How does e-commerce stack up on emissions?
We look at how shopping online could help consumers reduce their carbon footprint.
22 February 2018
The full lifecycle emissions from a products’ consumption is in many cases dominated by the manufacturing processes and the product’s use. However, the emissions associated with the distribution of goods from manufacturer to consumer (the retailing process) also matter.
On the direct greenhouse gas (GHG) emissions produced by the retailer, the evidence is clear and in favour of e-commerce. Online stores require data centres (which are increasingly powered by dedicated renewable energy installations) and a relatively small number of large distribution centres. By comparison, the environmental footprint created by an extensive retail store network - that is temperature controlled and well lit - is much larger.
The indirect GHG emissions associated with the distribution of goods are, in the case of traditional retailers, usually consumer-driven. Quite literally in fact: most are generated when we, the consumer, drive our cars to the shops to buy something. However, for online retail these emissions may be reported by a logistics company such as Fedex, or the ecommerce retailer themselves if they have invested in their own delivery infrastructure. So we need to be careful that we are actually measuring comparably between types of retailer. In addition, the number of different ways we journey to the store, the e-commerce delivery method and the delivery network density, all factor in to the ultimate GHG emissions associated with a consumer purchase.
There are, however, a number of academic studies that are beginning to get more precise in the estimation of the current GHG emissions. A study by Dimitri Weideli at MIT Centre for Transportation and Logistics, assessed the carbon footprint of the buying process of a toy in an urban area. The research studied the buying process separated into ‘traditional shoppers’ and ‘cybernaughts’, looking at various different types of shopping process. In the chart below, which summarises the findings, the extent of the impact of customer transportation emissions for the traditional shopper is clear, as is the packing and parcel delivery related emissions associated with ecommerce.
Carbon Footprint - by buying process - of a toy in an urban area
Important Information: This communication is marketing material. The views and opinions contained herein are those of the author(s) on this page, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. This material is intended to be for information purposes only and is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. It is not intended to provide and should not be relied on for accounting, legal or tax advice, or investment recommendations. Reliance should not be placed on the views and information in this document when taking individual investment and/or strategic decisions. Past performance is not a reliable indicator of future results. The value of an investment can go down as well as up and is not guaranteed. All investments involve risks including the risk of possible loss of principal. Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. Some information quoted was obtained from external sources we consider to be reliable. No responsibility can be accepted for errors of fact obtained from third parties, and this data may change with market conditions. This does not exclude any duty or liability that Schroders has to its customers under any regulatory system. Regions/ sectors shown for illustrative purposes only and should not be viewed as a recommendation to buy/sell. The opinions in this material include some forecasted views. We believe we are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know. However, there is no guarantee than any forecasts or opinions will be realised. These views and opinions may change. To the extent that you are in North America, this content is issued by Schroder Investment Management North America Inc., an indirect wholly owned subsidiary of Schroders plc and SEC registered adviser providing asset management products and services to clients in the US and Canada. For all other users, this content is issued by Schroder Investment Management Limited, 1 London Wall Place, London EC2Y 5AU. Registered No. 1893220 England. Authorised and regulated by the Financial Conduct Authority.