To create greener supply chains in China, Alibaba Group is leveraging its platform power and cloud computing capabilities.
Tmall Supermarket, the platform company's online grocery service, has partnered with Energy Expert, Alibaba Cloud's AI-powered sustainability and energy management system, to assist businesses in measuring and reducing their carbon emissions.
“Besides communicating the product’s environmental impact to consumers, we also want to encourage suppliers and manufactures to adopt green measures,” said Pei Yunlong, Tmall's head of green supply chain in Mandarin.
According to the consultancy Ernst & Young, supply chains account for more than 90% of an organization's greenhouse gas emissions and up to 70% of operating costs. Carbon reduction at the source will assist Alibaba in reducing both.
Since its inception in April, the initiative has resulted in the development of 20 eco-friendly own-branded consumer products on Tmall Supermarket, including biodegradable cups and compostable baking paper.
In the process, Hangzhou-based Alibaba has moved closer than ever to its goal of reducing carbon emissions across its digital ecosystem by 1.5 gigatonnes by 2035.
Multinational consumer companies can have a significant impact on the business practises of their suppliers. Retailers such as Unilever and Nestle have partnered with Alibaba to transform operations throughout their supply chains.
“Until recently, sustainability did not rank high on retailers’ list of priorities when it comes to sourcing suppliers,” said Zhao Yongjian, general manager of Ruikang Technology in China’s Zhejiang Province.
As part of its efforts to achieve carbon neutrality, the company has installed heat recovery systems and industrial waste recycling at a new factory.
However, there is still room for improvement, according to Yuan Can, technical manager at Alibaba Cloud's Energy Expert.
By replacing old machinery in one production line with energy-efficient equipment, 140 tonnes of CO2 emissions and 300,000 kilowatt hours (kWh) of electricity were saved annually, the equivalent of nearly 400 Chinese people's average residential energy consumption.
The platform also advocated for the use of biodegradable materials in packaging and the replacement of old machinery with more energy-efficient models. Yuan's team devised a plan to recover hot water from factory waste heat while also assisting them in making the transition to renewable energy by installing solar panels.
Multinational retailers have tried a variety of methods to encourage their suppliers to be more sustainable, such as establishing codes of conduct, conducting onsite assessments, and inviting third-party audits.
However, most Chinese factories lack the digital infrastructure to measure emissions and the know-how to manage energy use.
“Most of the smaller factories in China do not produce branded products. They don’t have a strong incentive to become sustainable unless brands say so,” said Yuan.
The primary barrier to greening a company's supply chain is the cost. However, Wang believes that investing in energy-efficient infrastructure will pay off in the long run.
"It will help lower operational costs and contribute to the company's competitive advantage," said Yuan.
Tmall Supermarket also incentivizes suppliers to improve their sustainability performance by tagging products as "eco-friendly". Customers who buy the products can accumulate points that can be redeemed for benefits on Alibaba's carbon ledger platform.
According to a report from the China Chain Store & Franchise Association, 80% of Chinese consumers are willing to pay a premium of up to 10% for sustainable products.
Tmall Supermarket plans to expand its partnership with green suppliers in the coming months in order to roll out more eco-friendly products. It is taking a step toward zero waste production by partnering with a retailer to collect used plastic bottles and repurpose them into consumer goods.
To create greener supply chains in China, Alibaba Group is leveraging its platform power and cloud computing capabilities.
Tmall Supermarket, the platform company's online grocery service, has partnered with Energy Expert, Alibaba Cloud's AI-powered sustainability and energy management system, to assist businesses in measuring and reducing their carbon emissions.
“Besides communicating the product’s environmental impact to consumers, we also want to encourage suppliers and manufactures to adopt green measures,” said Pei Yunlong, head of green supply chain at Tmall Supermarket.
According to the consultancy Ernst & Young, supply chains account for more than 90% of an organization's greenhouse gas emissions and up to 70% of operating costs. Carbon reduction at the source will assist Alibaba in reducing both.
Since its inception in April, the initiative has resulted in the development of 20 eco-friendly own-branded consumer products on Tmall Supermarket, including biodegradable cups and compostable baking paper.
In the process, Hangzhou-based Alibaba has moved closer than ever to its goal of reducing carbon emissions across its digital ecosystem by 1.5 gigatonnes by 2035.
Multinational consumer companies can have a significant impact on the business practices of their suppliers. Retailers such as Unilever and Nestle have partnered with Alibaba to transform operations throughout their supply chains.
“Until recently, sustainability did not rank high on retailers’ list of priorities when it comes to sourcing suppliers,” said Zhao Yongjian, general manager of Ruikang Technology in China’s Zhejiang Province. He heads a factory of over 300 people producing household goods for retailers in China.
As part of its efforts to achieve carbon neutrality, the company has installed heat recovery systems and industrial waste recycling at a new factory.
However, there is still room for improvement, according to Yuan Can, technical manager at Alibaba Cloud's Energy Expert.
By replacing old machinery in one production line with energy-efficient equipment, 140 tonnes of CO2 emissions and 300,000 kilowatt hours (kWh) of electricity were saved annually, the equivalent of nearly 400 Chinese people's average residential energy consumption.
The platform also advocated for the use of biodegradable materials in packaging and the replacement of old machinery with more energy-efficient models. Yuan's team devised a plan to recover hot water from factory waste heat while also assisting them in making the transition to renewable energy by installing solar panels.
Multinational retailers have tried a variety of methods to encourage their suppliers to be more sustainable, such as establishing codes of conduct, conducting onsite assessments, and inviting third-party audits.
However, most Chinese factories lack the digital infrastructure to measure emissions and the know-how to manage energy use.
“Most of the smaller factories in China do not produce branded products. They don’t have a strong incentive to become sustainable unless brands say so,” said Yuan.
The primary barrier to greening a company's supply chain is the cost. However, Wang believes that investing in energy-efficient infrastructure will pay off in the long run.
"It will help lower operational costs and contribute to the company's competitive advantage," said Wang.
Tmall Supermarket also incentivizes suppliers to improve their sustainability performance by tagging products as "eco-friendly". Customers who buy the products can accumulate points that can be redeemed for benefits on Alibaba's carbon ledger platform.
According to a report from the China Chain Store & Franchise Association, 80% of Chinese consumers are willing to pay a premium of up to 10% for sustainable products.
Tmall Supermarket plans to expand its partnership with green suppliers in the coming months in order to roll out more eco-friendly products. It is taking a step toward zero waste production by partnering with a retailer to collect used plastic bottles and repurpose them into consumer goods.
For Additional information on Alibaba’s sustainability efforts click here.