Fostering a Greener E-Commerce Future: UNCTAD Report Highlights Sustainability Challenges and Solutions

UNCTAD’s latest policy brief highlights the environmental challenges of e-commerce, from packaging waste to last-mile delivery emissions. The report calls for regulatory action, business innovation, and consumer awareness to ensure a greener digital marketplace. With solutions ranging from solar-powered warehouses to eco-friendly packaging and low-carbon delivery methods, a sustainable future for e-commerce is within reach.

E-commerce has become a powerhouse of global trade, offering unparalleled convenience and economic growth. However, its rapid expansion brings environmental challenges that require urgent attention. According to a recent policy brief by the United Nations Conference on Trade and Development (UNCTAD), titled Fostering Environmentally Sustainable Electronic Commerce (January 2025), the sector must adopt sustainable practices to mitigate its ecological footprint. The rise of online shopping has led to increased emissions, packaging waste, and energy consumption in warehouses. While business-to-business (B2B) e-commerce tends to be more efficient due to bulk shipments, business-to-consumer (B2C) transactions generate more waste and emissions due to frequent small-package deliveries. The UNCTAD report calls for a fundamental shift in logistics, packaging, and transportation practices to ensure sustainability.

Warehousing plays a crucial role in e-commerce but contributes significantly to carbon emissions. Large distribution centers, often located far from urban areas, consume vast amounts of energy for heating, cooling, and lighting. However, innovations are emerging. In China, solar-powered logistics centers have cut carbon emissions by over 21,000 megatons. Similarly, Pakistan’s e-commerce platforms are utilizing solar-powered facilities to reduce energy consumption. Governments should provide incentives for renewable energy in warehouses, and businesses must invest in smart warehouse management to optimize energy use.

E-commerce deliveries often involve excessive packaging, leading to a surge in single-use plastics and cardboard waste. Studies have found that online shopping generates significantly more packaging waste than traditional retail. Companies like Amazon India and Mercado Libre in Latin America are shifting towards recyclable and biodegradable packaging to address this issue. Governments should regulate packaging waste and incentivize eco-friendly materials, while businesses should minimize packaging through right-size designs and recyclable materials.

Transportation, particularly last-mile delivery, is a major contributor to e-commerce’s carbon footprint. The demand for fast shipping increases reliance on fossil-fuel-powered vehicles, worsening emissions. Some companies are transitioning to electric vehicles (EVs) and alternative delivery methods. For example, in China, replacing conventional delivery vans with electric bicycles reduced emissions by up to 71%. Governments should invest in EV infrastructure and promote sustainable transport, while businesses should adopt AI-driven route optimization and low-carbon delivery fleets.

E-commerce returns not only create financial losses but also contribute to waste and emissions. In the U.S. alone, returns amounted to $816 billion in lost sales in 2022. To address this, some companies are leveraging augmented reality (AR) for virtual product trials and introducing return fees to discourage unnecessary returns. Governments should ban the destruction of returned items and promote durable product designs. Businesses should enhance product descriptions, introduce AR shopping tools, and improve reverse logistics. Consumers should make informed purchasing decisions to minimize unnecessary returns.

Consumer habits heavily influence the environmental footprint of e-commerce. Impulse purchases, fueled by marketing tactics like flash sales, drive overconsumption. However, younger consumers are showing increasing awareness of sustainability, prompting businesses to introduce eco-friendly options such as carbon-neutral shipping and minimalist packaging. Governments should launch awareness campaigns and implement eco-certifications for online products, while businesses should provide transparent environmental data and incentives for sustainable shopping.

E-commerce platforms can promote sustainability by enabling the resale, reuse, and rental of products. In India, platforms for second-hand goods have helped reduce carbon emissions by 8 million tons annually. Peer-to-peer platforms also support the sharing economy, but the risk of increased consumption remains a concern. Governments should regulate to prevent the rebound effect of increased consumption. Businesses should expand circular economy initiatives such as resale and repair programs. Consumers should prioritize repair and reuse over frequent replacements.

Sustainability in e-commerce requires international collaboration. UNCTAD highlights the need to integrate environmental considerations into digital trade agreements. While frameworks like the African Continental Free Trade Area and WTO’s e-commerce rules address trade facilitation, they currently lack explicit sustainability provisions. Policymakers should incorporate sustainability measures into international trade agreements. Governments, businesses, and international organizations should collaborate on data-driven sustainability research. Technological innovation should be prioritized to enhance energy efficiency and reduce waste in e-commerce.

The UNCTAD report underscores that achieving environmentally sustainable e-commerce requires collective efforts from governments, businesses, and consumers. By adopting innovative solutions and enforcing regulatory frameworks, e-commerce can continue to drive economic growth while reducing its environmental footprint. As online shopping continues to reshape the global economy, the need for responsible and sustainable practices has never been more urgent. Policymakers, industry leaders, and consumers must take decisive action to ensure that the digital marketplace contributes to a greener and more sustainable future.