By: Creating Future Us
July 7, 2020
The growth in e-commerce over the past four months of Covid-19 has been meteoric. Online retail sales, in March alone, saw 74% growth in average transaction volumes year-on-year. In the US and Canada, the year-on-year growth in retail e-commerce as of mid-April was 146%. Conversion rates have skyrocketed to levels only seen during Cyber Mondays.
With countries coming out of, then reverting back to some form of lockdown, it is expected that high levels of e-commerce are here to stay. And there are repercussions to consider, in terms of environmental and social costs:
⇒ Delivering packages to individual households, versus aggregated distribution centres like supermarkets and department stores, means more frequent and longer trips, potentially equalling higher net emissions from transportation of goods
⇒ It also means exacerbating a pre-existing major challenge, through increasingly individualised and non-recyclable packaging. For instance, in the U.S., plastic packaging alone accounts for 47% of the estimated 6.3Bn MTs of plastic waste generated from 1950 to 2015, of which only c.9% was recycled and 12% incinerated. This leaves 79% to occupy landfills, polluting the natural environment for hundreds of years. The world is generating more plastic each year, with an estimated 430 million tons created in 2018 – and unfortunately, plastic recycling rates are dropping
⇒ It has also led to a rise in fraudsters attempting to obtain and use financial data through techniques such as Covid-19-related phishing scams
⇒ This massive e-commerce upsurge has also put considerable strain on the health and working conditions for millions of warehouse workers globally, in the pursuit of continuing to deliver the convenience shoppers expect
⇒ In addition, it has turbo charged robotics development for fulfilment centres – with medium term effects on growth in warehouse worker jobs, not paralleling that in e-commerce
⇒ This trend is also swiftly hastening the death of bricks and mortar businesses, with impacts on, amongst others, their real estate/mortgages/banks supply chain, and sector employment – with most redundant employees not necessarily having skills fungible to e-commerce, with a likely gender impact tilted to women’s detriment
An increasing level of consumer convenience is indeed an accomplishment; however, it does come at an environmental and societal price. Are investors aware that through accelerated investment into this sector, they are providing e-commerce businesses with capital to potentially exacerbate these issues? Could investors utilise their capital and shareholder positions to ensure a thoughtful, safe and just transition? And how will they rate and differentiate among e-commerce companies whose financial profiles are highly attractive, but have varying ESG downsides?