As Online Shopping Surges, E-Commerce Retailers Face Major Risks From the Climate Impact and Toxicity of Their Products

E-commerce retailers are carrying potential liability for the hundreds of unsustainable and hazardous products sold on their platforms, finds a new analysis by Environmental Defense Fund­­­. In order to mitigate reputational and liability risks that are increasing amidst the global pandemic, the report calls for more transparency about the products sold on e-commerce platforms, as well as focused efforts on reducing their climate impa­­­cts and toxicity.

The Roadmap to Sustainable E-commerce calls on major e-commerce retailers to take responsibility for their products’ life-cycle impacts, and provides seven recommendations for doing so. The report’s accompanying interactive online shopping model, SustainaBuy, also demonstrates how companies can display environmental and ingredient safety data for the products sold online, in order to reduce risk and capture a rapidly growing market demand for sustainable products.

Right now, the leaderboard for e-commerce leaves a lot to be desired. Target, Sephora and Credo are among the few companies that have taken encouraging, innovative steps towards reducing these three risk factors, but it’s time for other businesses to follow – fast.” said Boma Brown-West, senior manager of consumer health at EDF. “SustainaBuy shows retailers where they should be, and where they can be, using information they already have.

E-commerce spending in the U.S. hit $82.5 billion this year, up 77% year-over-year. It typically would have taken four to six years for retailers to experience this same level of growth.

Rapid growth creates three major risks for e-commerce retailers:

  • Climate – Customers, investors and employees are demanding bold leadership from companies to take action on climate change. Pressure is increasing on companies to address product sourcing, manufacturing, transportation, use and disposal – all of which involve steep emissions that contribute to climate change. Companies that do not address climate impacts are losing market share, investor confidence and facing bigger hurdles to secure insurance or low-interest loans. At the same time, climate change impacts are already causing supply chain disruptions from extreme weather events, and impairing companies’ ability to manufacture, transport and/or sell products.
  • Toxicity – Sixty two percent of chemicals in consumer products are hazardous to humans and the environment, yet today’s shoppers have no guarantee that the products they are buying on e-commerce platforms are free of toxic chemicals. E-commerce retailers aren’t verifying the safety of products, avoiding both responsibility and accountability. While manufacturers are foremost responsible for their own products, the retailer has a shared responsibility for making sure the products they sell are safe. In addition to the risk of losing trust and damaging its reputation with consumers, the retailer is vulnerable to product liability lawsuits.
  • Transparency – Millennial and Gen Zers want to buy from brands and companies that are transparent and committed to making a positive social impact. Sixty five percent of consumers expect companies to clearly explain environmental benefits on product labels or websites. Lack of transparency hinders companies’ ability to cultivate customer loyalty and trust, hurting their brand and the bottom line. And, failure to disclose the environmental impacts and ingredient safety of products can result in diminished presence in the market for “greener” products.

Consumers want to buy sustainable products and e-commerce retailers can help them by sharing environmental and social data on their online platforms,” said Tensie Whelan, Professor and Director of the NYU Stern Center for Sustainable Business, and author of the report’s foreword. “Whether companies choose to jump at this opportunity will determine their ability to cultivate the consumer and remain competitive over the long-run.

The report advises e-commerce retailers to follow seven steps to strike a competitive edge in the marketplace: assess chemical and carbon footprints, set ambitious goals, align business operations to sustainability goals, engage product suppliers, help consumers make sustainable choices, measure and share progress publicly, and lead the industry forward on sustainability.

Download the Roadmap document (pdf)

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