ecommerce consequences
TRANSCRIPT
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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
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.
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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
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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
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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-
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Fichter, Environmental Consequences of E-Commerce 29
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-
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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
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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
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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-
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34 Journal of Industr ial Ecology
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
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36 Journal of Industr ial Ecology
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.
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Fichter, Environmental Consequences of E-Commerce 37
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
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38 Journal of Industr ial Ecology
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.
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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.
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