Are sustainability and social responsibility feasible in e-commerce?
Particularly for younger generations, sustainability and social responsibility are key buying factors. How can small and medium-sized e-commerce retailers ensure that their products meet these requirements?
Who defines social responsibility in online retail?
The sobering answer to this question is: nobody. To date, there are no internationally recognized certificates or seals that are based on an objectively verifiable and transparently traceable set of criteria. As an example, the German “Grüner Knopf” (“Green Button”) label, which was introduced by the government in 2019 for clothes that have been produced in a fair and environmentally friendly way, makes a good start, but even that by far doesn’t cover all the production steps.
However, more and more online retailers want to satisfy the needs of their customers and so they give themselves and their product range their own fair trade label for sustainable production or talk about corporate responsibility and socially acceptable standards. But how can customers be sure that the emphatic claims and marketing activities of an online retailer aren’t just merely false labeling, greenwashing, or social washing? And how can e-commerce companies ensure that their products meet the criteria of the standard they set for themselves along the entire value and supply chain?
The intention is there! So why is social responsibility still not sufficiently put into practice
Declaring CSR (corporate social responsibility) as a strategic management approach is relatively easy. But it’s a different story to incorporate social responsibility into an e-commerce strategy, establish it as a corporate attitude, and introduce specific CSR measures and compliance in practice. After all, corporate responsibility is not an isolated measure, but rather a fundamental issue of how a company sees itself and aligns itself sustainably – a comprehensive management approach that involves far-reaching aspects of its business activities on a social, environmental, and economic level, such as:
- Responsibility towards and contributing to the common good
- Effective and sustainable use of resources
- Health and safety in the workplace
- Employee satisfaction
- Reduction of emissions
- Energy efficiency
The problem of this comprehensive concept for sustainable business can be easily explained: ensuring end-to-end transparency with regard to social responsibility and sustainability in the supply chain is difficult, even for long-standing small and medium-sized enterprises that have a relatively close relationship with their suppliers and producers abroad. For small and medium-sized online retailers, establishing a risk assessment system and corresponding monitoring is extremely complicated due to a lack of binding guidelines and fixed parameters.
For example, in the electronics sector and textile and leather industries, working from home is a common practice in many countries. This undoubtedly presents an opportunity that socially disadvantaged women and families living in poor conditions can particularly benefit from. But that is just one side of the coin. At the end of the day, who can check that safety standards and regulated working hours are complied with and that child labor is not happening when people work from home?
Small and medium-sized enterprises in developed parts of the world that use products from third-party producers, suppliers and intermediaries themselves often don’t have the full picture of the respective supply chains and the working conditions that exist in each individual link. Consequently, although they recognized the importance of social responsibility a long time ago, they simply do not have the means to effectively enforce appropriate concepts. Online retailers hardly have the power that large corporations do to contractually force suppliers to adhere to sustainability criteria.
Corporate social responsibility can only be implemented on an individual basis
It is important to remember that your CSR will only be credible if it is reflected in a transparently communicated commitment that is actually instilled throughout the whole company. Simply copying random guidelines from a large corporation that are not a good fit with your business at all and are impossible to comply with is therefore anything but advisable. Instead, you should follow the advice below when defining your own social responsibility strategy for your online business:
- Define your own specific sustainability goals for your online business and communicate them clearly and unambiguously.
- Choose CSR goals that are precisely aligned with your e-commerce business. In this respect, it is helpful to communicate closely with employees, suppliers, partners, and external stakeholders and incorporate their specific suggestions for feasible CSR guidelines from an economic, environmental, and social perspective.
- The guidelines for each individual goal must be formulated in a way that allows you to ensure that they are also observed by your business partners and suppliers.
- To do this, define fixed parameters and measurable goals that will later make your CSR activities objectifiable and communicable.
- Establish your CSR strategy in your company’s objectives and values and communicate it as an integral part of your business attitude.
- Implement appropriate internal processes and measures to meet the guidelines of your CSR. In addition, identify relevant KPIs that help you measure the achievement of your goals.
- Clearly and transparently communicate your goals and intentions to your customers and business partners.
If you take this advice on board, externally communicating your CSR as part of your attitude and business strategy can become a real competitive advantage for your business and significantly boost your reputation and profitability. However, you need to make sure that your communication matches your actions because credibility is key when it comes to sustainable marketing!
How do you go about implementing corporate social responsibility in e-commerce?
Companies that want to set standards for sustainability in their online retail should first address the following four areas, since they present the biggest potential for optimization:
- Carbon dioxide emissions
- Returns management
After all, two of the biggest criticisms customers have about sustainability in online retail is the sheer amount of packaging waste and shipping/delivery issues. Effective concepts already exist for both issues. Recyclable packaging, as offered by innovative startup company Living Packets for example, could replace billions of disposable, nonreturnable packages. According to the results of a study conducted by PwC, companies that adopt similar alternative concepts in this area, for example less filler material, no plastic, or reusable packaging, do business more sustainably than many renowned competitors and can thereby win the hearts of customers.
CO²-neutral delivery concepts are still in the development and trialing phase, but SMEs can already utilize the benefits of bulk shipping provided by specialized delivery companies, for example. When communicated in the right way, many customers are willing to sacrifice express deliveries, thereby reducing the number of unnecessary empty trips.
In the majority of cases, making “eco-mmerce” a reality is ultimately about eliminating the conflict between sustainability and customer experience. Usually, this conflict actually only exists on the surface: the key to solving the problem can frequently be found in the transparent communication of the company’s own measures. In other words, if you make it clear to your customers why you don’t want to offer next-day delivery, you will even improve the customer experience in the long run in many cases.