Consumer spending in ecommerce increased 14.2% in 2021, and unsurprisingly, many retailers have invested in strategies to take advantage of this growth. As ecommerce scales, however, we risk creating significant negative environmental impact with packaging, shipping, and last-mile logistics that leave a heavy carbon footprint behind. Ecommerce companies that invest in sustainability will not just do right by the planet, but also appeal to increasingly environmentally conscious consumers.
Increasing consumer awareness and focus on environmental sustainability have already driven changes in spending. One recent study showed that 73% of global consumers would change their own behaviors to reduce environmental impact. Another revealed that 50% of the growth from consumer packaged goods came from products marketed as sustainable. This focus on climate presents retailers with both an opportunity and a responsibility to align with consumers on their environmental values.
To deliver on growing consumer sustainability demands retailers must first measure and reduce their emissions. In doing so, there are common challenges that surface related to emissions from packaging and transportation. To overcome these challenges, many retailers consider when and how to offset residual emissions that cannot be reduced. Fortunately, there are several ways carbon offsets can be used to drive measurable impact at every transaction.
With NCX, carbon credits buyers can customize their purchases for local, geo-specific impact that supports family forest landowners across North America. This allows companies to enhance their checkout experience by enabling customers to automatically offset their shipping emissions and share stories about impact in forests and local communities specific to a state or region, as well as, impacts on wildlife habitat.
Unpacking the Challenges
Materials matter
There were 131 billion packages shipped worldwide in 2020. That volume has tripled in the past six years and is expected to double again in the next five.
Packaging often contains materials that are difficult to recycle and are harmful to the environment. Ecommerce companies have started packaging more items in bubble mailers which are lighter and allow for more items to be placed on planes and trucks, resulting in more products shipped per journey. However, mixed materials of plastic and bubble wrap generally have a higher carbon footprint compared to paper-based alternatives and often can’t be recycled, blocking the recycling systems and slowing down the process. Choosing sustainable packaging materials demands a balance between durability, circularity, and cost.
Going the distance
Transportation accounts for 29% of annual U.S. greenhouse gas emissions, more than any other sector. As ecommerce continues to grow, so will the transportation emissions associated with it. A study published by the World Economic Forum (WEF) found that the growth in last-mile deliveries over the next decade will lead to a 36% rise in the number of delivery vehicles in the world’s top 100 cities by 2030, leading to an emissions increase of over 30%.
Finding Solutions
Quantifying and reducing emissions from ecommerce is no easy task. Life cycle assessments and other tools can help companies understand their opportunities to invest in emissions reduction and where tradeoffs may exist. Below are some solutions that generally apply across all ecommerce companies:
Packaging
Retailers can reduce their carbon footprint from packaging by sourcing recycled materials and planning to reuse and repurpose as much of those materials as possible. Sourcing previously recycled materials alone could save millions of tons of waste from ever entering landfills. As an added benefit, sustainable packaging is typically lighter and less bulky, allowing more goods to be transported at once.
Transportation
Transportation is and will continue to be a major contributor to global emissions, particularly as the demand for ecommerce grows and more goods are shipped. We have opportunities to reduce transportation emissions by increasing the efficiency of delivery vehicle technology, changing how we transport goods, and using lower-carbon fuels or electrifying delivery fleets. As these transitions are made we must consider offsetting carbon emissions where they cannot currently be removed from the equation.
Where to use carbon credits
Retailers must first take the critical steps to set their sustainability goals, quantify their emissions, and reduce them wherever possible. After that point, many retailers find they still have a significant carbon footprint derived from the packaging and transportation of their goods to consumers. That is where carbon offsets come into play.
Ecommerce retailers have the benefit of existing “plug and play” solutions, using technology behind the scenes to calculate and include a carbon offset right into a purchase. Retailers have a few options in how this is done:
- Put the power in the customer’s hands, offering them the option to offset the emissions of their purchase during the checkout process
- Include the cost of offsetting a transaction automatically and make that offset cost clear during the checkout process
- Cover the cost for a customer in a show of goodwill
Whichever method you choose, the checkout experience can be enhanced with climate positive messaging, showcasing your brand’s dedication to making an impact. In some cases, transactional-based offsetting may be a poor fit; some businesses will purchase carbon offsets at designated times in the year retroactively to cover the previous period’s purchases.
Looking ahead, research from carbon market analysts and survey data from sustainability leaders both point to an expected increase in future carbon credit prices due to growing demand and limited supply. That’s why some businesses are planning ahead, pre-purchasing carbon offsets for their current and future emissions to capitalize on the available supply today.
Ensuring Quality in Your Offset Choices
Retailers must carefully consider the options available once they’ve decided to offset. A few dimensions commonly discussed when determining the quality of carbon credits are additionality, leakage, and durability (or permanence).
To reduce the amount of carbon in the atmosphere carbon offsets must provide a quantifiable benefit to the climate that would not have happened without their intervention. This is what climate experts call additionality. At NCX, we’ve adopted a fine-scale, dynamic approach to additionality where we base our carbon credits on detailed, data-driven, acre-by-acre analysis of scenarios that would happen in absence of NCX. This approach better captures the variability in forest management behavior across the landscape. Over time, the results are a more accurate and trustworthy estimate of additionality. Learn more in our baseline model of harvesting behavior.
Leakage is defined as efforts made to reduce emissions in one place simply shifting emissions to another location or sector where they remain uncontrolled or uncounted. Traditionally, forest carbon programs have dealt with this by taking standardized deductions to account for these shifts across timber markets. NCX uses leakage deductions that are aligned with industry standards.
Permanence refers to the planned duration of carbon storage and the “reversal risk” of the credits due to factors such as wildfire or unplanned harvest. At NCX, we only deliver ex-post credits, meaning the promised climate impact has already been verified with measurement and monitoring.
This is made possible by our annual contract length and tonne-year accounting approach which allow us to quantify offsets on an annual basis.
Traditional, long-term forestry projects use buffer pools where offset credits from individual projects are set aside into a common buffer reserve which functions as an insurance mechanism in case some credits are reversed before the credit duration is over.
The problem with this approach is that reversal risk is greatly increased in years 40-100 in long-term carbon credits particularly as climate change makes catastrophic wildfires and other natural disturbances more common.
A short project term coupled with a robust measuring and verification system increases certainty that buyers are paying for real, fully delivered, immediate climate impact.
Each of these areas deserves a great amount of consideration and careful inspection outside of the overview contained in this post.
Ready to Start Offsetting Your Ecommerce Footprint?
NCX is proud to connect brands with landowners across North America for neighbor-to-neighbor impact. All NCX carbon buyers get access to a customized impact dashboard to help tell their story to their customers, employees, and stakeholders. These dashboards highlight the impact made, landowners supported, and habitats of local wildlife enhanced.
We help organizations reduce their ecommerce carbon footprint at every checkout through a partnership with Patch, an API-first carbon removal marketplace.
The NCX and Patch partnership combines Patch’s innovative architecture with climate impact from NCX, enabling brands to easily offset the footprint of every ecommerce customer purchase with NCX forest carbon credits.
The API calculates and offsets the amount of carbon emissions at the checkout page of every order, increasing conversion rates and delivering immediate and verifiable climate impact.
The process is simple. Contact us to get started.
