumersareincreasinglyawareofenvironmentalimpacts;asurveyof16,000consumersin16countriesfoundthat,inacomparisonbydemographiccohort,over90percentofmillennialsexpressedconcernsaboutsustainability,comparedwithonly77percentofbabyboomers.13SuchawarenessoffersanopportunityforGovernmentsandbusinessestopromoteresponsibleshoppinghabits;Governmentscouldencouragethecreationofenvironmentallabels,tocertifysustainablee-commercepractices,enablinginformedchoices;andbusinessescouldoffereco-friendlyoptions,suchascarbon-reducedshipping,carbonoffsettingand/orminimalpackaging.

Recommendations

?Governments:Launchpublicawarenesscampaignsontheenvironmentalimpactsoffastshippingandoverconsumption;andintroduce

environmentalcertificationsfore-commerce,tohelpconsumersevaluateproductsustainability

?Businesses:Providetransparentenvironmentalinformationonshippingoptions;andofferincentivesforeco-friendlyalternatives

13See

/news/sustainability-conscious-consumers-leading-value-purchases-study/

.

5

Policy

brief

#117

January2025

Leveraginge-commerceplatformsforcircularity

E-commercehasanenvironmentalimpact,yetplatformscanpromoteresourceefficiencyandwastereductionbyenablingreuse,resale,swapsandtherentingofproductsandservicesbetweenindividuals.Doingsocanfacilitatethetransitiontocircularandsharingeconomies,easingpressureonscarceresourcessuchaswater,non-renewableenergysourcesandrawmaterials.14Platformsforclassifiedadvertisingenableconsumerstotradeusedelectronics,furnitureandclothes;inIndia,forexample,oneplatformreportedareductionofcarbondioxideemissionsby8milliontonsinoneyear,byreducingtheneedfornewproducts.15Innovativeapplicationsallowuserstoswapclothingandtrackenvironmentalbenefitswithanimpactcalculator,asusedforexampleinIreland.16Peer-to-peerplatformscanalsosupportthesharingeconomy,suchasthroughtheuseofride-sharing.However,reboundeffects,wherebythebenefitsofcircularandsharingsystemsarecounteractedbyincreasedoverallconsumption,canoffsetinitialenvironmentalgainsbyincreasingemissions.

Recommendations

?Governments:Establishregulationstomitigatereboundeffects

?Businesses:Advancecircularinitiatives,suchasbyofferingrepairsorpromotingresaleoptions

?Consumers:Participateinsharingsystems,prioritizingrepairsoverreplacementsanddemandingcircularity-focusedpolicies

Makinge-commercemoreenvironmentallysustainable

E-commercepresentsbothopportunitiesandriskswithregardtoresponsibleconsumptionandproduction.Makinge-commercemoreenvironmentallysustainablerequirescollaborationfromGovernments,businessesandconsumers,toaddresstheaspectshighlightedinthispolicybrief.Policymakersneedtocombineregulations,taxincentivesandothermeasures,toreducecarbondioxideemissionsandwaste,whilesupportingthedevelopmentdimensionofe-commerce.Consumersplayarole,byadoptingsustainablehabitsandencouragingbusinessestoprioritizesustainability.In2024,theGeneralAssemblyadoptedthePactfortheFuture,includingtheGlobalDigitalCompact,thegoalofwhichisaninclusive,open,sustainable,fair,safeandsecuredigitalfutureforall,withfiveobjectives,includingwithregardtodigitalinclusion;advancingdigitalinclusionrequiresapredictableandtransparentenablingenvironmentthat,amongotheractions,facilitatesthegrowthofe-commerce.Integratingsustainabilitywithe-commercegrowthcanhelpsupportenvironmentalandsocialgoals.Inaddition,environmentaldimensionsneedtobeemphasizedininternationaltradeagreements.Forexample,aprotocolondigitaltradeundertheAfricanContinentalFreeTradeAreaAgreementwasadoptedinFebruary2024;

14See

/development/desa/dpad/publication/un-desa-policy-brief-109-accelerate-action-

to-revamp-production-and-consumption-patterns-the-circular-economy-cooperatives-and-the-social-and-

solidarity-economy/

.

15See

/news/how-olx-india-users-helped-reduce-their-carbon-

footprint/article24078672.ece

.

16See

/fashion/2021/jan/29/reselling-repairing-and-swishing-the-rise-of-

sustainable-fashion-apps

.

6

Policy

brief

#117

January2025

implementationoftheprotocolcouldhelpstreamlinee-commerceoperationsacrossAfrica,fosteringcross-bordertradeandeasinglogistics.Inaddition,ajointstatementinitiativeone-commerce,negotiatedamong91membersoftheWorldTradeOrganization,isaimedatestablishingrulesfordigitaltrade.17However,atpresent,neithertheprotocolnortheinitiativehasmadeexplicitreferencetotheenvironmentalfootprintofe-commerce.Asafollow-uptobothprocesses,capacity-buildingeffortsneedtoaddressenvironmentalsustainability.Inthiscontext,UNCTADandotherinternationalorganizationscanprovidetechnicalassistance,fundingandtrainingwithregardtointegratingsustainabilitydimensionsintoe-commercestrategies.Doingsocanhelpempowerdevelopingcountriestoadoptmoresustainabletechnologies,improvelogisticsandpromoteresponsibleconsumption.ByfosteringcollaborationamongGovernments,businessesandconsumers,internationaleffortscouldcreateamorecohesiveglobalapproachtosustainablee-commerce,ensuringthatitsupportsbotheconomicdevelopmentandenvironmentalpreservation.

Policyrecommendations

Promotebettere-commercepractices

?Governmentandbusinesscollaboration:Governmentscouldcreate

regulationsandincentivesforsustainablepractices;andbusinessescouldinnovateandembedsustainabilityintooperations

?Sustainablewarehousingandtransportation:Governmentscouldpromoteresource-efficientinfras

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