Among 17 influential public figures, Alibaba’s Executive Chairman Jack Ma was re-appointed a Sustainable Development Goal (SDG) Advocate by United Nations Secretary-General Antonio Guterres on May 9, 2019. Ma has been an SDG Advocate since 2016. But given Alibaba’s environmental impact, does its business model truly align with the United Nations’ SDGs?
The UN adopted the SDGs in 2015 to address 17 pressing issues, including fighting hunger and providing clean water, in order to ensure peace and prosperity for both people and the planet. SDG Advocates serve as cheerleaders to raise awareness of SDGs and accelerate global action to build an equal and sustainable future.
Ma has hosted a few SDG-related conferences to capture the public’s attention, while acting to achieve several SDGs. For example, Ma’s companies have allowed a substantial number of Chinese people with limited education and resources to start their owner microbusinesses on Taobao or Tmall and earn extra income. The Alibaba and Jack Ma foundations provide financial and technical support for education and environmental protection initiatives and host global philanthropic events.
At the same time, more and more people argue that Alibaba-style e-commerce is creating new environmental problems. Many have asked whether Alibaba’s business model contradicts some of the SDG framework’s environmental goals.
While Alibaba’s platforms have made shopping easier and cheaper than ever, they are driving a new age of consumerism in China. The increase in online purchases has, in turn, led to increases in packaging waste and fossil fuel burning.
Alibaba is responsible for the majority of all package deliveries in China. The packaging from e-commerce shipments is seldom reused and usually ends up in landfills. Furthermore, it takes a huge amount of fuel to transport goods from factories to warehouses or online shop owners, and then to consumers. The amount of fuel used for transportation is difficult to measure considering the various locations of factories, warehouses, online shop owners, and final destinations. According to its 2018 Environmental, Social, Governance (ESG) report, Alibaba launched its Cainiao Network with the goal of replacing 50% of all packaging materials on its many platforms with eco-friendly or biodegradable options.
Moreover, the data centers that power Alibaba’s platforms use a huge amount of energy. Though more data centers are being built, the supply has so far failed to catch up with demand. Forbes has reported that the need for data centers is so high that it will be impossible to build enough power plants to keep up over the next few years. This means data centers must become more energy efficient.
To illustrate that it is taking data center power usage seriously, Alibaba shared two case studies in its 2018 ESG report. Its Zhangbei data center is 100% powered by renewable energy and has a Power Usage Effectiveness (PUE: a measure of data center energy efficiency) of 1.25, compared with an optimal score of 1.0. The Qiandao Lake data center uses deep lake cooling to reduce carbon emissions and has a PUE of 1.17. For reference, Google’s data centers boast an average PUE of 1.12. By January 2019, Alibaba had 56 data centers all over the world, but the ESG report did not include information on the PUEs of each of the company’s data centers.
Every business has an environmental footprint, but companies should try to offset their negative environmental impacts. Alibaba has begun to take its impact on the environment seriously and act more responsibly. Jack Ma is clearly doing better to address sustainability issues than many of his peers in China. However, he can make further contributions and should work to lessen his companies’ environmental footprint as he enters his new term as an SDG Advocate.
(Top photo from Baidu Images)