- Steffen Dreher, Karl Prince
Examining carbon emissions more holistically
Global retail e-commerce sales transactions are expected to account for more than USD 4 trillion in 2020. One of the largest and most popular e-commerce sites is Amazon. The technology firm that started as an online marketplace for selling books has expanded not only to an online store that sells virtually everything but also diversified its offerings to cloud computing services, consumer electronics and physical stores. Amazon has been on the rise when surpassing Walmart as the most valuable retailer in the United States but also experienced further growth in its e-commerce business due to the Covid-19 pandemic. This external shock resulted in even more people ordering supplies online which increases the logistical challenges the company has to cope in its day-to-day operations.
Over time customers have become more demanding and expect fast delivery times as well as not having to pay for shipping. Across major cities, Amazon is now offering same-day delivery. Considering the logistical efforts that such a service requires, one might think that this will further increase the carbon emissions and environmental burden that e-commerce has on our planet. However, in early 2020 Amazon released a press statement that ‘while it may seem counterintuitive, the faster delivery speeds […] actually help us lower carbon emissions in line with our Climate Pledge to be net zero carbon by 2040 - 10 years ahead of the Paris Agreement. This is because these new facilities are in close proximity to customers, reducing the need for aircraft transport and generally decreasing the distance drivers have to travel to deliver packages to our customers’ (Amazon, 2020).
Research has shown that ordering products online as compared to making use of brick-and-mortar stores can actually have a positive impact on the environment. For instance, instead of driving to a physical store by car, delivering goods with dedicated delivery trucks can be beneficial, similarly to public transportation since these delivery trucks deliver multiple products to multiple customers at a time. However, this of course depends on various factors such as the mode of transportation a customer had chosen to go to a physical store. Additionally, researchers have criticised that such calculations often do not include other changes upstream in the supply chain that were required to enable such fast delivery times, for example reliance on air transport earlier in the delivery process or the requirement of setting up multiple delivery centres in close proximity of the customers. In summary, this certainly is a point of contention and further research as well as more transparency from companies is required for resolving such issues.
More generally, this should provoke a discussion about the negative environmental impacts of business operations in a more holistic way. For example, if an automotive company after the Covid-19 pandemic now decides to hold the majority of its meetings that require air travel via Zoom rather than in-person, this obviously leads to an increase in data traffic and emissions of Zoom. However, a more holistic view should take into account the benefits of reduced air travel when assessing such a decision. This is especially important since for mitigating anthropogenic climate change it is not decisive where the carbon emissions occur, but rather if they occur. As our economy has become increasingly interconnected, such a holistic view is needed to enable fact-based decisions in regard to carbon neutrality strategies. However, this has so far been lacking in much discussions about the increase of carbon emissions in the digital sector of our economy.