Reducing product packaging
In addition to manufacturing, product packaging is another part of the fulfillment journey that costs the environment. According to data published by the Federal Environmental Agency, Germany amassed a record 18.7 million tonsof packaging in 2017. That’s 5% more than the previous year. Amazon, which made USD280 billion in revenue in 2019, is attempting to tackle packaging en masse. The online seller, marketplace, and service provider announced the Compact by Design initiative as a part of their Climate Pledge Friendlyprogram in late 2020. Compact by Design enables customers to filter their search for products that have a more efficient design.
Examples of Amazon’s Compact by Design
Germany’s leading drug store chain, DM, offers climate-neutral brands such as Lavera and МОЙ, and creates more environmentally product packaging with their home brand, Denk Mit. The retailer claims to be reducing the amount of plastic used and applying more sustainable packaging methods such as using recycled paper. DM is also promoting and supplying more solid product alternatives for soap, lotion, conditioner, and shampoo. Solid products don’t need elaborate external packaging and are primarily wrapped in a piece of cardboard for transporting and display on shelves. They promote these environmentally friendly products via their YouTube channel, which has 131,000 subscribers.
Selling refurbished goods
A circular economy aims to reduce the consumption of finite resources by designing an economy that keeps products and materials in use — as opposed to throwing things out and buying new ones. The concept encourages repairing and reselling products and transitioning to renewable energy sources. Fundamentally, the idea is to rethink and redesign the way things are produced, such as manufacturing products that can be repaired easily. In Germany, there is even a law to promote the circular economy and to ensure environmentally friendly waste management. The Circular Economy Act came into force on June 1, 2012.
Despite the Act, nearly 853,124 tons of electrical and electronic waste were collected in Germany in 2018. About 90% of that comes from households.
Refurbished items play a key role in the circular economy. Used items, display items, items with minor factory defects, factory returns, or returned items fall into the category of refurbished items. They are often sold by certified sellers and come with buyers’ insurance. eBay is doing this with their new B-Ware category. Customers can find over 3 million “good as new” items for up to half of the original price on the new landing page. The products are checked to ensure they work, and eBay buyer protection applies to the goods in this shopping category.
The beauty of refurbished products is that there are plenty of marketing opportunities to make customers feel good about both saving money and protecting the environment. Back Market is another online marketplace that connects trusted refurbishing factories with customers. Many products displayed on the site include:
- Price of the phone compared to brand new
- How much the customer saves by buying refurb
- How much electronic waste the customer saves with the purchase
- A review from previous customers to give shoppers piece of mind
Germany has a competitive selection of resellers. Each of them has varying durations of warranties and refund policies. Some of them refurbish, others just check quality, some buy and sell, some just sell. One thing they have all in common is that they brand themselves as trusted third-party partners in the reselling business. They are “brokers” to ensure that customers can safely purchase used products. Some household names include refurbed.de, rebuy.de, asgoodasnew.de, and flip4new, the latter being a buyer only.
Initiatives that aim to offset emissions
If a company can’t reduce their Co2 emissions, they can either improve their manufacturing processes to make them more climate-friendly or offset their emissions. Offsetting means buying carbon credits from other companies or energy-efficient projects with a surplus of carbon credits. A carbon credit represents the right to emit one metric ton of carbon dioxide. They are components of national and international approaches to reduce the emission of greenhouse gases.
Environmental projects can reduce greenhouse gas emissions, and some of these projects may not be viable without revenue from the sale of carbon credits. Companies that can’t manufacture as environmentally friendly as they can finance — through buying carbon credits — climate-friendly projects that reduce emissions projects that could otherwise not be paid for.
While emissions trading is mainly a B2B market, more companies are entering a B2C market. They offer consumers the option to purchase carbon credits to offset or lower their carbon footprint. For example, this could be for the carbon emission of a specific item, a new phone, the consumer buys, or more generally his average yearly carbon footprint from traveling or using a car. The companies which sell those carbon credits are usually an aggregator for individual projects around the globe.
Carbon offsetting in the transportation sector
Road traffic accounted for the greatest share (over 96%) of Co2 emissions in Germany’s transport sector. FlixBus, a long-distance bus company, advertises that people who choose buses over cars for longer routes can reduce their individual Co2 emissions by 80%. The German company has partnered with Atmosfair to offer carbon compensation to customers at checkout. In FlixBus’s most recent update, customers’ contributions go directly to Atmosfair’s UN-accredited Gold Standard Projects in Rwanda.
With flights making up about 2% of the total greenhouse gas emissions for transport, airlines are also doing their part. Lufthansa, Germany’s largest airline, partnered with Swiss-based myclimate to provide customers with a carbon calculator and offsetting program. The calculator enables the traveler to input their departure and arrival information and calculate both the emissions and the speed of how those emissions are offset.
Their entire aircraft fleet was studied to clarify how much kerosene a flight would consume from gate to gate, including taxiing procedures and other ground operations. First, the calculator estimates the carbon emissions; then, it converts it to a cost. This fee can either be used for a reforestation project — which can take an estimated number of years to offset your trip — or used to offset Sustainable Aviation Fuel (SAF). By purchasing the fuel, the emissions can be offset immediately as SAF emits up to 80% less Co2 compared to conventional jet fuel.
Carbon offsetting for products
Multi-seller marketplaces have thousands of different types of products and brands. To standardize the carbon calculation process, online marketplaces like eBay and Digitec Galaxus work with a carbon finance consultancy like South Pole. The respective marketplaces worked separately with South Pole to estimate the carbon footprint of “average products”. The measurement starts with the procurement of raw materials all the way to how it’s delivered to the customer. To define the average product, they analyzed the bestselling ones.
Based on this analysis, the team defined a representative weight for each product category and an emission factor. Based on the modeled weight (in kg) and the emission factor (kgCO2e/kg product), the South Pole consultants then calculated the Co2 emissions. At the checkout, customers are presented with an estimation of their carbon footprint for the product and an option to offset emissions by choosing from three environmental projects that South Pole partners with.
Companies may choose to focus their offsetting efforts where they emit the most. Etsy, for example, is a marketplace that focuses on handmade or vintage items and craft suppliers. With low manufacturing emissions, 98% of their carbon impact stemmed from items shipped from Etsy sellers to Etsy buyers.
This shipping isn’t directly in Etsy’s realm of control, but the company partnered with 3Degree to offset all shipping costs — and foot the bill. The company doesn’t charge customers for this; they pay for it. Instead of asking customers to opt-in, there’s a leaf logo at check out that says, “Etsy offsets carbon emissions from every delivery.”
Standards, certifications, and projects
As mentioned earlier in the section Understanding Carbon Offsetting, some customers are more inclined to opt into paying for carbon offsetting if they know exactly where their money is going. There are third-party verifications for environmental projects to create more structure around this emerging carbon trading market and protect customers who voluntarily offset their emissions.
Carbon offsetting standards verify the legitimacy of the offsetting projects. These certification standards vary depending on market share, the different types of tests they do, and the different projects they specialize in. You can learn more about the different types of standards at the WWF. Here are a few examples:
- Verified carbon standard
- Gold Standard
- Green-e Climate standard
Another seal of approval for a carbon offsetting project is the United Nations Framework Convention on Climate Change (UNFCCC) certified projects. These vetted projects reduce, avoid, or remove greenhouse gases from the atmosphere. South Pole, a carbon compensation partner, used by several marketplaces in Germany, is an official partner of the UNFCCC and offers programs aligned with the aims of the Paris Agreement and the UN Sustainable Development Goals.
For the voluntary carbon offsetting projects mentioned in this paper, most of them fit into the category of large-scale reforestation, renewable energy, or various community projects. These initiatives are located around the world, with a large concentration of them in Africa and Asia. Some common types of projects include contributing to:
- Access to clean, safe drinking water
- Geothermal energy
- Wind energy
- Forest conservation
- Sustainable farming and agriculture
Additionally, the initiatives work directly with the local community, create jobs, build infrastructure, teaches local populations new skills, and makes communities less dependent on fossil fuels.
As public awareness of the impacts of climate change increases, so does the question of solutions. While government action is basic but usually slow, companies can be more agile and have the flexibility and creativity to take transformative action. And when companies contribute to sustainability, ethics and business development can be in harmony.
Sustainability measures often have many winners: the environment, society, customers and the companies themselves. The latter companies can combine social commitment with competitive advantages because climate-neutral concepts are increasingly accepted or even demanded by consumers. The large e-commerce platforms in particular can use their real strength here: Bringing services to the market that are to the customer’s advantage, while at the same time offering opportunities to the selling retailers that they would not be able to tap into on their own due to their small size. Partnerships and collaborations are often the key to meaningful solutions.
Now is the time to act. This summary from eStrategy Consulting highlights the variety of ways a company can offset its emissions or take steps to reduce its carbon footprint.
If you want to stay up to date updated on our free studies and articles, follow us on LinkedIn.
Check out our consulting services here.