A Guide to Carbon-Neutral Shipping for Small Businesses

There’s no doubt that our love of online shopping has driven the growth of shipping — and with it, a growing environmental concern.

Today, shipping contributes to about two to three percent of global greenhouse gas emissions.

Carbon emissions have a big impact on the environment and are a major factor in climate change.

But eCommerce sales in the US are expected to exceed $1.7 trillion by 2027, so there’s no sign of the shipping industry slowing down anytime soon.

Many factors go into the environmental impact of shipping, like transportation, fossil fuels, and packaging.

Take packaging as an example — Amazon ships 1.6 million packages a day.

The cardboard, plastic, and other materials used to wrap and protect those products have a significant environmental impact.

Paper packaging accounts for the loss of 3 billion trees every year.

And that’s before we even talk about the fuel needed to move all those packages around the world.

If you own a business that sells physical products, the question is: How do you ship products in a way that doesn’t hurt the planet?

Below, we’ll explore everything you need to know about carbon-neutral shipping and explain how small businesses can offset shipping emissions.

What does it mean to be carbon neutral?

“Carbon neutral” is a hot buzzword these days.

Google claims they’ve been carbon neutral since 2007, and has further pledged to run on carbon-free energy at all their data centers by 2030.

Apple is also aiming for carbon neutrality by 2030, and Amazon has pledged to be carbon neutral by 2040.

But what does that actually mean?

The term “carbon neutral” describes any action or activity resulting in a net zero release of carbon dioxide into the atmosphere.

From driving your car to flying in an airplane, everything we do has some sort of carbon footprint.

Carbon neutrality aims to balance those emissions with activities that remove carbon dioxide from the atmosphere.

Businesses and individuals can do this through carbon offsets.

Carbon offsets are things like planting trees or investing in renewable energy projects.

In business, being “carbon neutral” means that your business offsets as much as it emits.

Businesses can focus on carbon offset shipping, purchase carbon credits, or make financial contributions to environmental projects and funds to neutralize their impact.

The overall goal is to have a net neutral impact on the environment.

What is carbon-neutral shipping?

Carbon-neutral shipping is the practice of offsetting carbon emissions from transportation and shipping.

The goal is to increase sustainability while decreasing the carbon footprint of shipping packages.

Supply chains can be long and wasteful. And packages don’t always take the most direct route from point A to point B.

But it goes further than that.

Manufacturers consume energy and resources while creating products. Those products sit in warehouses and distribution centers before being packaged with more resources. Bad logistics waste fuel when delivery vehicles take inefficient routes.

Carbon-neutral shipping is all about strategies to make your shipping operations as efficient as possible to reduce waste and emissions.

It’s also about investing in carbon offsets to make up for the emissions that your business just can’t avoid.

Why is carbon-neutral shipping important?

We’ve already established that shipping has a significant environmental impact.

But some business owners might be reluctant to adopt sustainability practices.

How much will it cost? Will it hurt my business?

It’s a big commitment to promise to go carbon neutral by a certain year because you need the strategies and action plans to make it happen.

However, carbon-neutral shipping has some major benefits.

As consumers become more aware of their purchases’ environmental impact, they’re demanding more sustainable options from businesses.

Many people — particularly millennials — are willing to pay more for sustainability. 

Across the globe, 85 percent of people said they’ve shifted their purchasing behavior toward being more sustainable in the past five years.

Carbon reduction practices can also save your business money by curbing wasteful spending.

Some companies spend an average of $226,000 a year on gifting.

Plastic swag (like water bottles with a company logo) are like birthday goodie bags filled with crappy toys — they end up in the trash.

What if these companies kept their swag out of the landfill, saved some money, and rolled some of it over to help with reforestation instead?

Sustainability initiatives, like carbon-neutral shipping, can help your business save money in the long run by reducing waste, improving logistics (less wasted time and trips), and becoming more energy-efficient.

Most importantly, carbon reduction is necessary to fight climate change. After all, we only have one planet, and we need to take care of it.

Reducing emissions from shipping is a small but important step in the right direction.

Tips for carbon-neutral shipping

Ready to get your small business on track with sustainable practices?

Below are our top sustainable shipping tips to reduce carbon dioxide emissions and be a more responsible shipper.

Measure your carbon footprint and set goals

The first step is to figure out how much shipping-related carbon your business emits.

You can use a carbon calculator from the Environmental Protection Agency (EP) or a simplified version from Berkeley to get a basic idea.

You’ll collect a lot of data in the process, including: 

• Identifying the sources of your emissions
• Looking at energy bills
• Figuring out employees’ travel costs
• Inspecting your supply chain process
• Understanding the types of shipping and packaging you use
• Analyzing transportation costs

Once you have an amount of carbon, you can set a goal — just make sure it’s realistic.

You want to make your goal achievable so you can share your results with customers and build  trust.

But you also want to set a goal that will push you to make changes and improve your company’s sustainability.

For example, a good goal might be to reduce emissions by 10 percent in the next year, or switch to carbon-neutral shipping for all domestic orders in the next two years.

You can’t set a goal without a strategy to make it happen, though.

Are you going to purchase carbon offsets, donate to reforestation, switch to recycled materials for packaging, or change your shipping practices?

If you need ideas for where to start, keep reading!

Use eco-friendly packaging materials

The right packing materials are essential for getting your products to customers safely.

But some materials are better for the environment than others.

You can reduce your CO2 emissions by using eco-friendly packaging materials.

Use compostable, biodegradable, or recycled materials for your packaging so less waste ends up in a landfill.

Here are some options to consider:

• Compostable mailers: These will eventually break down without leaving behind any toxins. 
• Biodegradable packing peanuts: It only takes some water to dispose of these, as they’re water soluble.
• Recycled cardboard: Recycled cardboard can help you avoid contributing to deforestation while also offering customers sturdy packaging. 
• Biodegradable air pillows: These allow you to avoid using plastic and decompose relatively quickly. 

Use less packaging altogether

It’s much easier said than done, but using less packaging is an effective way to reduce your carbon footprint.

To make your small business carbon-neutral, you must strike a balance between protecting your products and using as little packaging as possible.

Only around five to six percent of plastic packaging is recycled. Over 85 percent ends up in landfills — a major source of pollution.

So, using less plastic is a good way to reduce your carbon footprint.

Some customers will recycle. Some won’t. It’s out of your control.

What you can control is how much packaging your customers receive.

Choose appropriately sized packaging — meaning if you’re shipping a relatively small product, you probably don’t need an extra-large cardboard box. 

Or if you only have packaging of a certain size, you might consider putting multiple products together instead of shipping them out separately. 

You can even give customers incentives to bundle products by offering a discount or credit. 

Look for eco-friendly shipping options

Not all shipping carriers are created equal when it comes to sustainability.

Some shipping companies already commit to reducing their carbon footprint and have environmental impact strategies, including UPS and FedEx.

But this isn’t always the case. So if you’re looking for an eco-friendly shipping option, do your research.

As a small business, you might already use major carriers like UPS, USPS, or FedEx for shipping.

The good news is that some of these carriers have their own eco-friendly initiatives, such as:

• FedEx EarthSmart: This is the company’s commitment to environmental sustainability and covers business solutions, workplace culture, and community outreach initiatives.
• USPS Blue Earth: USPS offers a Federal Recycling Program for electronic waste and transparent carbon reporting across the postal service’s entire delivery process.
• UPS Eco Responsible Packaging Program: UPS has a different spin on their initiative: Customers who meet their criteria are eligible to put the UPS green seal of approval on their shipping containers.

Research these programs to find out if they’re a good fit for your business.

Hold inventory at different fulfillment centers

As you’d expect, the farther your products have to travel, the more emissions are released as drivers eat up gas during transport.

So, if your customers are spread out all over, you'll have an increased carbon footprint if you only have one base.

One way to reduce your carbon footprint is by storing inventory at multiple fulfillment centers.

This way, you can ship products from the fulfillment center closest to your customer.

Distributing your inventory across multiple fulfillment centers can help speed up transit times and reduce shipping costs since you’re shipping from a closer location.

It’s a win-win-win.

If you don’t have a fulfillment system set up, there are many distribution network options. Learn more about the different types of order fulfillment.

For example, dropshipping is a type of inventory-free fulfillment.

In this system, you never actually see or touch the product. You simply take the customer’s order and pass it along to the supplier.

The supplier then ships the product directly to the customer’s door (rather than to your warehouse to be shipped again), and you get real-time updates throughout the process.

Reduce travel time with routing software

With a growing number of delivery vehicles on the road, emissions are growing and traffic is only getting worse.

This means longer travel times for your drivers.

Idling also creates pollution and costs you money by wasting gas.

If your company does last-mile delivery, consider using route planning software.

Fortunately, routing software can help you create the most efficient routes possible, so your drivers can spend less time on the road and more time making deliveries.

Reducing travel time means you can save money on fuel and reduce emissions.

If you’re handling delivery yourself, Circuit for Teams optimizes routes for last-mile delivery, helping you find the fastest, most efficient delivery routes.

It’s also easy to manage multiple drivers, keep track of your team’s progress in real-time, and make route changes on the fly.

Plus, you can get proof of delivery and send your customers SMS updates so they’re always in the loop.

Reduce waste during the delivery process

As a small business owner, you want to do your part to help protect the environment.

But it’s not always easy to know where to start.

You know shipping and delivery are a big part of your carbon footprint.

But what can you do to reduce the impact of shipping and delivery on the environment?

You can use less packaging and make sure the packaging you are using is environmentally friendly. 

You can also explore shipping options and try to work with a carrier with eco-friendly initiatives. 

Finally, consider holding inventory at different locations so your drivers can spend less time on the road — preventing them from having to use as much fuel.