Here’s how Etsy is tackling e-commerce emissions, a largely unaddressed problem

The offsets will cost less than 1 cent per package for Etsy.

The practice of buying verified carbon credits to offset greenhouse gas emissions certainly isn’t the most direct way of reducing a company’s negative impact on the environment, but a new program designed by e-commerce marketplace Etsy is notable for its creativity — and for drawing much-needed attention to a rapidly growing problem.

In late February, the company adopted a program to offset the greenhouse gas emissions related to delivering items ordered online on its marketplace by buying verified reduction credits for projects selected by its partner in this effort, consulting firm 3Degrees. 

Etsy doesn’t actually handle shipping itself — that’s a responsibility of its merchants — but it figures that about 98 percent of its environmental impact is related to this activity, and it has claimed them as part of its carbon footprint within its corporate reporting since 2013. 

In becoming the first global e-commerce company to actually take a public stand on emissions — not just packaging — Etsy hopes to heighten awareness among e-commerce shippers, shoppers and merchants, noted CEO Josh Silverman in the company’s blog.

"Considering these offsets will cost less than one penny per package for Etsy, we don’t believe that cost should be a prohibitive factor for others to follow in our footsteps," he wrote. "For the benefit of future generations, how can we all afford not to take this action?"

In 2018, Etsy’s marketplace generated about $3.9 billion in gross revenue, according to the company’s fourth-quarter earnings report. The marketplace represented more than 2.1 million active sellers at the end of December. Neither buyers nor sellers will bear the costs for the offset program, Etsy said.

Over time, Silverman said Etsy will seek out ways to collaborate with others — including other e-commerce companies, logistics organizations and policymakers — to identify ways to make the planes and trucks carrying millions of e-commerce packages every day emissions-free. The company views the offsets as an immediate step while it presses for these changes, he said.

Incidentally, Etsy jumpstarted its initiative by picking up the carbon tab related to deliveries for the entire U.S. e-commerce sector Feb. 28 — an estimated 55,000 metric tons of CO2 equivalent.  

It's a timely jump. E-commerce revenue swelled to almost $520 billion in 2018, a number calculated using figures from the U.S. Department of Commerce and various industry sources — and a 15 percent increase over the previous year. Online orders account for about 15 percent of retail purchases in the United States alone.

The emissions impact of those orders varies dramatically, depending on how an order is packaged and how quickly it is delivered, according to a comprehensive analysis by Bain & Co. By doubling the average number of items in an order and eliminating split shipments (where items are shipped as they become available rather than together) would reduce average per-item emissions by 30 percent, the consulting firm calculated.

That scenario, of course, benefits online retailers that can ship in volume — some e-commerce retailers, such as Walmart’s Jet.com division, have taken steps to encourage "clustering" of purchases so that more are shipped together. Others e-commerce giants, such as Amazon, deliver to centralized lockers or depots where customers can pick up packages themselves rather than sending delivery vans the last mile on city streets.

Chelsea Mozen, sustainability lead for Etsy, said one of the toughest behaviors to address will be the "buy-now" consumer interest in instant gratification, in receiving shipments as quickly as possible after they place an order online. Right now, there’s only very general information on the site — buyers are alerted (at the top of the page) as they’re placing an order, but shoppers don’t have the ability to select the particular offsets they’d like to associate with their delivery. Mozen said Etsy was concerned about adding friction to the checkout process, although it will experiment with raising awareness over time. The company is also addressing this issue with sellers and encouraging them to rethink the shipping options they offer, she said. 

According to the blog, the new Etsy offset program will support the UPM Blandin Native American Hardwoods Conservation Project in Minnesota, part of an 187,876-acre forest; the Giriraj Wind Power Project in India; and the Solar Grouped Project by ACME, a portfolio of 11 solar installations in India that otherwise would have been covered by coal-generated electricity.

Mozen said the offsets program also will support a project at auto parts company Meridian Magnesium Products that is focused on reductions of sulfur hexafluoride, or SF6, a greenhouse gas traditionally associated with its manufacturing process. (Meridian is one of the largest producers of magnesium components and is a big supplier to many large automakers.) The initiative is working on SF6 alternatives, in particular, a gas mixture called NOVEC-612. Meridian created a carbon credit methodology to help fund the expense of switching over to the new gas.

On the other hand, Amazon announced a new emissions reduction initiative called Shipment Zero in mid-February, which commits it to carbon neutrality for half of its package deliveries by 2030. As of 2017, the company shipped 5 billion packages during just its Prime program, which often grants free shipments to customers. Amazon has pledged to publish details of its corporate carbon footprint by the end of 2019.