Chinese company Vipshop gets ‘A’ ESG Rating from MSCI, shows leadership in E-Commerce Sector

Leading Chinese online discount retailer company ‘Vipshop’ has successfully managed to receive and retain an ‘A’ ESG rating from global ESG rating firm MSCI in the e-commerce sector. The company also received a score of 46 on the Dow Jones Sustainability Index (DJSI) in the global retail sector with an impressive performance in the rating component for Product Packaging and Supply Chain Management. The company operates the e-commerce website VIP.com, earlier known as Vipshop.com, specialising in online product sales and distribution services. The company is the third largest e-commerce site in China and has been ranked at the number position in China’s online discount market with a 38.1% market share. 

The pandemic has sharpened the importance of sustainability for business owners and the e-commerce industry is no different. According to ‘The Environmental Impact of E-Commerce 2022’ it was found more than 40% of European citizens are willing to pay a premium for ‘green’ transportation of online purchases that has a lower carbon footprint, as compared to traditional in-store shopping, where consumers would use personal or public transport that uses more energy. The report also states that major e-commerce companies like Amazon, Alibaba, and Zalando have implemented measures to lower their environmental impact by investing in electric vehicles, renewable energy, optimising packaging material use, introducing reusable mailing bags, and eliminating single-use plastic materials for packaging. 

Major retail giant Walmart has banned single-use bags, both plastic and paper in the states of Colorado and New York in order to push forward and attain its sustainability goal to achieve “net zero waste” in its operations in the USA and Canada by 2025. The company has eliminated single-use bags in other states like New Jersey, Maine and Vermont and customers will have the option to buy reusable bags at a cost of between USD 0.74 and USD 3.98 depending upon the size of the shopping products. Similarly, eBay plans to source 100% of its electricity supply from renewable energy by 2025 for the company’s data centres and offices, and reduce up to 90% of its operational carbon emissions by 2030. 

Coming to Vipshop’s ESG-related goals, the company has a dedicated leadership team to implement an energy conservation and carbon reduction plan along with improving operational efficiencies. The company provides equal opportunities for all employees and encourages a diversified workforce. In its ESG report, the company has created a three-tier social responsibility management structure that involves a working ESG group, a focal point, and a special executor who is responsible to identify and assign social responsibility management tasks at all levels. The company places importance on stakeholder expectations and integrates them within its daily operations. 

ESG has gained importance lately in the e-commerce industry as it helps minimise environmental impact on the business bottom line, such as with packaging, transport and waste. It also addresses the growing concerns around environmental degradation and change while being resourceful at the same time. The shift towards making sustainability a priority for e-commerce retailers has intensified. Consumers have become more drawn towards eco-friendly products and e-commerce retailers have realised that environmental sustainability is here to stay.According to United Nations Conference on Trade and Development(UNCTAD), Due to the pandemic, there was an exponential rise in e-commerce online retail sales. The total retail sales went up from 16% to 19% in 2020. The report also stated that online retail sales grew massively in various countries and the Republic of Korea had the highest online share of retail trade at 25.9% in 2020, up from 20.8% in the previous year. The consumer’s purchasing behaviour has also taken a shift towards sustainability. According to the Nielsen review, 73% of global consumers said they would be ready to change their behaviour to reduce their impact on the environment.  

So, in order for their online businesses to thrive, many have resorted to becoming sustainable, starting by re-modelling their packaging in environment-friendly ways and opting for climate-neutral shipping options to minimise waste material. The sustainable e-commerce trend is now the norm for buyers, sellers and dealers worldwide, and we hope to see more e-commerce retailers join the trend of sustainability. 

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