Sustainable E-Commerce

The close Ties between Environmental Protection and Protecting Data

by: Caroline Helbing

Sustainability is a well-known keyword for e-commerce companies. However, it is still considered a "nice-to-have". Notable exceptions being D2C manufacturers and pre-loved B2C resellers, who purposefully include environmental protection, recycling or fair trade goals in their mission statement. They, of course, are obliged to report transparently on their impact. (And must expect scrutiny and reproaches of green washing if they don't).

For all other e-commerce business models, sustainability measures rank on their to-do list as a communication idea to follow-up on 'as soon as we have time'. Thereby ignoring indicators, that in the long term sustainability might be far more important for the company's success than the occasional bit of good PR.

Sustainability is more than CO2-neutral Shipping

While no online business would openly reject sustainability as a meaningful goal and everyones’ responsibility; a company’s impact in is usually not transparent neither for customers nor partners. Oftentimes its status is not even known internally.

And while offering CO2-neutral shipment is popular, very few merchants consider transparency on their sustainability goals a self-evident duty.

Reforestation, the protection of living nature, switching to recycled materials, and packaging, green energy and other measures to handle natural resources responsibly is not a generosity towards other species. Preserving habitats and environmental balance is an important and self-interested contribution to ensure that we all ourselves will continue to live well and in a healthy way.

Considering this, we might have been defining "sustainable" far too narrowly in e-commerce up until now. While we navigate our digital environment daily, particularly in e-commerce, we rarely discuss its sustainability aspect. Digital communities and networked spaces have multiplied beyond expectation and greatly expanded every aspect of everyday life. And just as any other living environment, the digital space is shaped by how we act and intend to live in it. How would a sustainable digital environment look like of businesses as well as for users?

Mental stress highlights how security concerns are shaping the digital lifestyle more and more, with evident serious effects.

Eco Anxiety Precedes Privacy Anxiety

Just as climate change is a global challenge and a defining issue of our time, so is digitalization with all its opportunities and threats.

Being anxious and experiencing existential fear with regards to climate change and the destruction of natural environments has been known as "eco anxiety" since 2017. Eco-Anxiety continues to present itself as a phenomenon with a strong and ever rising negative impact of people’s lives. („Understanding eco-anxiety“ in The Journal of Climate Change and Health)

Similarly, "Privacy Anxiety" describes the mental state, when omnipresent digital tracking leads to concern and fear. Those affected are afraid of manipulation and loss of control due to the collection, industrial processing and use of their personal data: Of unnoticed spying, resulting adverse treatment, fraud and even the loss of their own identity.

The connections between climate change were unclear for a long time or were willingly ignored, except by experts and informed circles, until the global extent became obvious and everyone was inevitably affected.

The dangers of uncontrollable personalized traces also only become clear at a point when the collection and use of personal data has entered society, markets and politics on a large scale and worldwide.

By analogy, I would like to call "privacy anxiety" [link to article 1] state of unease when omnipresent digital tracking leads to concern and fear. Those affected are afraid of manipulation and loss of control through the collection, industrial processing, and use of their personal data, to which the current infrastructure of the internet exposes us.

However, it is not only the appropriation of highly personal and private information by strangers that triggers this anxiety. More concerning and threatening are of course the possible consequences: Eliciting details that you did not want to reveal, being spied on, experiencing detrimental treatment (inaccessible content, higher prices, fewer job opportunities, insurance fees, credit rating), fraud (burglary, theft, deception) and even the loss of your own identity (identity theft, criminal impersonation).

For a long times the dependencies and influencing factors of climate change were unclear or willingly ignored, except by experts and other well-informed circles, until the global extent became apparent. The fact that everyone is inevitably affected extends our personal responsibility from our own immediate environment to everyone who shares their living space.

Similarly, for users without digital expertise, the dangers will only become clear at a point when the collection and use of personalized information has entered society, markets and politics on a large scale and worldwide. We may not yet be at this point of collective awareness, but we are pretty close.

And here we face the same questions of innovation, initiatives; metrics and standards, initiatives, targets and coordinated action that we now focus on in environmental efforts.

Shaping the Digital Habitat

Anyone who collects, processes and uses data makes a contribution for or against the preservation of a healthy living environment.

This applies to anyone who operates a digital offering, such as an app or website. And it applies in particular to online shops that handles a large amount of highly sensitive data and who uniquely link personal behavioral information with legal (identity), financial (payment) and local (shipping) data.

Digitalization has developed in the manner of an exciting experiment based on the trial-and-error principle. As a result, some questions were ignored or remained unanswered in the early days - sometimes perhaps rightly so.

However, if major questions are permanently ignored and remain unanswered, this creates a climate of concern and unrest. The consequences of a high level of digitalization in all areas of life is one such unanswered big question. Evidently, we can only shape what we have reflected on and understand well. But did anybody every deeply research and reflect on what a healthy and thriving combination of analog and digital life would look like?

I guess no one has yet contemplated a medium to highly digitalized world with reality-based models. And for proof I refer to the fact that works of literature and film are still our best scenarios of pessimistic as well as optimistic fantasies about the future: be it Orwell's 1984, The Matrix or The Jetsons.

From Innovation to Mainstream - Commerce as a Milestone and Catalyst

Now, if all areas of life and activities are affected by digitalization, why the focus on e-commerce?

Because retail has been and still is accelerating digitalization. It was the first and most important area of everyday life to be digitized at a high level. And a closer look reveals that many innovations reached mass suitability precisely when they were safely established in retail.

If you examine the history of innovation, you'll find that this pattern applies not only to digital advancements but to all innovations. For instance, the Spinning Jenny was designed to increase textile production – not as an end in itself, but of course specifically for higher trade goals. Similarly, the invention of the wheel spread primarily because it facilitated the transportation of heavy goods. I suppose not only for building pyramids, but also for commercial ends. There are many more examples that I will not go into now but they all show, that although with current advancements in psychology we had to correct the concept of "homo oeconomicus" as less rational than initially thought, the term still applies and underscores the inherent economic motivations behind technological progress.

Here are two examples from our shared recent digital history:

Social media became a pivotal part of the customer journey when companies and brands started creating targeted content, providing easy access, and investing heavily in community engagement and advertising. Today, social media is an integral component of every marketing strategy. Platforms like Facebook have evolved from simple friend lists and pinboards into comprehensive news channels for products, special interest topics, and current events, becoming crucial mediums for promotion, advertising, and even electoral campaigns.

Some other channels have followed the model, such as Instagram, TikTok and Pinterest. Others - Snapchat - have not yet succeeded to the same extent. But perhaps we just have to wait until the user base is older and has more purchasing power.

The common belief is that platforms are so excellent that they attract vast amounts of users, leading retailers to follow suit to reach customers. However, beyond a certain scale, I see a different cause-and-effect scenario: retailers act as kingmakers, driving opportunities to social platforms.

Firstly, through the marketing money that finances the platforms business model, but secondly also by transferring customer loyalty. Many retailers are not aware that it is them who holds the client’s trust and transfer it to the new (social) medium or communication channel.

A second example is mobile commerce. Mobile devices have been around for a long time, and the early days was not only internet browsing and e-mailing. Back in 2001 I was working for one of the first companies with commercial approaches in mobile payment. They didn't catch on because the acceptance of paying with a cell phone as we casually do today via NFC at the café or supermarket checkout, had no trust and acceptance back then.

Again, the big breakthrough for mobile commercial transactions succeeded at the point when online stores also offered a good user experience – nicely boosted by iPhone screens. Mobile digital then came full circle as the smartphone made it possible to organize all aspects of life: business communication, fitness trackers, ordering a cab, lunch or the weekly grocery shopping all from a small handheld in your pocket.

Today only website and app designers consider devices (in order to optimize UX),  the end user naturally and effortlessly switches between screens and – with exception of the tv - none of them is really stationary anymore. Language is probably the best proof of this. Who does indeed still talk about m-commerce today? (You may have even smirked at my sentences above. :) ) The only question we ask today - if at all - is whether “mobile first” or not.

E-Commerce is always at the Forefront...

With double-digit growth rates and a technologically very dynamic environment, e-commerce continues to be at the forefront of digitalization. I therefore expect e-commerce to be one of the first to feel the consequences of this sometimes undirected anxiety, sometimes very specific fear called "privacy anxiety".

The protection of individual end users is the last missing piece of the puzzle in the discussion about environmental and social due diligence that has been building up over a long period of time. Voluntary guidelines on ESG issues (environmental, social, governance) have been in place at UN and OECD level for many years. There is a fundamental consensus that states have a duty to protect their citizens, but that companies have a responsibility to ask whether and who is being harmed. It is also clear that those who suffer should be compensated.

Because it has been shown that voluntary action is not enough when people and the environment are harmed, the law on supply chain due diligence has been in force in Germany since January last year (2023). The Corporate Sustainability Due Diligence Directive has just been passed at EU level (April 2024), which goes beyond the German Supply Chain Act in some respects, for example in terms of the monitoring obligation, but also the possibility for individually affected parties to sue for damages under civil law in the EU member states.

Even though today small and medium-sized companies are not legally affected by either of them (GSCA applied to over 3,000 employees in 2023, and now to over 1,000 employees since 2024; CS3D to over 250 employees and 450 million annual turnover), the general perception on fair business behavior is clear. Any company, large or small, has to take responsibility for their effects on customers and partners, the environment, and communities; not only for their own immediate actions, but also for actions connected to their content of business.

Protecting human rights is one of the core pillars of sustainable business practice. The safety of the individual and the prohibition of invasion of privacy are human rights. So it is astonishing, that as things stand today, the health consequences in the digital space are neither monitored nor communicated transparently.

Of course, there is GDPR (General Data Protection Regulation). But GDPR only requires documentation and consent. It does not ask what good and healthy practices for business and users would look like. Crucial questions of are still unanswered.

Regardless of possible future legislation, being directly affected by Privacy Anxiety is in any case a strong motivation to find answers and look for better solutions. Companies will want to protect and raise their image and brand value with sustainability goals, but at the same time they will actually really want to act responsibly towards their own clientele, whom they are working hard to attract and retain as long-term customers.

It is evident, that luring users to consent to tracking with the help of incomprehensible cookie banners is not helping with either of these goals.

[credits: environmental header visual curtesy of skyoverse.]