an e-commerce carbon reduction report of a public welfare organization shows that only Ali and JD have passed the pass line.
Every year during the “618” and “double 11”, in addition to ensuring the smooth placing of orders by hundreds of millions of consumers, alibaba will also make a note of the “brief history of boiled eggs”.
“A brief history of boiled eggs” is an image statistic of Alibaba’s energy consumption of orders. Behind every time consumers empty their shopping carts, thousands of servers operate diligently, especially in the big promotion festivals such as 618 and double 11. In order to ensure the stability of business, a large number of computing resources need to be added. The power consumption and the carbon emissions behind them are not small numbers.
With technological progress, the energy consumption behind this is also being optimized. It is estimated that in 2005, Alibaba could cook 4 eggs for every 10 e-commerce exchanges; By 2021, the carbon emission of each order of tmall Taobao will decrease by 17.6% year-on-year, and only one loose quail egg can be cooked for every 10 orders.
618 in the past, in addition to the e-commerce giants’ efforts to offset performance, their own “carbon accounts” should also be carefully assessed.
On June 20, JD logistics announced its carbon reduction achievements during the 618 period – 220000 tons of carbon reduction in green supply chain logistics, and the large-scale application business volume of intelligent express vehicles increased by 260% year-on-year. During the period of 618, more than 70million boxes of products of 16000 JD brands used original packaging, that is, the commodity packaging and express packaging adopted an integrated structure, which could reduce the waste of secondary packaging.
Since 2017, JD logistics has launched the “Qingliu plan”, hoping to reduce carbon emissions in logistics from the aspects of packaging, logistics technology efficiency improvement, energy conservation and emission reduction. It has been five years now. This year’s “green flow plan” is stronger than ever – JD joint brand merchants have nearly a million kinds of goods labeled as “green”, and consumers can enjoy more discounts when purchasing these goods.
These activities serve the common goal. Duanyanjian, project leader of the Qingliu plan of JD logistics, said: “JD logistics has just announced the carbon neutral goal: reduce carbon by 50% by 2030. The biggest change in the Qingliu plan this year is that it will align with this goal.”
Previously, statistics like “a brief history of boiled eggs” could only prove that a company had a sense of social responsibility. However, with the implementation of the “double carbon” strategy, the capital market began to have a hard demand on ESG – carbon reduction, which is no longer a simple public welfare behavior. Instead, it needs to set specific goals and write them into the management KPI, which has become a key aspect of measuring the company.
What drives e-commerce to reduce carbon?
E-commerce is one of the earliest industries developed in China’s Internet economy. By 2021, China’s online retail sales of physical goods will account for 24.5% of the total consumer goods – which is already an industry of the national economy and the people’s livelihood. It is understandable that e-commerce should set an example in social responsibility.
However, in the past, e-commerce companies paid different attention to social responsibility. The head e-commerce, such as Alibaba, has an early layout, and its social responsibility report can be traced back to 2007 at the earliest; Like vipshop, which is in the second echelon, it began to change the energy structure very early. In 2020, the proportion of renewable energy power consumption reached 45%, while that of JD in 2019 was 1%.
Even if there were social responsibility reports in the past, they were all relatively simple. Most of them described their environmental protection public welfare activities and did not pay much attention to carbon emission data.
In fact, it is the compliance pressure that really helps enterprises to put carbon reduction on the right track.
Even Amazon, an e-commerce giant, was kicked by regulators. Amazon has been reluctant to disclose carbon emission figures until 2020, when it had to disclose them under the dual pressure of public opinion and regulation.
In March this year, the US Securities and Exchange Commission (SEC) released a proposal requiring listed companies to disclose direct greenhouse gas emissions in their annual reports in the future, and the accuracy of the data must be verified by a third party.
The importance attached by the capital market to ESG has gradually affected China from abroad, and has become an indicator affecting market judgment. The “double carbon” (carbon peak in 2030 and carbon neutralization in 2060) strategy proposed by China in 2020 has added fire to the carbon reduction of domestic companies.
In China’s carbon emission structure, more than 70% are power, oil and other high energy consuming industries, and the carbon emission of e-commerce is far from the top. However, e-commerce has a great social impact. From the terminal logistics and packaging, the public can know more about its carbon emissions.
The “double carbon” strategy has been put forward for two years. Now it has moved from top-level design to implementation, and the policy granularity is clearer. In the 14th five year plan issued by the Ministry of transport in 2021, it is clearly required that the proportion of new energy vehicles in urban logistics distribution vehicles should be increased from 8% in 2020 to 20% by 2025.
For e-commerce with overseas business, the “carbon tariff” in the EU and other places sets a hard threshold for carbon reduction.
Under the transmission of policies at various levels, e-commerce companies act quickly. Since 2020, Alibaba and JD have rapidly carried out self inspection on their own carbon emissions. Since 2021, they have successively issued carbon neutralization action goals. In February this year, Alibaba released Q3 performance in 2022, and wrote ESG progress into the financial report for the first time.
With the overall goal, e-commerce logistics, transportation, packaging and other links began to align, such as the rookie under Alibaba.
“There is a signboard for carbon emission within rookies. Every month, the general managers of each business line can see how much carbon their business has discharged and reduced. Every general manager should have green measures in OKR, which should be aligned with the carbon reduction goal of Alibaba group.” Niuzhijing, vice president of newbie, said in the interview.
JD sorting center source: Vision China
However, e-commerce companies are not all reducing carbon due to compliance pressure. The Internet industry is experiencing a cold winter. To some extent, reducing carbon is also reducing costs. For them, it is taking advantage of the trend.
In today’s sorting center, JD is replacing disposable polypropylene woven bags with recycling transfer bags, which can reduce the use of about 70million woven bags per year. Although labor and new hardware cost investment are required in the early stage, the packaging cost can be reduced by more than 30%.
Carbon reduction will also become the starting point for the platform to do “carbon neutral business” in the future, which adds impetus to their carbon reduction.
The fastest one is Ali. The data statistics of carbon emissions generally divide the emissions into ranges 1, 2 and 3, respectively corresponding to the emissions of their own assets, indirect emissions caused by the purchase of energy, and the emissions driving the upstream and downstream.
However, Ali also put forward the concept of “scope 3+”: in addition to its own operations, the ecological carbon reduction potential is greater, and promised to drive the ecological businesses and consumers to reduce carbon by 1.5 billion tons. This year, Alibaba cloud launched a SaaS product “energy consumption treasure” to serve small and medium-sized businesses, as well as energy, power and other industries. Now it has served more than 1400 customers.
Across online and offline, it is difficult for e-commerce to reduce carbon
E-commerce companies’ carbon reduction goals look very loud, but the challenges are not small when they are disassembled carefully.
Starting from the carbon emission structure of e-commerce – e-commerce businesses span online and offline, and the difference in carbon emissions between the two parts is not particularly large.
According to the carbon management SaaS service provider “carbon footprint”, in 2019, the total carbon emission of China’s e-commerce industry was 53.26 million tons, of which logistics was the link with the highest emission, accounting for 29%, followed by Office (26%) and data center (23%).
Online mainly involves data center power consumption, which is relatively easy to solve; The difficulty is the complicated offline emissions. E-commerce carbon reduction requires two legs. Take jd.com as an example. Jd.com has built its own logistics system, and the supply chain is more complex. Now only jd.com has announced the carbon neutralization goal, but the group level has not. We can see the difficulties.
Head e-commerce takes the lead in reducing carbon, but in fact, everyone is just beginning. Many players don’t even know their own carbon background.
A report released by the public welfare organization “Greenpeace” in 2022 once scored the carbon reduction results of e-commerce, of which only Ali and JD passed the pass line. Pinduoduo, the third largest e-commerce provider in China, has not disclosed carbon emissions or other environmental related information.
Source: Greenpeace China retail e-commerce climate action and environmental performance (2021)
For domestic manufacturers, the cost is now the core of restricting the carbon reduction process. This can not only rely on enterprise investment, but also need the support of the whole society.
E-commerce is a very cost sensitive industry. Logistics has long been a red sea. Since 2013, express delivery costs have been declining year by year. In fact, Yiwu has not been far away from the time of “sending a piece of goods to the whole country for 80 cents”, and logistics companies still have to fight at a loss for a long time.
Niuzhijing, vice president of rookie, reckoned with the industry: “the profit of the express industry in a year is more than 10 billion, corresponding to more than 90 billion express deliveries. If the packaging needs to be replaced with environmentally friendly materials, each express delivery needs to pay two to three times the packaging fee. If it is borne by the enterprise, the whole industry cannot continue to operate.”
E-commerce companies still need some time to explore ways to reduce carbon, because there is not much experience to refer to. Large foreign companies reduced carbon more than ten years earlier. For example, apple can reduce carbon by purchasing a large number of green electricity and carbon sinks. However, the domestic carbon market has just started, and green electricity and green asset trading have not been fully opened. E-commerce should first rely on technology investment, such as optimizing the computing architecture to reduce computing power consumption.
The roof of Jingdong “Asia No. 1” Xi’an intelligent industrial park is covered with photovoltaic
This is actually a good thing in the long run, but it needs more patience. Compared with foreign countries, one advantage of domestic e-commerce is that the scale advantage is more significant in both supply chain and logistics. Input in technology will lead to higher carbon reduction output ratio in the future.
In China, JD logistics is the first logistics company that dares to set a goal to reduce carbon emissions by 50% within 10 years. Their confidence may come from the huge investment in technology. JD has announced that it will build the world’s largest roof photovoltaic power generation system by 2030. By the end of 2021, the completed photovoltaic system will be able to support 85% of the power consumption of Jingdong intelligent industrial park.
In addition to technology, how to make the society share the cost and how enterprises can reduce carbon sustainably is a common challenge for e-commerce and the whole society in the next stage.