Helped by the Covid-19 health crisis, e-commerce is facing a banner year. According to the 2022 edition of the e-Conomy MAR According to a report released by Google, Temasek and Bain and Co last month, e-commerce in Southeast Asia is forecast to end the year as a $131 billion business, after accelerating growth of 204% from 43 2019 USD billion. forecasts that online shopping will continue to expand at 17 percent annually for the next three years, with a value of USD 211 billion by 2025.
Partly as a result of the rise of e-commerce, the region’s digital economy is expected to double its greenhouse gas emissions by 2025, figures in the report show. These include direct emissions classified as Scope 1 (emissions from directly owned assets) and Scope 2 (electricity emissions), as well as pollutants from indirect sources that impact its value chain, classified as Scope 3.
The report further points to the responsible use of materials for products, packaging and food as another area of environmental concern for the digital economy of Southeast Asia, where six out of 11 countries produce a 31 million tons of plastic waste per year.
But he noted that while awareness of environmental issues “is still nascent” in the digital economy, it is on the rise.
ESG reports published by the region top three Online retailers (Lazada, Tokopedia and Shopee) or their parent companies show that they are beginning to address the impact their operations have on the planet, with an emphasis on reducing packaging waste and emissions.
Carbon disclosure remains spotty, with no industry standard on what to disclose. GoTo, the parent company of Indonesia’s leading online retailer Tokopedia, which also operates the ride-sharing service GoJek, said that produced 828,898 T co2e in 2021, with 88 percent represented by products and services purchased from its digital platforms.
Shopee’s parent company, SEA Ltd, said as much. issued 112,014 T co2e last year, of which three quarters corresponded to electricity consumption. The rest came from own vehicles, refrigerants and heating. It did not include Scope 3 emissions in the report.
For its part, Lazada, at its inauguration ESG report launched last October, it did not disclose how much carbon emissions it generates, but said around 60 percent fell under Scope 3. Another 38 percent are direct emissions covering fuel consumption by company resources, while the rest is accounted for by the use of electricity.
“Given the nature of our industry, ground transportation from our logistics and delivery operations contributes significantly to our GHG emissions,” Lazada acknowledged.
The decarbonization strategies of online retailers are currently targeting activities that are directly under the control of companies. For example, Lazada and GoTo aim to reduce Scope 1 emissions by converting company-owned fleets to electric motorcycles with battery swap capability for long-range deliveries in Indonesia. Lazada also deploys cargo bikes for last-mile deliveries in densely populated areas.
Lazada also has a delivery fleet of electric scooters that can deliver more than 100 packages per charge and travel up to 20 km in Vietnam. In Singapore, its RedMart online grocery platform uses a routing algorithm to make deliveries more efficient. For the delivery of temperature-sensitive products, the retailer has also replaced refrigerated machines driven by truck engines with insulated containers.
Meanwhile, GoTo is targeting a full conversion of its driver fleet to electric vehicles by 2030.
To mitigate Scope 2 emissions, Tokopedia installed a 13.4kWp solar system on the roof of its offices. Shopee owner SEA has retrofitted the lighting structures in its Singapore offices, a move it says will halve energy use, reduce labor and maintenance costs, and reduce its footprint. monthly carbon by 13.4 tons. The company plans to roll out the initiative in regional offices and facilities to make it a group-wide project.
Curbing plastic waste is another common initiative, with companies launching programs promoting paper packaging as an alternative to plastic wrap. For example, Lazada has a Fulfilled by Lazada logistics service that offers customers two alternative packaging options: Eco, which reduces the use of plastic in packages, and Zero, which uses paper tape to seal paper packages. .
Tokopedia started using cardboard pillows instead of plastic pillows and bubble wrap last year. It also avoided dumping more than 10 metric tons of cartons in landfills by shredding and reusing them, while another 113 metric tons were recycled into pulp, its parent company claims.
Industry reports indicate that the current environmental measures of online retailers in the region have room to mature and expand. Plans to reduce packaging waste focus on what McKinsey and Company classifies in a paper about sustainable packaging as fruit within reach, “where the barriers to change are low and most of the work can be done… without broader value chain coordination.”
“Online shopping platforms like Lazada and Shopee should do more by redesigning their systems, processes and materials used,” Marian Frances T. Ledesma, a Greenpeace zero waste activist in Southeast Asia, told Eco-Business. “They should also use reusable packaging for deliveries and invest in reverse logistics for these.”
He noted that replacing plastic with bio-based paper and plastic is also “problematic” because they are still thrown away. The use of paper has an adverse impact on the forest and the climate, while bio-based plastics compete with food production and require significant amounts of water, land use and energy to manufacture, he added.
McKinsey notes that the world’s largest manufacturers and retailers are already looking beyond “quick wins” and experimenting with the use of returnable and reusable metal and glass.
Lazada, for his part, pointed out that a “collective effort” throughout the supply chain is essential to make a significant difference. Mr. Frank Luo, CFO of Lazada Group, told Eco-Business: “We need an integrated approach on multiple fronts, such as deepening collaborations with suppliers to improve packaging designs, pushing the ecosystem towards packaging adoption eco-friendly, educate customers about recycling. options and, finally, support relevant projects that governments have launched”.
Similarly, online retailers are encouraged to include Scope 3 solutions in decarbonization efforts as these have the highest environmental impact. in a to study Analyzing the response of global retailers to carbon emissions, Boston Consulting Group notes that Scope 3 emissions typically account for more than 90 percent of the industry’s environmental impact.
“Focusing solely on Scope 1 emissions overlooks a company’s supply chain, transportation and distribution, which are typically the most carbon intensive. Scope 3 emissions have to be included in the emission reduction objectives or plans,” said Ledesma.
Noting that reducing Scope 3 emissions is challenging because it is influenced by market readiness, Lazada said his goal is to “develop an overall ecosystem approach and create a ripple effect that ripples through our networks and creates Broader Change” in partnership with your courage. chain partners.
Meanwhile, e-commerce companies also play a role in promoting eco-friendly habits among their shoppers, a significant portion of whom are willing to pay more for sustainable products and services, according to studies.
According to the e-Conomy SEA report, 32 to 55 percent of digital users in markets covered by the region’s three largest online retailers (Singapore, Malaysia, Thailand, the Philippines, Indonesia, and Vietnam) are willing to paying more for sustainable products or services, although they also noted a 30 percent gap between their intent and their actions on sustainability.
Companies already run campaigns to promote environmental awareness, but these are currently limited in time and/or scope.
Tokopedia, for example, allows its users to donate funds for tree planting, while Lazada ran LazEarth, a two-day campaign promoting eco-friendly products and sellers so shoppers can easily find them on the platform.
Lazada declined to discuss future initiatives to this end, but acknowledges that it is in a position to collaborate with brands “to offer alternative product options to meet the changing demands of more environmentally conscious Southeast Asian consumers.”
Ledesma, for his part, recommends that online retailers review policies to achieve greater buyer participation. “[Their policies should] Encourage consumers to choose zero-waste transactions. [like] incentives and higher seller ratings [for sellers] using less or no packaging on non-fragile items.”
Mr. Luo said that Lazada is “committed to reducing our carbon footprint across our entire value chain.” He adds: “We also recognize that Scope 3 emissions are the most difficult to reduce as they are strongly influenced by the readiness of our markets. As a platform, we recognize that we are uniquely positioned to make a difference. Through deeper collaborations with our value chain partners, we aim to develop a global ecosystem approach and create a ripple effect that ripples through our networks and drives broader change for times to come.”