Etsy Crafts a Plan for Carbon-Neutral Online Shopping

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Tomorrow, all the carbon emissions spewed into the atmosphere from US ecommerce deliveries—some 55,000 metric tons of CO 2 , by one estimate, from trucks and planes shipping packages across the country—will be neutralized.

It’s all thanks to Etsy, the global online market for indie makers, which is picking up the tab on high-quality carbon offsets for itself as well as its competitors on Thursday. Etsy’s largesse ends after tomorrow, but it will continue to offset its own carbon footprint going forward, becoming the first ecommerce company to completely offset all its emissions generated from shipping.

Etsy estimates that doing so will cost less than a penny per package—less than $1 million for the year. The company made more than $200 million in just the last quarter of 2018 . The price of covering the industry’s emissions for one day won't even reach six figures.

“It's a pretty trivial cost,” says Etsy CEO Josh Silverman, who joined the company in 2017 and has been credited with turning around its fortunes . Before he joined, the company’s sales seemed poised to be gobbled up by Amazon. Though Amazon has only continued to dominate—accounting for almost 50 percent of total online sales last year, by one estimate —Etsy has regained its foothold on the craft market. Just this week, the company’s stock price surged on the news that its revenue was up 47 percent year over year.

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Silverman sees tackling sustainability as core to his stewardship of the brand. Ecommerce has come under scrutiny for its environmental consequences, but Silverman believes Etsy sellers and customers are eager to minimize their harm to the planet. To that end, he thinks carbon offsets will likely be good for the company’s bottom line.

Silverman also hopes that by paying for the rest of the industry’s carbon footprint for one day, Etsy will inspire its competitors. Carbon offsets, he wants them to understand, are extremely affordable. “If Etsy, on its own, can afford to buy the industry a day of clean air," he says, "then why can't we all do it?”

Etsy has been publishing the data on its carbon footprint since 2013 and has had outside auditor PwC assure the numbers since 2016. It calculates that around 98 percent of its carbon footprint comes from shipping. Last year, its carbon footprint from shipping was 135,459 metric tons of CO 2 .

If every ecommerce company offset its emissions, it would make a difference. Transportation is the single biggest source of greenhouse gas emissions, according to the US Environmental Protection Agency —more than electricity or industry. Most of that comes from the fuel it takes to power cars, planes, trucks, and boats.

It’s hard to tell exactly how big the shipping emissions footprints of other ecommerce companies really are. Amazon, by far the biggest e-retailer, has come under fire for a lack of transparency around its environmental impact, although last week the company announced it would share its carbon footprint sometime later this year as part of a plan to make 50 percent of all shipments carbon neutral by 2030.

If Amazon wanted to offset its shipping emissions now, some back-of-the-envelope math using available numbers suggests how much it might cost. The company says it shipped over 5 billion items using Amazon Prime in 2017. Amazon Prime, with its free two-day delivery, has been accused of having a larger environmental impact, since the expedited time frame can make bundling items in the same package or delivery vehicle less practical. If each of those items was shipped separately, and if I borrow from Etsy’s calculation that it costs less than a penny per package to offset emissions, then it would cost Amazon less than $50 million to offset the emissions of Amazon Prime shipments in a year.

That sounds like a lot, but it’s only five times more than what Amazon CEO Jeff Bezos is estimated to have paid for the single-use Washington Post ad he ran during the Super Bowl. And it’s less than 5 percent of Amazon’s reported $11.2 billion profit from 2018.

“If Etsy, on its own, can afford to buy the industry a day of clean air, then why can't we all do it?”

Josh Silverman, Etsy CEO

Chelsea Mozen, Etsy's sustainability lead and the architect of today’s announcement, calculated her own company's carbon emissions burden by using internal shipping data, US Postal Service data, and location information for sellers and buyers. To figure out how to offset the entire industry’s transportation emissions for a day, Mozen overlaid her internal shipping-emissions-per-sale analysis with estimates of the industry’s total sales, which she took from the US Census Bureau . She came up with an estimated 55,000 metric tons of CO 2 per day.

Climate-change experts commended Etsy’s approach. “This is a solid move, and encouraging,” says Adam Klauber, director of sustainable aviation at the Rocky Mountain Institute .

But while experts agree that carbon offsets are the best option for an organization wanting to take immediate action, they caution that it's a stopgap measure and not a solution to climate change. “Offsets are sort of second best because, essentially, what it does is allow you to continue emitting, and what we have to actually do is stop emitting,” says Phil Duffy, president of the Woods Hole Research Center, the leading climate change think tank in the US. “What I hope is that the company doesn’t view this as, OK, we solved our emissions problem.”

Etsy knows this. According to Mozen and Silverman, the company’s goal is to eventually cut down on actual emissions. Amazon says it also intends to do this. Doing so will take time and require changing the supply chain and shipping partners to use greener methods—such as electric or even hydrogen trucks, which are not yet available at the scale that ecommerce companies require. And Etsy is at a disadvantage when it comes to decisions about its shipping methods, because it’s not in direct control the way other ecommerce companies like Wayfare or even Amazon (except for its third-party sellers) are. Rather, individual Etsy sellers decide how to ship their goods. While the company works to figure out how to reduce its overall emissions, Mozen felt offsets were the best, most immediate way to have a positive impact.

All of that is true, experts say, so long as the offsets are of a high quality. Klauber says 3Degrees is highly regarded in the industry and offers offsets that have a genuine impact. Going forward, Duffy would like to see ecommerce companies band together to influence shipping companies to invest in greener technologies. For Etsy, that kind of collaboration has precedent. In 2018, it negotiated a purchasing agreement with Apple to give the company more market power to access large renewable energy projects. And today it becomes the first ecommerce company to offer its customers the promise that packages delivered from Etsy are not hurting Earth. It’s a pretty good start.

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