Large Online Retailers Produce Fewer Emissions, Report Says

(Bloomberg) -- Shopping online in some cases may be better for the environment.

Large online retailers in the U.S. produce 17% fewer greenhouse gas emissions than traditional stores, according to a report from Generation Investment Management LLP, the sustainable fund manager set up by former Vice President Al Gore and David Blood, the ex-CEO of Goldman Sachs Asset Management.

Generation said its research found that e-commerce was more carbon-efficient than brick-and-mortar retailing, but usually only with businesses operating on a global scale, such as Walmart Inc. and Amazon.com Inc.

Smaller online companies can be even more emissions-intensive than the traditional shops, particularly if their warehousing isn’t energy efficient. The findings, generated using a new modeling tool created by Carnegie Mellon University and the University of California, Davis, show the complexity of accurately determining the levels of emissions from the retail industry’s use of transport, buildings, data and packaging.

“Our base-case model suggests that e-commerce has the edge, even when compared with highly efficient bricks-and-mortar operations,” said Nick Kukrika, partner at Generation. “However, there are several factors, not least scale, timing and customer behavior that can tip the scales in the other direction.”

E-Commerce Rises

Global e-commerce sales rose from $2 trillion to $3.5 trillion between 2016 and 2019, according to Digital Commerce 360. In the U.S., they’ve jumped to 10% of overall retail sales as of 2018 from less than 1% in 2000.

The coronavirus pandemic is fueling additional online purchases, particularly of groceries as consumers stockpile essential items. Bruno Monteyne, an analyst at Bernstein, has said this shift is likely to be permanent as consumers change their habits.

Some of the world’s largest retailers have already made commitments on climate change. Tesco Plc and J Sainsbury Plc, Britain’s two biggest grocers, have pledged to hit net-zero targets by 2050 and 2040, respectively. Walmart has said it will source 50% of its energy needs from renewable sources by 2025, and Amazon has also set a net-zero emissions target for 2040.

“We want to see all of them set science-based targets for emission reductions,” said Felix Preston, director at Generation.

To contact the reporter on this story: Deirdre Hipwell in London at dhipwell@bloomberg.net

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, Anne Pollak, Anne Cronin

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