The cost of e-commerce

The e-commerce economy is mushrooming rapidly not only in Pakistan but across the world as well. The Covid-19 pandemic posed many financial challenges for the economies of the world and closed many avenues of business. Due to the unpreparedness for that income shock, many economies could not sustain this crisis and faced financial crises.

Some nations and societies tried to adapt to this situation and shifted their businesses to e-commerce. According to the United Nations Conference on Trade and Development (UNCTAD), the average share of internet users who made purchases online increased from 53 per cent before the pandemic (2019) to 60 per cent following the onset of the pandemic (2020/21), across 66 countries.

Similar trends were found in Pakistan. According to the International Trade Administration, “Pakistan is the 46th largest market for e-commerce with a revenue of $5.2 billion in 2023”. We can observe that the availability of fast internet technology has increased the number of online businesses manifold. Many famous brands are earning more through their online presence as compared to physical outlets. To avoid rental and utilities costs, many entrepreneurs started their online start-ups and became successful. On the consumer side, due to the social barriers for women, lack of access to outlets in rural areas, timesaving, and comfort, a huge portion of our society shifted to online shopping.

What are the impacts of accelerating e-commerce trends on our environment? The first negative impact of e-commerce is the manufacturing and utilization of packaging materials like plastic, bubble wrap, and cardboard boxes. In exchange and return, such materials are used multiple times. Many of these packaging materials are composed of single-use plastics that end in landfills and on roadsides or streets and take thousands of years to decompose. According to the World Economic Forum, e-commerce packaging accounts for 165 billion packages annually.

Similarly, another waste is electronic waste which has negative environmental impacts. Online businesses require electronic devices like mobiles, laptops, and computers to run these businesses. The materials needed to manufacture these devices use many chemicals and produce e-waste. E-waste produces thousands of chemicals like dioxins, lead, and mercury that can create many health challenges for human beings. Similarly, the delivery of online orders is the source of carbon emissions. The use of fossil fuels for vehicles can generate huge quantities of emissions which are a source of climate change.

Several strategies and policy interventions can be implemented to reduce the environmental impacts and make e-commerce a sustainable activity. The e-commerce industry needs to be responsible. It can work on multiple initiatives like reduction of carbon footprints, energy efficiency, and use of durable and recyclable packaging material.

First of all, buyers and sellers are two important players in the market to decide demand and supply. If consumers make sustainable choices, it will automatically increase demand for sustainable products. This requires creating awareness among consumers and suppliers to adopt eco-friendly choices and introduce products accordingly. Companies can play their part in protecting the environment by using environmentally friendly materials in the packaging process and providing such information to their consumers.

Similarly, companies can reduce huge quantities of carbon emissions by taking into account the emissions produced in the supply chains. The process from raw material to product manufacturing and market delivery involves transportation in various countries that involve the use of fossil fuels. Online companies must consider the environmental costs of the whole process instead of profit multiplication. The environmental costs of such businesses can be calculated, and these companies can be asked to compensate in the form of an environmental tax.

Similarly, online platforms providing space for e-commerce can also help by taking some green initiatives. They may promote environment-friendly companies by reducing their service charges for such businesses. They can also take initiatives to create awareness among consumers to make environmentally friendly choices.

According to the UNEP, Amazon has adopted the Climate Pledge Friendly initiative to help at least 100 million people find climate-friendly products that carry at least one of 32 different environmental certifications. Online companies could also consider the environmental impacts while signing contracts with courier companies.

Courier companies take environment-friendly initiatives like the use of eco-friendly material (organic, recycled, natural) in packaging and transportation services. Such companies can also work to minimize the wastage in the process of packaging and delivery. The e-commerce industry needs to take initiatives for a digital economy and paperless cash. It can be another step towards the promotion of sustainable e-commerce and protecting our environment.

E-commerce is a rapidly growing industry due to low cost and ease of launch. But it involves some environmental costs that need to be taken care of. By taking steps to use environmentally friendly packaging material, renewable energy resources in the manufacturing and delivery process, and with a change in social behaviour, we can make e-commerce a sustainable business. That will require efforts at both an official and personal level.

The writer is a graduate of the University of Oxford in Public Policy. She tweets/posts @zilehumma_1 and can be reached at: zilehuma_1@hotmail.com