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  • Business Ethics
  • Competitive Behavior
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General Issue Category
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Energy Management

Hardware Infrastructure Energy & Water Management

A large part of the energy consumed by the E-Commerce industry is used to power critical hardware and IT infrastructure in data centers. Data centers need to be powered continuously, and disruptions to the energy supply can have a material impact on operations, depending on the magnitude and timing of the disruption. Companies also face a tradeoff when it comes to energy and water consumption for their data center cooling needs: Cooling data centers with water instead of chillers is a means of improving energy efficiency, but it can lead to dependence on significant local water resources. Companies that effectively manage this issue may benefit from cost savings and minimize reputational risks, as there is growing concern over energy and water use.

Customer Privacy

Data Privacy & Advertising Standards

E-commerce companies have access to consumer information, including financial information, purchase history, and basic demographic data. Companies in this industry must carefully manage two separate and often conflicting priorities. On one hand, companies compete on their ability to leverage data to provide users with relevant services and target advertising or product recommendations based on consumers’ preferences and behavior patterns. On the other hand, the fact that companies have access to a wide range of user data, such as personal, demographic, and behavioral data, raises privacy concerns among users and the public at large, and is leading to increased regulatory scrutiny from authorities in the U.S., Europe, and other jurisdictions. Failure to manage the issue can result in costs associated with regulatory oversight and reputational risks. Furthermore, effective management in this area can have financial implications through increased user confidence and loyalty, which are particularly important to maintain market share.

Data Security

Data Security

The business model of companies in the E-Commerce industry depend on a firm’s ability to securely process electronic payments. As consumers become more educated about the threats of cybercrime, particularly in the wake of continued high-profile attacks, having a reputation as a secure company will become increasingly important to maintain or gain market share. There is an opportunity for the most trusted brands to position themselves favorably in the eyes of consumers and gain a significant competitive advantage. This makes user loyalty, which is highly influenced by the perception of the safety of the user’s valuable financial and personal information, particularly important to maintaining market share.

Employee Engagement, Diversity & Inclusion

Employee Recruitment, Inclusion & Performance

Employees are key contributors to value creation in the E-Commerce industry. While the number of job openings in the industry continues to grow, companies are finding it difficult to recruit qualified employees to fill these positions. In key markets, a shortage of technically skilled domestic workers has created intense competition to acquire such employees, contributing to high turnover rates. This competition for talent and the search for innovation opportunities presents several interrelated sustainability challenges regarding human capital that companies must manage. Hiring foreign nationals to compensate for shortages in local talent can create risks related to perceived social implications in the host and home countries of workers. Companies offer significant monetary and nonmonetary benefits to improve employee engagement and, therefore, retention and productivity. Initiatives to improve employee engagement and work-life balance might influence the recruitment and retention of a diverse workforce. As the industry is characterized by relatively low representation from women and minority groups, efforts to recruit from and develop diverse talent pools can serve to address the talent shortage and generally to improve the value of company offerings. Greater workforce diversity is important for innovation, and it helps companies understand the needs of their diverse and global customer base.

Product Design & Lifecycle Management

Product Packaging & Distribution

A significant part of the E-Commerce industry’s added value comes from firms’ ability to move a wide array of goods efficiently to consumers who would otherwise have to personally travel to collect the goods from brick-and-mortar stores. As the volume of packaging shipments increases, the industry may become more exposed to environmental externalities, such as carbon pricing and subsequent rising fuel costs that present risks associated with the shipping of products. While firms that outsource shipping and logistics have less control over the specific processes of shipping operations, they can still select suppliers with more energy-efficient business practices. As this is a highly competitive and low-margin industry, the ability to shave off shipping costs through fuel reduction and more efficient routing can allow firms to pass those savings on to their customers. Additionally, e-commerce firms have an incentive to minimize the use of packaging. Efficient packaging can lead to cost savings from reducing the amount of material that needs to be purchased, as well as saving on logistics costs, as more products can fit into a single shipping load.

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