The Case for ESGs and E-commerce Returns
What are ESGs
ESG – or Environment, Social and Governance refers to standards that corporations can opt to adopt as part of their organizational strategy. These goals define an active outlook for corporate social and environmental responsibility and accountability.
ESGs are a choice
It needs to be said that ESGs are a choice. They are not obligatory. With many consumers actively seeking out ethical, fair and responsible brands, it seems like a smart marketing decision to go this route. However, retailer beware; shoppers can separate the wheat from the chaff. If your ESG strategy is perceived to be mere lip service or virtual signaling, it would probably be better to find a more authentic way to represent your accountability.
E-commerce Returns: a dirty secret
With the proliferation of e-commerce purchases over the past few years, the flip side has been steady flow of e-commerce returns. Global averages for e-commerce returns stand at around 30%. This means that at any given time billions of purchase regrets are circulating the planet. It is a little known fact that these items may travel hundreds or even thousands of kilometers in order to get back the returns warehouse. It is even less well known that around 50% of these items will not be resold. Unfortunately, their fate is more likely to be landfill or liquidation. This is the backdrop to a tremendous opportunity for ESG-related activities.
Breaking down ESGs for E-commerce Returns
Environment and E-commerce Returns
ESG definition around environmental issues concerning e-commerce returns may include energy use, waste, pollution, and potentially even natural resource conservation. The latter is made possible by optimizing and ensuring that returns have a next life that does not de facto find them in landfills or liquidation points.
E-commerce returns are typically considered to lead to indirect greenhouse gas emissions. For certain categories – for example, electronics or items with batteries – like toys – this may also include the management of toxic waste.
There aren’t many environmental regulations focused on e-commerce returns, with landmark legislation taking effect in France over the past few years. So ESGs that focus on compliance with environmental regulations, isn’t yet a standout opportunity.
Returns management solutions – like OtailO that reduce returns, calculate carbon emissions reduction and de facto encourage the reduction of paper, wastage and transportation, can offer real ways to set and monitor science-based goals for carbon emission reduction. These can not only give a means to show significant reduction of the carbon footprint of the retailer, but also provide an opportunity to shoppers to make decisions around their own personal returns-related footprint.
E-commerce returns is set to grow. Pre-purchase returns prevention cannot go very far to solve to this global challenge. The challenge is to set ESG goals around the post-purchase activities. The opportunity is to transform returns into bankable, smart, and sustainable transactions.
Social and E-commerce Returns
Social is about relationships. Retailers have multiple stakeholders. These stakeholders could be internal or external. They could be employees, partners, suppliers, 3rd party agents, customers, investors. The list goes on and on. When setting an ESG agenda for social and e-commerce returns, you want to ask multiple questions. Each questions needs to be asked with a relevant stakeholder in mind. Here are a few examples:
How are we accountable for our relationship with stakeholders?
- Is there transparency around the journey of the e-commerce returns and where they land up?
- Can we a validate our own efforts to optimize and improve the supply chain?
- Do we provide sustainable and/or paper-free returns routes for our customers so that they have the option to make impactful decisions?
- Do our partners have access and visibility into our KPIs around e-commerce returns
How are our stakeholders accountable in their relationships with us and with others?
- Can we ascertain whether efforts are made by our partners to optimize and improve the supply chain?
- Are our consumers aware of the e-commerce returns journey and the challenges they face?
- Are our next-life partners on board to improve and expand the life span of the returns?
How do we fit and contribute to our local and global eco-system?
- Can we volunteer and/or donate our time and resources?
E-commerce returns themselves can be a source that is contributed to others. Retailers can opt to set themselves goals to actively spread awareness around returns. Stellar returns management solutions like OtailO will offer workflows that enable the strengthening of partnerships and relationships. They will facilitate returns routes that optimize the next life of the returns via resale, recycling, refurbishing, donation and even peer-to-peer recommerce: all within the realm of the retail brand.
Notwithstanding and in addition to e-commerce returns, the social aspect also includes asking questions like: are our working conditions transparent, fair and equitable? Do we have an agenda for diversity and inclusion? Do we have a clear action plan for dealing with racism, sexism and standing up again injustice? Are our business practices transparent, fair and equitable?
These are big questions that should be considered when drawing up the social standards that your organization plans to take on.
Governance and E-commerce Returns
Somehow the standards that you define need to come together in a manageable and transparent manner. This is the governance. Governance is about staying honest. If we set measurable and meaningful goals and monitor them over set intervals, we can hold ourselves to the highest standards or accountability and transparency. There is no angle that differentiates governance for e-commerce returns and anything else for this aspect of ESGs. As with any other practices checks and balances should always be put in place to ensure that the process is governed from within. The advantage of using end-to-end returns management systems like OtailO means that you can manage and monitor your returns governance. You will also be able to leverage data gathered in the process for the purpose of reaching your goals and making smart business decisions.
If You Have Come This Far, you are a Pioneer
It is important to note that since there is no current de facto industry regulations or standards around e-commerce returns. If you have come this far, then you are pioneering accountability in a space for which you could just have easily said, let’s wait for the regulator to make the first move. Thought leadership and impact leadership in this space are the greatest form of pro-activity. It is easy to delay the inevitable, but what we have learnt over the past few months is that we don’t have time. ESGs gives us the framework for making change. Regardless of this or any other framework, it should not be about opting in, but about being the change we want to make in the world.