Apr 19, 2021|
JD ESG: Green Packaging Saves 10 Billion Disposable Boxes
by Yuchuan Wang
As China’s largest retailer in China, JD.com has made great efforts in reducing packaging waste, through establishing operations regulations, technology innovation, and collaboration with up and downstream partners. In its first ESG report released on Apr. 19, the company announced that it has facilitated hundreds of brand enterprises to join in using green packaging, which has reduced industry-wide disposable packaging usage by nearly 10 billion pieces.
As said by Richard Liu, chairman and founder of JD.com in his letter accompanying the ESG report, “China is playing an increasingly important role in global climate and environmental governance… JD is accelerating its own low-carbon development through technological means, promoting the green transformation of the industry, and leading society toward green consumption.”
Express delivery package volume in China has exploded in the past decade, growing from 5.7 billion in 2012 to over 80 billion in 2020, thanks to the development of e-commerce. The skyrocketing number of parcels also poses concerns regarding packaging waste and environmental pollution. If each package is to weigh 0.2 kilograms, then 16 million tons of such waste was produced last year.
Optimization of packaging materials
The optimization of packaging involves introducing new materials to reduce thickness, weight or width, such as cardboard boxes, plastic bags and even adjustments to packaging tape.
“JD has adopted three-layer (which are normally five-layer) cardboard boxes for 95% of its cardboard packaging, while the average rate in China is 60% to 70%. [JD’s rate is] even higher than the in the US which is 90%,” said Jerry Duan, head of JD’s Green Stream Initiative.
Similarly, JD has managed to decrease the thickness of plastic delivery bags from 60 to 70 micrometers to 40 to 50 micrometers.
In 2015, JD.com proposed the concept of “Slim Tape” to the industry to replace 60 millimeter packaging tape with 45 millimeter ones, based on the company’s repeated and verified tests in its own logistics business. Now, JD’s “Slim Tape” has been included into China’s standards for postal industry and used in external logistics enterprises. By promoting it and reusable boxes, tape usage at JD can be reduced by 630 million meters per year.
JD also researched an advanced system to facilitate warehouse workers in choosing the right packaging and minimize waste. According to Duan, there are at least a hundred types of packaging used in JD’s warehouses. It can be hard to employees to eyeball which one might be most effective in reducing waste.
The JD intelligent packaging recommendation system automatically suggests the suitable packages in the best size according to the size of the order, and guides workers on how to arrange the products to save space. The accuracy of the recommendation can exceed 96.5%.
As early as in 2015, JD.com began to use reusable cold chain boxes for its fresh produce business, instead of the standard disposable foam boxes, making it the first e-commerce company in China to adopt recyclable packaging. JD’s in-house logistics makes it possible for the boxes to be collected and reused to its warehouses and other production scenarios. So far, 180 million disposable foam boxes have been reduced.
In December 2017, the reusable Green Stream Box was officially introduced for normal temperature goods such as FMCG products. Today, these green-colored boxes have been widely used as normal containers in over 30 cities in China, with over 16 million times of use in total.
In the warehouse, JD has replaced its disposable woven bags with recyclable transfer bags used in the process of goods transfer from warehousing centers to distribution centers. With the average utilization rate of over 98%, transfer bags can save nearly 80 million disposable plastic woven bags annually.
JD Logistics, JD.com’s logistics arm, also launched the Green Packaging Alliance and China’s E-commerce & Logistics Packaging Standards Alliance, which developed the industry’s first packaging standards and is playing an important role in promoting the industry’s environmental-friendly development. Members of the alliances include giants such as P&G, L’Oréal, Unilever, Johnson & Johnson, Unicharm, Kimberly-Clark, Blue Moon, Mengniu, Lenovo, ZTE and more.
Innovation from the origin
It is not uncommon for e-commerce companies to repackage products with complicated materials such as multi cardboard, bubble wrap, paper and buffing pads, to prevent damaged in transport.
“In order to get rid of secondary packaging for e-commerce sales, we are working with the upstream brand owners to adjust the design of their original packaging,” said Duan. “Manufactures need to re-design their packaging to meet the requirement of long transportation of a single product for online sales.”
“It means that from the factory of a brand to the warehouse of JD and to the doorstep of our customers, no additional packaging is needed,” explained Duan.
By collaborating with JD, P&G has fully shifted to use original packaging for its products in all its e-commerce channels. And the original packaging has helped hundreds of brand enterprises reduce industry-wide disposable packaging usage by nearly 10 billion pieces from 2014 to 2020.
Leading a green supply chain
In addition to packaging, JD is also leading in green warehousing.
The company pioneered a rooftop distributed solar PV system in Shanghai “Asia No.1” logistics park in 2017, which has been supplying the energy for warehouse lighting, automatic sorting, automatic packaging, automatic picking and other activities. In 2020, the power generation reached 2.538 million kwh, equivalent to approximately 2,000 tons of carbon dioxide emissions reductions and saving approximately 800 tons of standard coal. A total of more than 200 megawatts of solar PV power plants are expected to be installed in JD’s logistics and intelligent industrial parks by the end of 2021, to achieve an annual power generation of more than 160 million kwh after completion.
In transportation, the company has been gradually replacing traditional fuel-combustion trucks with new energy vehicles since 2017 and has adopted such new energy vehicles in more than 50 cities across China, reducing at least 120,000 tons of carbon dioxide emissions per year. In addition, JD has built and introduced more than 1,600 charging stations nationwide to better support the operations of the vehicles. Big data is applied to provide drivers the real-time optimal route planning to help reduce the number of vehicles in transit, increase the full load rate of return vehicles, and optimize the efficiency of logistics transportation.