E-commerce Growth During COVID-19 and Its Impact on GHG Emissions

E-commerce takes off as the pandemic closes traditional retail spaces

If you have had more packages arriving at your place of residence this year than ever before, you are not alone. Since the beginning of the pandemic in March 2020, 8 out of 10 Canadians have reported purchasing online for the first time and have said they will continue to do so moving forward.E-commerce was already on the up-and-up before the pandemic. Statistics Canada reported $8.3 billion in online sales in 2012, which nearly tripled to $22.1 billion by 2018. The pandemic further accelerated the move towards e-commerce, with retail e-commerce sales reaching single-month record highs of $3.9 billion in May 2020, a 99.3% increase from February of the same year. Selling online has become essential for businesses that are not able to stay open during the pandemic and has continued to create new opportunities for business growth and continuity.

Increase in Transportation Related Emissions from Shipping

As e-commerce continues to accelerate, there are environmental considerations to factor in for businesses that measure their greenhouse gas emissions, particularly the impact that e-commerce has on their carbon footprint. As we transition to an e-commerce driven business environment, product shipping will be a potential carbon footprint hotspot for companies that were not previously addressing this part of their business in their greenhouse gas (GHG) management strategy.The transportation sector in Canada (and globally) is already one of the largest GHG emitters, alongside the oil and gas sector. By 2018, the transportation sector accounted for 25% of Canada’s carbon emissions. This impact grew by 53% from 1990-2018 and has only continued to increase during the latest e-commerce surge. The emissions from freight travel specifically have increased 147% between 1990 and 2018.

What Companies Can Do in Response

In response to e-commerce’s global increase, many businesses have been turning their attention to better understanding their Scope 3 emissions. Scope 3 emissions are described as an “indirect” emissions source and consist of emissions-generating activities from sources that are not owned or controlled by the organization, but are released because of that organization’s activities. Third-party shipping emissions can be a relatively significant source of emissions for e-commerce-based companies, particularly those engaged in shipping heavy products across long distances.

Modal Shifting & Packaging Design

For companies shipping products through third-party providers, the primary drivers of shipping emissions are a.) Mode b.) Weight and c.) Distance. While distance is a relatively fixed variable, companies are increasingly paying attention to the carbon benefits of modal shifting and package light weighting. By shipping a product via airplane over a distance of 1,000 kilometres, a parcel’s individual carbon footprint could be approximately 6-8 times higher than if it were shipped via ground freight. Companies can avoid further emissions in their shipping operations by prioritizing lightweight packaging to reduce fuel burn in vehicles, while prioritizing primary and secondary packaging with high recycled content.

Carbon Neutral Shipping

In early 2019, Etsy, an e-commerce hosting website, demonstrated a strong commitment to reducing certain Scope 3 emissions and became the first major online shopping retailer to offset 100% of their carbon emissions from shipping. Entirely e-commerce-based businesses like Etsy can see upwards of 95% of their carbon footprint falling under Scope 3 emissions from transport.Fullscript is another company that has incorporated carbon neutral shipping practices into its corporate carbon neutrality program as part of its Carbonzero Certification. Despite third-party shipping being considered outside of the control of the business, Fullscript has taken responsibility for emissions generated from shipping by supporting carbon offset projects offered by Carbonzero and third-party shipping providers.

Looking Ahead

Companies looking to gain an understanding of their Scope 3 emissions, particularly related to product shipping, may consider completing a GHG inventory. Understanding where emissions are coming from is the first step in creating a planned approach to carbon emission reductions. While e-commerce shipping emissions may decrease as we emerge out of the COVID-19 pandemic, the impact of shipping is a long-term challenge that is sure to be a focal point of GHG Inventories well into the future.To learn more about the services we provide organizations, visit our webpage here.