ecommerce consequences

8/13/2019 eCommerce Consequences

1/18

F O R U M

http://mitpress.mit.edu/jie Journal of Industrial Ecology 25

Copyright 2003 by the

Massachusetts Institute of Technologyand Yale University

Volume 6, Number 2

E-Commerce

Sorting Out the Environmental

Consequences

Klaus Fichter

Keywords

business strategy

e-commerce

environmental management,

information and communicationtechnologies (ICT)

innovation

rebound effect

Address correspondence to:

Dr. Klaus Fichter

Director

Borderstep

P.O. Box 37 02 28

14132 Berlin, Germany

[email protected]

Summary

The environmental effects of e-commerce may be described

in terms of first-, second-, and third-order effects. Data for

these effects are scarce, partly because research on environ-mental effects of e-commerce and e-business is still in its in-

fancy, although it is evolving very rapidly.

Until now, positive environmental consequences of e-

commerce have generally been coincidental. Two crucial ques-

tions that must be addressed are (1) How do we improve our

understanding and management of the environmental effects

of e-commerce? and (2) Which approaches are best suited to

the development of sustainable e-solutions? Three approaches

to developing sustainable e-commerce solutions are discussed:

the extension of environmental performance measurementand management to e-commerce activities, the use of new

cooperative forms of innovation management, and the provi-

sion of customer choice. Finally, an outlook on future research

demands is presented. The technology itself (information and

communication technologies, Internet) does not determine

sustainability, but rather its design, use, and regulation does.


2/18

F O R U M

26 Journal of Industr ial Ecology

The First and Second Waves ofthe Internet Economy

Nineteen ninety-three is regarded as the year

when the Internet economy was born with the

breakthrough of the World Wide Web. Sincethen, the Internet has developed into a service-

integrated global network1 with a diversity of

multimedia uses (Picot et al. 2000). The initial

euphoria over the new economy has in the mean-

time given way to more realistic market valua-

tions after the failure of many Internet start-ups

and the still low proportion of e-commerce in the

overall trade turnover.2 E-business will not be the

be-all and end-all in the future, but e-commerce

will certainly gain in importance. In 2001, we

already had over 300 million Internet users

worldwide.3 According to forecasts of the Euro-

pean Commission, there will be more than 500

million users by 2003 and a rapid increase in e-

commerce turnover, rising from US$500 billion

worldwide in 2001 to more than US$3 trillion in

2004 (eMarketer 2001). More than three-

quarters of all on-line sales and purchases for the

years 20002003 are in the business-to-business

(B2B) sector.

At present, a second wave of the Interneteconomy is approaching. Until now, Internet use

has almost exclusively relied on a global network

of stationary computers and terminal devices.

With new standards in the field of mobile tele-

communication systems (for example, the Uni-

versal Mobile Telecommunications System) and

Internet-compatible mobile devices (mobile

phones, personal digital assistants), the number

of users worldwide with mobile Internet access is

projected to rise from 16 million in 2001 to al-

most 500 million in 2005 (NFO 2002, 27).

Mobile e-commerce (known as m-commerce)

will rapidly gain in importance. In addition, fall-

ing chip prices, novel access channels (e.g., In-

ternet access via power lines), and mobile appli-

cation technologies (e.g., smart tags4) are

expected to link everyday products such as re-

frigerators, cars, and clothing to the Internet and

to relate them to Web-based services such as re-

mote control, metering, measurement, diagnos-

tics, and dynamic software updates to devices,appliances, and systems. The Internet revolution

continues.

What does the future hold for the Internet

economy? WillHomo connecticuslovingly stroke

over his computer touch screen, be beamed via

the World Wide Web around the globe in a mat-

ter of seconds, and get all his work done effort-

lessly, cheaply, in real time, and of course usinga minimum of energy resources and without any

environmental side effects? Is that the new econ-

omy: clean, pollutant free, and gentle on re-

sources? If you believe the advertisements, yes!

The real world of the digital economy will prob-

ably look very different. The proclaimed para-

digm shift from atoms to bits (Negroponte 1995)

is only half of the story.

Definitions and Focus

Concepts such as e-business, e-commerce, In-

ternet economy, digital economy, and new econ-

omy are relatively recent constructs. Therefore,

they have no common interpretation as yet

(Wirtz 2001). Their use and importance, how-

ever, reflect rapid development in the use of the

Internet and new information and communica-

tion technologies (ICTs).

The concept of an Internet economy is

based on three key characteristics: It is foundedon digital technologies, intensively interlinked,

and global (Kelly 1998; Wirtz 2001). The term

Internet economy emphasizes the networking

of economic actors and processes by means of

electronic communication media and the related

change in structures of value creation, mecha-

nisms of market function, professional life, and

consumption patterns. The following text uses

the concept of Internet economy as an all-

encompassing notion, as it emphasizes the new

quality of connectivity (Venkatram and Hender-

son 1998). The notion of Internet economy

comprises both micro and macro perspectives

and covers the whole range of economic trans-

actions (profit oriented or not).

E-commerce and e-business are applica-

tion forms of the Internet economy. In this ar-

ticle, e-commerce is understood as part of e-

business, which also includes, for example, video

conferencing and teleworking. On the basis of

definitions available so far,5 the term e-businesscan be defined as follows: business processes,

commercial activities, or other economic tasks


3/18

F O R U M

Fichter, Environmental Consequences of E-Commerce 27

conducted over the Internet or computer-

mediated networks (Intranet, etc.).

E-business processes are carried out using ICT

equipment and applications. In this respect, e-

business and e-commerce are components of ICT

use. Among all the different definitions of e-commerce (Wirtz 2001, 33; OECD 2001), that

of the OECD is probably the most common, be-

cause it has been agreed on by all member coun-

tries.6 The definition is operational, that is, it is

being used as a basis of statistics and indicators.

The OECD is gives both a narrow and a broad

definition of e-commerce:

Narrow definition.An Internet transaction is

the sale or purchase of goods or services,

whether between businesses, households,individuals, governments, and other public

or private organizations, conducted over

the Internet. The goods and services are or-

dered over the Internet, but the payment

and the ultimate delivery of the good or

service may be conducted on- or off-line.

Broad definition. An electronic transaction is

the sale or purchase of goods or services,

whether between businesses, households,

individuals, governments, and other publicor private organizations, conducted over

computer-mediated networks. The goods

and services are ordered over those net-

works, but the payment and the ultimate

delivery of the good or service may be con-

ducted on- or off-line.

This article examines the environmental effects

resulting from e-commerce, using the OECDs

broad definition of e-commerce, and describes

approaches for sustainable business strategies inthe Internet economy.

Environmental Effects ofE-Commerce

Three main categories of environmental ef-

fects of e-commerce can be distinguished (Fi-

chter 2001; Berkhout and Hertin 2001), as pre-

sented in figure 1:

First-order effects.E-commerce presupposesthe availability of an ICT infrastructure

(PCs, mobile phones, servers, routers, etc.).

The production and use of the ICT infra-

structure cause material flows, use hazard-

ous substances, and lead to energy con-

sumption and electronic waste.

Second-order effects. E-commerce is trans-

forming economic processes and markets.E-markets, virtual business networks, and

the digitalization of products and services

entail environmental consequences, for ex-

ample, for resource productivity, transpor-

tation, and land use. These effects may be

either beneficial or damaging to the envi-

ronment.

Third-order effects. E-commerce causes

structural change of the economy and af-

fects lifestyles and consumption patterns,

which, in turn, indirectly affect the envi-

ronment. If the rate of efficiency improve-

ments (e.g., the miniaturization of devices)

is lower than the growth rate of consump-

tion (e.g., more devices used), we have the

so-called rebound effect.

First-Order Effects: ICT Infrastructure

Two crucial questions regarding the environ-

mental effects of the ICT infrastructure are asfollows:

1. What is the volume of energy consump-

tion caused by this ICT infrastructure

(PCs, servers, routers, etc.) over its life cy-

cle?

2. What is the volume of material flows

caused by the manufacture and disposal of

this ICT infrastructure?

Few assessments have been completed of the en-

ergy consumption associated with ICT infra-

structure use and manufacture. Existing studies

indicate that, in the United States, electricity

used for all office, telecommunications, and net-

work equipment (including electricity used to

manufacture the equipment) is about 3% of total

electricity use (Koomey 2000, 27).7 In Germany,

the share of electricity consumption for Internet

use (PCs at home and in offices, Web servers,

routers, etc.) is estimated at about 1%. This fig-

ure could rise to about 2% to 6% in 2010, de-pending on the extent of energy efficiency mea-

sures (Langrock et al. 2001). The available


4/18

F O R U M


Figure 1 Environmental effects of e-commerce.

studies do not detail, however, how much of theenergy consumption is attributed to e-commerce

applications.

Telecommunications in Germany (fixed-line

networks and mobile communication systems)

are estimated to use 0.7% of the overall electric-

ity consumption, similar to that used by the In-

ternet. In 1996, annual telecommunications en-

ergy consumption was about 3.1 TWh,8 a figure

that has probably increased because of the ex-

pansion of the mobile communication networks.

Recent studies estimate the energy consumption

of mobile communication to be as high as 0.4

TWh. Of interest in this context is the fact that

the respective infrastructure (base stations, etc.)

accounts for about 90% of this amount, whereas

terminal devices account for only about 10%

(Schaefer and Weber 2000). According to the

network providers, the energy consumption of

the infrastructure is largely independent of the

number of users. Rapidly increasing numbers of

participants in mobile communication thereforewill have little impact on energy consumption as

long as existing networks have the capacity to

admit further users (Schaefer and Weber 2000).

So far, the debate on pollution resulting fromInternet use and e-commerce has largely focused

on energy consumption, with little attention to

the material aspect. Hence, only general data on

material flows associated with ICTs have been

ascertained (Behrendt et al. 1998), and their re-

lation to e-commerce remains uninvestigated.

The following general information is available:

Only 2% of the material flows entering

production (including those preceding pro-

duction stages) go into the final product,

whereas 98% result in waste (Hilty and

Ruddy 2000).9

In 1998, 6 million metric tons of waste

electrical and electronic equipment

(WEEE) were generated within the Euro-

pean Union (4% of the municipal waste

stream). The volume of WEEE is expected

to increase by at least 3% to 5% per annum

(CEC 2000). Entertainment equipment

accounts for about 25% and ICT for about12% of WEEE. As more than 90% of

WEEE is landfilled, incinerated, or recov-

ered without any pretreatment, a large pro-


5/18

F O R U M


portion of various pollutants found in the

municipal waste stream comes from WEEE

(CEC 2000). For the remaining sets, ma-

terial recycling prevails, whereas reuse is

very rare. Fast innovation leads to a further

decrease in average product lifetime, whichaggravates the waste issue. Cellular phones

even threaten to become a throwaway

product: Dieceland Technologies has de-

veloped worlds first disposable cell phone

(www.dtcproducts.com/). Thus, a further

increase in the waste volume must be reck-

oned with (Fishbein 2002).

The relevant infrastructure includes the

fixed-line networks of Deutsche Telekom

and other network providers, transmitting

and receiving stations, large-scale comput-

ers, and cable connections. The copper

long-distance cable net of Deutsche Tele-

kom alone, with its weight of 5,000 kg/km

and a copper content of approximately

1,800 kg/km, contains about 300,000 met-

ric tons of copper (approximately one-third

of the total annual use of copper in Ger-

many). This corresponds to an ecological

backpack of 150 million metric tons of

waste and overburden from ore mining andprocessing (Behrendt et al. 1998).

Second-Order Effects Due to Changed

Processes and Markets

E-commerce presents opportunities to accel-

erate business processes, reduce costs, reach new

customers, and develop new business models and

markets. The general agreement is that elec-tronic markets and digitalization of products will

impact material flows. A clear identification of

the extent and direction of effects, however, has

not yet been achieved, and the issue remains

controversial. Secondary effects due to changed

processes and markets may show up in the fol-

lowing areas:

Digitalization of Products and Services

The core insights of the available studies(Kortmann and Winter 1999; Greusing and

Zangl 2000; Reichart and Hischier 2001; Quack

and Gensch 2001) may be summarized as follows:

Whether the utilization of electronic me-

dia will increase or decrease environmental

impacts is not yet known (Fichter 2001).

As with life-cycle assessment (LCA) in

general, results in this field crucially de-

pend on the underlying assumptions anddefined system borders (Fichter 2001).

Frequently, electronic media are not so

much a substitute for as a supplement to

printed or other media, thus tending to in-

crease environmental impacts (Greusing

and Zangl 2000). The risk exists for incom-

plete substitution and for the additional

use of electronic media next to conven-

tional media.

The environmental profile of Internet use

and electronic media heavily depends on

the means of electricity production, hence

on the respective shares of the generation

technologies. For printed media, the extent

of paper recycling strongly influences the

environmental outcome (Reichart and

Hischier 2001).

The network infrastructure (server, router,

etc.) and terminals are of considerable rele-

vance with regard to energy consumption

and materials use (Behrendt et al. 2002). Important factors influencing the environ-

mental effects of ICT use are frequency and

duration of media use, degree of utilization

of individual devices/media (difference be-

tween professional and private use), mul-

tifunctionality of the devices/media, and

utilization forms/behavior (Reichart and

Hischier 2001).

In a given circumstance, there is limited

choice about using an information or tele-

communications medium or not. There-

fore, in the short run, the focus should be

on optimizing the efficiency of the respec-

tive medium. In the long run, there is more

opportunity to choose between media, tak-

ing environmental concerns into account.

Effects on Production and Inventories

Increased resource productivity is discussed as

one of the major potential ecological advantagesof e-commerce. Potential exists, above all, in the

fields of demand and supply chain management,

e-procurement, and mass customization. Poten-


6/18

F O R U M


tials to increase resource productivity appear in

outline particularly in the business-to-business

(B2B) field, where there may be, for instance,

reduction in quantities procured or stored, sur-

plus production, and error rates between supplier

and manufacturer.10

Initial studies reveal positive effects on re-

source productivity due to e-commerce in the

procurement and sales sector (Behrendt et al.

2002). Over the short and medium term, up to

a 5% reduction of material use per unit of final

product sold seems possible, primarily because of

a reduction in the scrapping of stocks for prod-

ucts subject to rapid obsolescence (such as infor-

mation technology [IT] products). Yet the studies

also show that no quantum leaps regarding the

dematerialization of material and energy flows

are expected.

For the companies studied, environmental ef-

fects (positive or negative) resulting from the in-

troduction of e-business solutions have not re-

c e i v e d m u c h a t t e n t i o n . E n v i r o n m e n t a l

monitoring is largely lacking and should be es-

tablished in the future as part of environmental

management and environmental control11 (Beh-

rendt et al. 2002).

Effects on Logistics

Although few data exist on the effects on pro-

duction and inventories, there are already some

detailed studies of the effects of e-commerce on

logistics. Major concerns of the new e-commerce

business models include the energy and packag-

ing materials used by the logistics networks for

product fulfillment and delivery. Most of the

studies focus on business-to-consumer e-

commerce, either comparing traditional versus e-

commerce retailing of books (Caudill et al. 2000;

Jonson and Johnsson 2000; Kuhndt and Geibler

2001; Matthews and Hendrickson 2001; Wil-

liams and Tagami 2001;12 Reichling and Otto

2002) or traditional versus electronic grocery

shopping (Murto 1996; Freire 1999; Cairns 1999;

Orremo et al. 1999; Punakivi and Holmstrom

2001; Bratt and Persson 2001; Flamig 2002).13

Studies comparing book retailing demonstrate

the potential for environmental benefits from e-

commerce sales, but the overall message is thatneither traditional nor e-commerce retailing per

se show better environmental performance. The

environmental performance depends on param-

eters such as shipping distances, return rates,

shopping allocations, population density (and

thus distance to retail stores), amount of pack-

aging, and mode of transport.

Studies of on-line shopping and home deliv-ery of groceries, however, reveal a different situ-

ation. Electronic ordering of groceries and their

joint distribution seem to present a definite op-

portunity to reduce the total transportation re-

lated to grocery shopping and its associated en-

ergy consumption and emissions. Simulations

show that home deliveries could reduce traffic

mileage by 2% to 19%, energy consumption by

5% to 35%, and CO2 emissions by 7% to 90%,

depending on the context and assumptions (e.g.,

the car used for making shopping trips) (Heis-

kanen et al. 2001). These studies also emphasize

that although certain direct effects of electronic

grocery shopping, especially the effects on traffic,

are already identifiable today, the indirect effects

(e.g., change of shopping habits and consumer

mobility, rebound effects) might be of greater sig-

nificance with regard to overall environmental

impacts. So far, however, little is known about

those indirect effects.

Thus, from an environmental point of view,the key question is not whether traditional or e-

commerce retailing should be the first choice, but

how the environmental performance of each

value chain can be improved, for example

through improved volume utilization of vehicles,

avoidance of express delivery by airfreight, or

minimization of packaging.

Market Transparency and Communication

with the Customer

The possibilities inherent in the Internet may

lead to increased market transparency. Today,

customers are able more than ever before to in-

form themselves about the range of offers avail-

able to them. E-commerce opens up new possi-

bilities for imparting and propagating product

information. Consumer information can be im-

parted in a more comprehensive, comfortable,

and customer-specific way than before. Group-

specific mass communication made possible by

the interactivity and individualization potentialsof the Internet allows consumer education that

is extensive, cost efficient, and at the same time


7/18


8/18

F O R U M


by regulations such as the European Union di-

rective on WEEE, economic instruments such as

energy or emission taxes, or information instru-

ments such as eco-labeling.

Environmental Effects of E-Commerce:

Conclusions

Facts on the environmental impact of e-

commerce and Internet use are scarce. The avail-

able studies and examples of environmental ef-

fects of e-commerce, however, provide a diverse

picture of positive, neutral, and negative envi-

ronmental effects.

The overall environmental effect cannot yet

be predicted, but it is obvious that the Internet

economy is not and will not be a weightless

economy. Here there is no determinism: The

technology (ICT, Internet) does not determine

sustainability, but rather its design, use, and regu-

lation does. This brings us to two crucial ques-

tions: How can we do a better job of understand-

ing and managing the environmental effects of

e-commerce, and which approaches are best

suited to the development of sustainable e-

solutions?

Consequences: How to DevelopSustainable E-Solutions

The development of sustainable e-commerce

solutions requires the contribution of all actors

involved (government, companies, consumers,

financial sector, etc.). For example, political reg-

ulations and programs to promote higher envi-

ronmental standards are well known to play a

crucial role in initiating and implementing sus-

tainable processes, as well as product, service, or

system innovations (GSF 2001). The following

section shows that the development of sustain-

able e-solutions very much depends on the co-

operation and interaction of different actors and

the development of new organizational settings

and institutions. Because companies are a key

player in this process, the following text specifi-

cally focuses on their role.

Until now, positive environmental effects

brought about by e-commerce have generallybeen coincidental, because e-commerce is pri-

marily used for business purposes such as accel-

erating business processes, lowering transaction

costs, and opening new markets. From an envi-

ronmental point of view, the growth in signifi-

cance of e-commerce for the economy and en-

vironment means that companies in the future

should incorporate environmental demands aspart of their strategies. The key question with

regard to business is, Why should enterprises take

aspects of the natural environment into account?

Pivotal goals of strategic management are the

gain of competitive advantages and maintaining

competitiveness. Besides ethical requirements,

there are strong strategic arguments for incor-

porating environmental issues, as they might in-

fluence competitiveness (Porter and van der

Linde 1995; WBCSD 2001). That is, environ-

mental aspects are worth consideration if any of

the following conditions apply:

Costs can be lowered or avoided.

A firm can differentiate itself from com-

petitors and thus increase its sales.

New business areas and markets can be ac-

cessed.

Risk to brand image or liability of damage

can be reduced.

Markets can be secured through compli-

ance with regulations and resulting accep-

tance on the part of stakeholders (license

to operate).

Investigation of the current practice of e-

commerce implementation reveals that three

crucial prerequisites are missing for the devel-

opment of sustainable e-solutions. First, so far,

barely any companies have been monitoring and

assessing the environmental effects of their e-

business activities. Even large companies with

certified environmental management systems

(ISO 14001, etc.) still limit their performance

measurement to traditional processes and activ-

ities. Thus, neither first-order effects nor second-

and third-order effects are monitored. Second, in

almost all cases, environmental and sustainabil-

ity aspects are ignored in the development and

implementation of e-commerce business models.

This, again, counts for first- as well as for second-

and third-order effects. Third, until now, con-

sumers and customers have not had access to in-formation about the environmental performance

of e-commerce applications and therefore have


9/18

F O R U M


Figure 2 Strategies for greening e-solutions.

had no opportunity to make an informed choice

between different offers, even if they wished to

do so. Taking these deficits into account, there

are three key business approaches to developing

sustainable e-commerce solutions: (1) the expan-

sion of environmental performance measure-ment and management to e-business activities,

(2) the use of new cooperative and interactive

forms of innovation planning and management,

and (3) the provision of customer choice (see

figure 2).

Expanding Environmental Performance

Measurement and Management

So far, the environmental effects of e-business

activities are neither monitored nor managed.

The first step toward developing sustainable e-

solutions, therefore, is to assess current e-business

activities from an environmental perspective and

establish a sustainability portfolio of these activ-

ities. LCA methodology, developed and stan-

dardized in recent years (ISO 14040 to ISO

14049), can be used to examine environmental

impacts. The complexity, for example of com-

paring electronic grocery shopping with tradi-

tional shopping, recommends the use of methods

that need less data and still produce reliable re-

sults. One less complex method is to focus on

energy use. The cumulated energy use is suitable

as a key indicator, and it correlates with relevantenvironmental impact indicators such as the

greenhouse warming potential or the acidifica-

tion potential. Because the collection of data is

often too expensive for individual companies,

open-access data banks must be developed for

the future or existing data banks must be ex-

tended.

The assessment of e-business activities reveals

two crucial aspects that must be taken into ac-

count. First: the system boundaries. A lesson

learned from recent studies is that LCA-type ma-

terials and energy analyses of individual activities

are not the only, or perhaps even the best, indi-

cator of how these activities contribute to de-

materialization (Heiskanen et al. 2001). Environ-

mental assessment of e-business activities may

require a system shift from first-order to second-

and third-order effects. Also, it is necessary not

to limit the assessment to direct energy and ma-


10/18

F O R U M


terial effects. Because of network and threshold

effects, some solutions may not be very efficient

in their early stages, but perform better if applied

on a larger scale (e.g., delivery services). In order

to assess second- and third-order effects, it is nec-

essary to study the change of shopping habits,daily travel routes, and so on. Questions that re-

late to second- and third-order effects can, for

example, be included in customer questionnaires

or focus group and lead client interviews.

So far the available statistics are very limited,

but they will grow rapidly, as more companies

and research institutes are starting to collect data

(Park and Roome 2002). To compile reliable da-

tabases, it is necessary that companies supporting

virtual and physical value chains (suppliers of IT,

operators of networks/on-line providers, e-

commerce companies, logistic companies, etc.)

cooperate closely, exchange data, and conduct

joint research projects.

Performance measurement is only the first

step in setting up environmental management

and control15 of e-commerce. The next steps en-

compass the development of environmental tar-

gets, measures, and sector standards. A guiding

example for this is the 3 G Greenbook initia-

tive by large international carriers such as Deut-sche Telekom and Vodafone (Greenbook Initia-

tive 2001). The Greenbook Initiative was started

in 2000 to establish harmonized environmental

requirements for third-generation mobile com-

munication networks (the Universal Mobile

Telecommunications System, etc.). The first

draft, which covers the buildup, operation, and

removal of third-generation communication net-

works, has been agreed to by various operators

worldwide, and also agreed upon by suppliers of

hardware for net infrastructure and mobile de-

vices. The Greenbook gives detailed require-

ments for hardware suppliers concerning product

design (e.g., improvements in energy reduction),

materials and components selection (elimination

of lead, cadmium, etc.), distribution, packaging,

product use, and end of life (take-back, reuse,

recycling, etc.). Requirements for operators will

progressively be developed (e.g., concerning

power consumption of base stations, antenna

mast location, etc.). The bundled environmentalrequirements for the networks and products are

intended to be binding both for suppliers and op-

erators. This is perceived as a historical chance

to optimize the coexistence between economical

and ecological necessitiesand it can save money

for all carriers and suppliers in the long run

(Greenbook Initiative 2001, 4). The GSM As-

sociation, the worldwide umbrella organization for

the industry, also supports the initiative (DeutscheTelekom AG 2001).

Innovate Innovation: New Cooperative

and Interactive Approaches

Innovations, in particular in the sectors of IT

and e-commerce applications, are characterized

by high dynamics and rapid change. Controlling

innovation in this field is further complicated by

the great complexity of environmental effects

(second- and third-order effects). Against this

background, novel cooperative and interactive

forms of innovation planning and innovation

management are required. With increasing com-

plexity and dynamics, the focus must shift from

planning and direct control to the creation of

appropriate innovation contexts.

The idea of context control suggests several

approaches to initiating sustainable innovations

and getting them accepted. First, the normative

context must be created by anchoring sustain-ability within company policies (such as com-

pany objectives and guiding principles). Second,

sustainability principles must be anchored as part

of the mental context of innovation actors. To

that end, these principles must be translated into

tangible guiding concepts, such as factor X

( v o n We i z a c ke r e t a l . 1 9 9 8 ) , w a s t e a s

food(McDonough and Braungart 2002), and

zero emission and UpCycling (Pauli and Hart-

kemeyer 1999), and become part of cognitive

maps as new interpretative schemes. Third, stan-

dards (e.g., sustainability requirements in guide-

lines, grids of criteria for innovation projects) as

part of the organizational context are also im-

portant, in particular the selection of innovation

ideas or prototypes. And finally, the distribution

of resources in the form of research or time bud-

gets for specific innovation projects is of essential

relevance.

Apart from context control, interactions of

actors are a second essential point of interven-tion. Interactions of actors are relevant because

the very nature of innovation is not actually to

generate ideas but rather to realize ideas and


11/18


12/18

F O R U M


Figure 3 Developing a road map for sustainable ICT in the NIK project.

quality of life. Providing choice is therefore a keypart of promoting sustainable development

(WBCSD 2001). Currently, consumers and cus-

tomers cannot access information about the en-

vironmental performance of e-commerce appli-

cations and thus cannot make an informed

choice between different offers, even if they wish

to do so. Of course, customers decision making

is mainly determined by such factors as conve-

nience, speed, flexibility, and price; however,

there are some strong hints that sustainability is-

sues will become a decision criterion, at least

with regard to certain IT products and e-

commerce services. For example, information

about the electromagnetic radiation of mobile

phones and antenna masts for mobile commu-

nication is relevant for consumers who are con-

cerned about possible health risks. Already today,

there are ways to provide consumer choice. The

independent German environmental jury for the

blue angel label has adopted a standard for low-

exposure mobile phones (www.blauer-engel.de).The deciding factor for the award of the label is

the specific absorption rate, which indicates the

maximum exposure intensity of a mobile phone.Only mobile phones with specific absorption

rates of no greater than 0.6 W/kg are eligible for

the blue angel. The highest legally permitted

level in Germany is 2 W/kg. In the future, pro-

ducers of mobile phones can differentiate them-

selves from competitors by using the label.

The development of individual IT products

will not be enough in the future. Developing en-

vironmental standards and including respective

data in reports about the virtual and physical

value chains of e-commerce is also necessary. Be-

sides the expansion of environmental perfor-

mance measurement and control of e-business

activities in brick-and-mortar companies, it is

also necessary that media and e-commerce com-

panies such as eBay and Amazon develop envi-

ronmental management and reporting systems,

dealing with first-, second-, and third-order ef-

fects. Even if these companies have little direct

impact on the natural environment, as is the case

with banks or insurance companies, their indi-rect influence (e.g., on logistics, shopping habits,

lifestyles) may be substantial.


13/18

F O R U M


For e-service companies that do not run their

own logistics system, environmental data and

emission calculations with regard to transport

will have to be made available by the logistics

company in charge. As one of the leading inter-

national providers of integrated logistics services,the Schenker company offers the on-line service

of emission calculation.17 The application pro-

vides estimates of the environmental impact of

individual Schenker land transports in Europe; it

is possible to calculate the size of the emissions

for one distance at a time. As the calculation is

based on an imaginary goods consignment, de-

fault values are used for the load, fuel type, and

vehicle class. The default values, however, are

representative of the average situation and con-

ditions in Schenkers European network. Emis-

sion calculation helps e-service companies to as-

s e s s t h e e n v i r o n m e n t a l p e r f o r m a n c e o f

integrated virtual and physical value chains and

helps them in their sustainability reporting.

Conclusion and ResearchOutlook

As a future medium and form of market trans-

action, the Internet and e-commerce are of cen-tral importance for sustainable development. Re-

search on the environmental effects of e-business

is still in its infancy, but it is evolving very rap-

idly. The studies available so far make clear that

e-commerce is inherently neither environment

friendly nor environment hostile. Here there is

no determinism: The technology (ICT, Internet)

itself does not determine sustainability, but

rather its design, use, and regulation does. The

demand for future research in this field is consid-

erable:

1. The need for research on the environmen-

tal impact brought about by e-commerce

and Internet use is substantial. In partic-

ular, there is a demand for the following:

More case studies, especially on the ef-

fects of e-commerce on resource pro-

ductivity (production, inventories,

etc.), the marketing of green products,

and eco-efficient e-services

The identification of best practices foreco-efficient digital products and e-

commerce applications

Empirical studies that encompass a large

number of companies to deliver results

of statistical validity

National and international monitoring

programs on the Internet economy and

the environment that gather data andassess the environmental effects of the

Internet economy

2. In spite of LCA and other methodologies,

which have been developed in recent

years, there are still quite a few methodical

problems with research on environmental

effects of e-commerce and the Internet

economy that must be solved:

A principal problem consists in defining

a unit of use. The paradigm of func-

tional equivalence is difficult to apply

in comparisons between different me-

dia.

LCA-type materials and energy analyses

of individual activities are not the only,

or perhaps best, indicator of how e-

commerce activities contribute to de-

materialization. It may require a system

shift from first-order to second- and

third-order effects. This also relates to

appropriate system boundaries. The(micro) product technology assessments

or LCAs so far register neither conse-

quences in the value chain nor rebound

effects.

Also, it is necessary to expand the as-

sessment beyond direct energy and ma-

terial effects. As a result of network ef-

fects and critical threshold, some

solutions may not be very efficient in

their early stages, but perform better if

applied on a larger scale (e.g., delivery

services).

Data validity is often insufficient; the

data inventories for ICT devices and fa-

cilities are outdated.

Quality/test criteria for studies on en-

vironmental effects of e-business appli-

cations are still lacking.

3. In this article, three approaches for devel-

oping sustainable e-commerce solutions

have been presented. More detailed re-search on the role of environmental issues

for the competitiveness of digital products


14/18

F O R U M


and services and the e-commerce business

models is needed.

Notes1. The term service-integrated global net refers to

the fact that, before the advent of hypertext

mark-up language (HTML) and the graphical in-

terface of the World Wide Web came into use,

the main use of the Internet was simple and typ-

ically unrelated services such as file transfer (FTP,

etc.) and e-mail. With HTML and extensible

mark-up language (XML), Web-based services

can easily be bundled and interlinked. Thus, the

use of the term integrated.

2. Few countries currently measure the value of In-ternet or electronic sales. In Organisation for

Economic Cooperation and Development

(OECD) countries, total Internet sales in 2000

ranged between 0.4% and 2% of total sales, while

electronic sales (including those over all

computer-mediated networks) have reached al-

most 6% in the United Kingdom (OECD 2001).

3. Persons that use the Internet at least one hour a

week (eMarketer 2000).

4. Editors note: For a discussion of the use of smart

tags in environmental management, see the ar-

ticle by S. Saar and V. Thomas, Toward TrashThat Thinks: Product Tags for Environmental

Management, in this special issue of the Journal

of Industrial Ecology.

5. The term e-business was first used in an IBM

marketing campaign (eBusiness) in 1997 and

has been used increasingly since (Amor 2000).

Other definitions have been given, for example

by Cunningham and Froschl (1999), Pricewater-

house Coopers (1999), Amor (2000), and Wirtz

(2001).

6. The OECD established an expert group on defin-ing and measuring e-commerce with a mandate

to compile definitions of electronic commerce

that are policy relevant and statistically feasible.

This expert group has worked on the three inter-

related aspects of this problem: a framework for

user needs and priorities, definitions, and statis-

tical measurement. In April 2000, the OECD ap-

proved two definitions of electronic transactions

(electronic orders), based on a narrower and

broader definition of the communications infra-

structure, and a core list of indicators to measure

electronic commerce use and transactionsin busi-nesses and households (see www.oecd.org/EN/

about_further_page/0,,EN-about_further_page-

570-nodirect orate-no-no 29-no-no-1,00

.html).

7. Editors note: For a discussion of electricity use

for Internet services, see the article by J. Laitner,

Information Technology and U.S. Energy Con-

sumption: Energy Hog, Productivity Tool, or

Both? in this special issue of the Journal of In-

dustrial Ecology.

8. One terrawatt-hour (1 TWh) 1012Wh; 1 kWh

3414 BTU; 3.1 TWh 10,583,400,000,000

BTU.

9. Available studies generally differ in their param-

eters chosen, for example, primary energy con-

sumption, eco-points, mass in tons, and CO2emissions, so that they can hardly be directly

compared. Equally, they heavily differ in their

relative attribution of pollution shares to produc-

tion and use. Furthermore, more recent studiesreport a considerably lower energy consumption

during production. This seems plausible, as sig-

nificant progress in the efficiency of production

of electronic components has been made.

10. Editors note: For a discussion of the impact of e-

commerce on stock keeping and logistics, see the

article by H. S. Matthews et al., The Economic

and Environmental Impacts of Centralized Stock

Keeping, in this special issue of the Journal of

Industrial Ecology.

11. Environmental control refers to the aspect of

overall environmental management that deals

with data collection (site-related characteristics,

material and energy inputs and outputs, etc.), as-

sessment of data, the development and imple-

mentation of improvement measures, reporting,

and so forth.

12. Editors note: A refined and updated version of

the study by Williams and Tagami, Energy Use

in Sales and Distribution via B2C E-Commerce

and Conventional Retail: A Case Study of the

Japanese Book Sector, can be found in this spe-

cial issue of the Journal of Industrial Ecology.13. Editors note: For a discussion of traditional ver-

sus electronic grocery shopping in Finland, see

Effects of E-Commerce on Greenhouse Gas

Emissions: A Case Study of Grocery Home De-

livery in Finland by Siikavirta et al., pages 83

98 in this special issue of the Journal of Industrial

Ecology.

14. A good overview is provided by the Berlecom

B2B marketplace database, www.berlecom.de.

15. Environmental control is the part of the overall

environmental management that deals with data

collection and assessment, the development andimplementation of improvement measures, re-

porting, and so on.


15/18


16/18

F O R U M


tems, Proceedings of the International Conference,

Munich: GSF.

Heiskanen, E., M. Halme, M. Jalas, A. Karna, and R.

Lovio. 2001.Dematerilization: The potential of ICT

and services.The Finnish Environment 533. Hel-

sinki: Finish Ministry of the Environment.

Hilty, L. M. and T. F. Ruddy. 2000. Towards a sustain-

able information society. Informatik 4(August):

29.

Jonson, G. and M. Johnsson. 2000. Electronic com-

merce and distribution systems. Lund: Lund In-

stitut of Technology. www.kfb.se/junikonf/upps/

G_Jonsson.pdf. Accessed 27 December 2002.

Kelly, K. 1998. New rules for the new economy. New

York: Penguin.

Koomey, J. G. 2000. Rebuttal to testimony on Kyoto

and the Internet: The Energy Implications of the

Digital Economy. Berkeley, CA: Energy AnalysisDepartment, Lawrence Berkeley National Labo-

ratory. August 2000.

Kortmann, J. and S. de Winter. 1999. On line applica-

tions in The Netherlands: Looking up telephone num-

bers by Internet.Amsterdam: IVAM, Universiteit

Amsterdam.

Kuhndt, M. and J. Geibler. 2001. Elektronischer

Geschaftsverkehr und Ressourceneffizienz [E-

commerce and resource efficiency]. Umwelt-

WirtschaftsForum [Forum for Sustainability and the

Economy]3/01. 9. Jahrgang. 1519.

Laitner, J. A. and J. G. Koomey. 2000.Re-estimating the

Annual energy outlook 2000. http://enduse.lbl.gov/

Projects/InfoTech.html. Accessed 27 December

2002.

Langrock, T., H. E. Ott, and T. Takeuchi, eds. 2001.

International climate policy and the IT-sector.Wup-

pertal Spezial 19. Wuppertal, Germany: Wupper-

tal Institute.

Matthews, H. S. and C. T. Hendrickson. 2001. Eco-

nomic and environmental implications of online

retailing in the United States. In Sustainability in

the Information Society, 15th International Sympo-sium on Informatics for Environmental Protection,

edited by L. M. Hilty and P. W. Gilgen. Marburg:

Metropolis Verlag.

McDonough, W. and M. Braungart. 2002. Cradle to

cradle: Remaking the way we make things. New

York: North Point Press.

Murto, R. 1996. Paivittaistavarakaupan sijoittumisen

liikenteelliset vaikutukset Tampereen seudulla.

[Traffic effects of locating grocery stores, case

Tampere.] Transportation Engineering research

report 15. Tampere, Finland: Tampere University

of Technology.Negroponte, N. 1995. Being digital.New York: Vintage

Books.

NFO Infratest. 2002. Monitoring Information Econom-

ics. Munich. www.bmwi.de/Homepage/download/

infogesellschaft/MoniFakt5_Chart_E.pdf. Ac-

cessed October 2002.

OECD (Organisation for Economic Cooperation and

Development). 2001.OECD science, technology,

and industry scoreboard: Towards a knowledge-based

economy. Paris: OECD.

Orremo, F., C. Walllin, G. Jonson, and K. Ringsberg.

1999. IT, mat och miljo: en miljokonsekvensan-

alys av alektronisk handel med dagligvaror. [IT,

food, and the environment: An analysis of the

environmental impacts of electronic grocery

shopping.] Swedish Environmental Protection

Agency report 5038. Stockholm: Swedish EPA.

Park, J. and N. Roome, eds. 2002. The ecology of the

new economy.Sheffield, UK: Greenleaf.

Pauli, G. and J. F. Hartkemeyer, eds. 1999. UpCycling.Munich: Chronik Verlag.

Picot, A., A. Zerdick, U. T. Lange, and A. Artope.

2000.E-conomics: The economy of E-commerce and

the Internet. European Communication Council

report. Berlin: Springer-Verlag.

Plepys, A. 2001. The ICT role in resource conserva-

tion and rebound effects. In Sustainability in the

Information Society, edited by Hilty, L. M. and

P. W. Gilgen. 15th International Symposium In-

formatics for Environmental Protection, Zurich.

Part 2: Methods/Workshop Papers. Marburg,Germany: Metropolis Publishing.

Porter, M. E. and C. van der Linde. 1995. Toward a

n e w c o nc e pt i o n o f t h e e n vi r on m en t -

competitiveness relationship.Journal of Economic

Perspectives9(4): 97118.

Pricewaterhouse Coopers. 1999. E-business technology

forecast.Menlo Park, CA: PricewaterhouseCoop-

ers Technology Centre.

Punakivi, M. and J. Holmstrom. 2001. Environmental

performance improvement potentials by food home

delivery. Helsinki: The Ecomlog Research Pro-

gram, Department of Industrial Engineering and

Management, Helsinki University of Technology.

http://www.tai.hut.fi/ecomlog/. Accessed 7 Au-

gust 2002.

Quack, D. and C.-O. Gensch. 2001. Potential for re-

ducing environmental impacts by means of de-

materialization, exemplified by Deutsche Tele-

koms virtual telephone-call manager, the

T-NetBox. In Sustainability in the Information So-

ciety, 15th International Symposium on Informatics

for Environmental Protection,edited by L. M. Hilty

and P. W. Gilgen. Marburg: Metropolis Verlag.Reichart, I. and R. Hischier. 2001. Environmental im-

pact of electronic and print media: Television, In-


17/18

F O R U M


ternet newspaper, and printed daily newspaper. In

Sustainability in the Information Society, 15th Inter-

national Symposium on Informatics for Environmen-

tal Protection, edited by L. M. Hilty and P. W.

Gilgen. Marburg: Metropolis Verlag.

Reichling, M. and T. Otto. 2002. The environmental

impact of the new economy. In The ecology of the

new economy, edited by J. Park and N. Roome.

Sheffield, UK: Greenleaf.

Romm, J., A. Rosenfeld, and S. Herrmann. 1999.The

Internet economy and global warming: A scenario of

the impact of e-commerce on energy and the environ-

ment. Washington, DC: Center for Energy and

Climate Solutions.

Sarkis, J., L. Meade, and S. Talluri. 2002. E-logistics

and the natural environment. In The ecology of

the new economy,edited by J. Park and N. Roome.

Sheffield, UK: Greenleaf.Schaefer, C. and Ch. Weber. 2000. Mobilfunk und

Energiebedarf [Mobile communication and en-

ergy demand]. Energiewirtschaftliche Tagesfragen

[Bulletin on the Energy Sector] 50(4): 237 241.

Shaft, T. M. Shaft, M. P. Sharfman, and M. Swahn.

2001. Using interorganizational information sys-

tems to support environmental management ef-

forts at ASG. Journal of Industrial Ecology 5(4):

95115.

Venkatram, N. and J. Henderson. 1998. Real strategies

for virtual organizations. Sloan Management Re-

view40(1): 3348.

von Weizacker, E., A. B. Lovins, and L. H. Lovins.

1998.Factor four: doubling wealth, halving resource

use.London: Earthscan.

WBCSD (World Business Council for Sustainable De-

velopment), ed. 2001. Sustainability through the

market: Seven keys to success. Geneva: WBCSD.

Williams, E. and T. Tagami. 2001. Energy analysis of

e-commerce and conventional retail distribution

of books in Japan. In Sustainability in the Infor-

mation Society, 15th International Symposium on In-

formatics for Environmental Protection, edited by

L. M. Hilty and P. W. Gilgen. Marburg: Metrop-

olis Verlag.

Wirtz, B. W. 2001. Electronic business.Second edition.

Wiesbaden, Germany: Gabler-Verlag.

About the Author

Klaus Fichteris director of the Borderstep Institute

for Innovation and Sustainability, in Berlin, Germany.

Borderstep is a not-for-profit think tank, focusing on

sustainable product, service, and system innovations

and the sustainable design of the digital economy.


18/18

ecommerce consequences

Documents