Scope 3 emissions are the hardest emissions for companies to address when setting goals. But often, they are the most emissions to take on. For Etsy, the e-commerce marketplace known for handmade items such as jewelry, art and apparel, Scope 3 emissions make up 99 percent of the company's carbon footprint. That's why it's prioritizing engagement with sellers in its marketplace to drive down emissions.
The ambition is part of the company's net-zero carbon emissions by 2030 goal, which it set in February.
"I know many companies have different definitions of net-zero. We are definitely following the Science-Based Targets Initiative’s (SBTI) forthcoming emerging definition around net-zero," said Chelsea Mozen, director of sustainability at Etsy, who as one of the company’s first sustainability hires has helped build its strategy from the ground up.
"It has been a really fun journey over the past seven years. In the beginning, we really focused on our own operation, so getting our own house in order."
In addition to the net-zero goal, the e-commerce site has set two science-based targets using a baseline year of 2019, pending validation from the SBTi. They call for:
- a 50 percent absolute reduction in Scope 1 and 2 greenhouse gas emissions by 2030, including Etsy's office operations and purchased energy
- a 13.5 percent absolute reduction in Scope 3 greenhouse gas emissions by 2030, including seller shipping and fulfillment
The company’s most recent 10-K form for the fiscal year that ended Dec. 31, which it files annually with the U.S. Securities and Exchange Commission, also noted a 2021 goal to "offset 100 percent of measured Scope 1, 2 and 3 greenhouse gas emissions annually."
In a blog about the new net-zero pledge, Etsy CEO Josh Silverman wrote, "We’re committed to holding ourselves accountable and maintaining transparency as we push toward a net-zero 2030."
Mozen said that as the company makes its way toward the net-zero goal, it will continue the practice of reporting all of its sustainability metrics in its 10-K form, as well as within its Sustainability Accounting Standards Board (SASB) and Task Force on Climate-related Financial Disclosures (TCFD) disclosures. Only 10 percent of companies are integrating sustainability metrics into 10-K filings, according to SASB. A couple of years ago, when Etsy first started including such metrics in its filings, former Etsy Senior Sustainability Manager Hilary Young, who still works at the company in a different role, wrote, "Key non-financial metrics around our economic, social and ecological impact are an integral part of how we run Etsy. It just makes sense for us to report those metrics in the same place."
The idea was that we know with the urgency of the climate crisis, we wanted to do something to immediately address that impact while we work towards long term reductions.
In order to be transparent about its sustainability work, Etsy has to do the relevant work behind those reports. In recent years, Etsy has been working on addressing the carbon impact of its marketplace, which is made up of nearly 4.5 million sellers with more than 85 million items available for sale, as of December.
Back in 2019, Etsy launched its first initiative focused on reducing the carbon emissions of its marketplace by introducing carbon offset shipping. To offset shipping, Etsy estimates the emissions created by each product sold by looking at data such as the distance between a seller and buyer for each order and the expected weight of the items. Etsy then works with 3Degrees, a carbon offset and renewable energy company, to invest in emissions reduction projects such as wind and solar farms or forest protection.
Mozen said this was an obvious step for the company to address the emissions for the marketplace because it is the source of Etsy's largest measured carbon impact. In 2020, Etsy offset 404,439 metric tons of carbon in total and shipping alone was 303,218 metrics tons CO2 equivalent in 2020, according to the company.
"The idea was that we know with the urgency of the climate crisis, we wanted to do something to immediately address that impact while we work towards long-term reductions," she said.
The third-largest area of Etsy’s footprint is purchased goods and services in its corporate supply chain, according to Mozen. Between now and 2030, Etsy said it plans to deepen its engagement on climate with vendors and will continue to prioritize partners that share similar carbon standards.
Here's a recent example of how Etsy already has done this: In 2020, the company completed its migration to Google Cloud, which combined with a 15-year power purchase agreement helped in reaching its goal to be 100 percent renewably powered by 2020.
"From 2018 to 2020, our energy use for computing decreased by 23 percent. And that is largely thanks to the efficiency of Google Cloud Platform compared to what we have in our own colocated data centers," Mozen said.
And in total, last year, 81 percent of the money Etsy spent in its supply chain went to companies that have set a greenhouse gas emissions reduction goal.
But a lot of the focus will be on other areas of Etsy's business, over which it doesn't necessarily have direct influence, she added. For example, in 2020, 75 percent of Etsy’s carbon footprint came from shipping, which it doesn’t have control over — its sellers ship directly to buyers.
"But we will be looking at that footprint," said Mozen, who noted that the company thinks one way to address shipping emissions is through public policy.
"There's been a lot of moves in the space right now. And we've been very active in it," she said. "We're going to double down on advocating for the decarbonization of the logistics sector. And that, for the next few years, will be very important as we head towards 2030."
In 2020, Etsy advocated for the Transportation and Climate Initiative, for which it received an award from the Ceres BICEP Network, as well as the California Air Resources Board (CARB) Advanced Clean Trucks Rule and other regional policies that the company believes have the potential to accelerate decarbonization of the transportation sector.
Etsy also plans to address the second largest contributor to its footprint, packaging, which it started measuring in 2020, Mozen said.
"We're hopeful that providing more tools for [sellers] will help drive some of these decreases in our carbon footprint, especially in the packaging space," she said. "We're hoping that partnerships for more sustainable packaging that will be affordable for our sellers will help reduce that footprint."
She said Etsy is also interested in digging into the circular packaging space. "This would be early days for us. But that's where I hope that we can make some gains."