Building a sustainable e-commerce ecosystem in Southeast Asia and beyond

Lazada’s corporate sustainability expert explains why having a climate change strategy is crucial to businesses as well as the planet and our communities.

eCommerce in Asia
While eCommerce was already steadily growing, the pandemic accelerated its adoption among shoppers. In 2020, there was 15.5 per cent year-on-year growth in retail eCommerce sales in Asia Pacific. Image: Creative Commons Zero - CC0

The outbreak of Covid-19 has led to the e-commerce industry’s explosive growth and this trend is here to stay, with the sector playing a key role in post-pandemic recovery both regionally and globally.

But as the growth outlook of online shopping continues to rise, so has attention to topics related to the sector’s impact on people and the planet. As such, it has become increasingly important for companies involved in digital retail to focus on corporate sustainability to ensure not only the long-term health of the sector but also of the world.

Online shopping and the planet

Online shopping offers unparalleled convenience, product assortments and accessibility to consumers. While e-commerce was already steadily growing, the pandemic accelerated its adoption among shoppers.

In 2020, there was 15.5 per cent year-on-year growth in retail e-commerce sales in Asia Pacific. In Southeast Asia alone, the online commerce market was worth US$62 billion, over a third of which was generated by new shoppers.

But the convenience of e-commerce comes with certain environmental costs, especially when it comes to logistics operations. According to a 2017 whitepaper entitled “Optimizing Packaging for an E-commerce World” online retail has about four times as many touchpoints as its traditional offline counterpart.

Not only is adequate packing material necessary to ensure parcels reach consumers in pristine condition, greater demand for services such as speed deliveries also mean that orders are often shipped in multiple packages.

Considered together, these factors can create a sizeable carbon footprint that could, if unchecked, outweigh its benefits over offline commerce.

Digital commerce companies can – and should – lead in reducing this environmental impact. During last year’s 12.12 campaign, for example, Lazada rolled out measures to reduce plastic packaging material or replace them with eco-friendly options.

Compared to the year before, we managed to reduce the amount of plastic packaging materials, achieving up to 65 per cent across our regional fulfilment operations.

This Earth Day, we partnered with Starbucks to offer Starbucks®️ X Herschel accessories and drinkware made from recycled coffee grounds on LazMall.

Our colleagues in the Philippines took further initiative to customise packaging of Starbucks products purchased via LazMall through the use of compostable materials including recycled pre-cut cardboard fillers.

E-commerce and corporate sustainability

As e-commerce continues to grow by double digits annually, it is crucial to understand its business operations and the unintended sustainability costs that arise as a result.

In 2020, the rise of environmental, social, and governance (ESG) issues on the agendas of stock exchanges, regulators and investors has shown that businesses should factor in sustainability and other non-financial topics that impact valuation.

This is where corporate sustainability comes in. It analyses the risks, opportunities and impact from an integrated perspective within companies’ existing business models and core activities.

To this end, a value-chain approach can help map out key stakeholders involved in the e-commerce ecosystem and each activity’s impact on business operations and the surrounding environment and community.

Digital commerce companies can – and should – lead in reducing this environmental impact.

Key to defining the priority levels and impact of many issues within a company is the concept of materiality. A well-done materiality assessment is grounded with in-depth qualitative sustainability intelligence from stakeholders, often drawn from ongoing industry insights shared in interviews and engagements, and allows a business to understand internal and external stakeholder priorities and deliver more strategic actions from value-chain focused and business-ecosystem perspectives.

Materiality in relation to sustainability may be a fairly new concept to many companies but crucial to corporate sustainability management, hence it will need to be connected and incorporated into other strategic business processes, such as enterprise risk management, strategic and financial business planning.

Diving into sustainability conversations within the company or the wider stakeholder group may seem challenging at first, but it’s essential for corporate sustainability teams to be able to empower business leaders with professional sustainability frameworks, standards and tools for problem solving and value creation.

Shaping sustainable e-commerce at Lazada

For the past several months, the discussions that I’ve had with both internal and external stakeholders about online shopping has led to more opportunities to engage with business operations, value chains and the wider e-commerce ecosystem, including platform and digital marketing solutions, logistics, technology, digital financial payments and more. It is important for business leaders to open up cross-company dialogue on sustainability.

On Earth Day in April, Lazada hosted a roundtable discussion on Shaping Sustainable e-commerce in Southeast Asia. This leadership session convened more than 60 spokespeople – business partners, customers, financiers, innovators, public policy makers and others.

With fellow veteran sustainability warrior and co-host, Jessica Cheam, managing director of Eco-Business, we opened the floor to discussions on potential collaborative opportunities and actionable initiatives that could help make e-commerce greener, cleaner and better overall.

The event was led by 10 Lazadian leaders, and spokespersons were grouped into five moderated tracks to discuss pressing ESG topics that shape, and are shaped by, Lazada and the region’s e-commerce system.

Lazada roundtable discussion - Shaping Sustainable eCommerce in Southeast Asia

The five discussion tracks covered sustainability issues arising from operating an e-commerce platform in Southeast Asia. Image: Eco-Business

The roundtable marked the first of many conversations within a thriving and growing thought leadership community. In the weeks and months ahead, we will dive even deeper into many of the actionable insights and partnership opportunities shared during the event. 

As businesses in Southeast Asia and around the world continue the race to triumph over the immediate impact of Covid-19 while also building a better post-pandemic future, there is no better time than now to put sustainability at the core of strategic plans.

Janet Sarah Neo is a Lazada vice-president and leads corporate sustainability for the group. She serves as board director, Temasek Foundation Liveability. Janet believes in helping youths to harvest the power within them and founded We Got This, a youth-led sustainability movement. A version of this opinion piece is also published here

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