Memorandum by the Digital Futures Consortium
"The increasing use of e-commerce could
have a profound impact on our ability to be more sustainable,
but it is important that we assess the benefits and problems in
a systematic and balanced way. My Department, with the DETR, is
supporting a year long inquiry into the environmental and social
impacts of e-commerce."Patricia Hewitt, e-Minister,
"I am delighted to be involved in the Digital
Futures project. My role is to co-ordinate the Government's drive
towards making the UK the best place in the world for e-commerce.
This project gives us the chance to think about what the effects
of that will be for our society, our environment and our daily
lives."Alex Allan, E-Envoy, Cabinet Office
1. Forum for the Future welcomes the opportunity
to contribute to this inquiry on behalf of the Digital Futures
consortium. Digital Futures was launched on 1 February by e-Minister
Patricia Hewitt, and is being backed by the DTI, DETR and the
Cabinet Office. Its aim is to explore the social and environmental
implications of the predicted explosion in e-commerce, and recommend
ways in which the digital economy could evolve into a powerful
ally of sustainable development.
2. The research for Digital Futures is being
carried out by eight think-tanks, including Demos, Forum for the
Future, New Economics Foundation and the Town and Country Planning
Association (a full list of research themes is attached). The
project will look ahead to 2010 to assess the impacts of e-commerce
in several key areas:
Energy useWill e-commerce
help to create a low-energy "weightless" economy? Can
it help the UK to meet its climate change targets? How many products
and services (such as records, banking, estate agency) will be
TransportWhat will internet
shopping mean for patterns of transport and distribution? To what
extent will home delivery replace the need to travel?
PlanningHow will e-commerce
shape the future of our towns and cities? Will the shift away
from bricks and mortar towards "clicks and mortar" accelerate
the decline of the High Street?
Social inclusionHow do we
overcome the "digital divide"? What will e-commerce
mean for communities, neighbourhoods and relationships?
3. In February 2001, the Digital Futures
consortium will publish its final report, which will include a
set of recommendations as to how Government and business can maximise
the wider benefits to society of the dot-com revolution.
4. The project is being supported by 11
companies with a stake in the digital economy: AOL UK; BP Amoco;
BT; Ericsson; Kingfisher plc; Nationwide Building Society; NatWest;
the Post Office; Royal and SunAlliance; Sun Microsystems and Unilever.
These companies are becoming actively involved in the research
process, as well as contributing financially to the research.
B. SETTING THE
5. Two of the most powerful drivers of change
in contemporary society are the explosion of digital technologies,
and the shift towards sustainable development. Both require us
to rethink the nature of goods and services. Both have the capacity
to transform companies, markets and entire economies. Yet surprisingly
few attempts have been made to assess whether the digital and
sustainability revolutions will complement or conflict with one
6. In the past decade, internet use has
grown at a phenomenal rate. There are now more than 150 million
users worldwide, and each day 80,000 new users go on-line. Although
the internet was originally perceived as a source of entertainment
and information, and advent of electronic commerce means that
it has evolved into the world's fastest growing marketplace.
7. E-commerce is still in its infancy, but
most commentators agree that it is set to grow as rapidly as the
internet itself. Conservative estimates suggest a near-quadrupling
of e-commerce in Britain by 2002, from £200 million per annum
to £720 million. On the more generous side, the OECD forecasts
that the global market will be worth $1 trillion by 2005.
This will have far-reaching implications for all aspects of business:
creating new brands and new markets; transforming product and
service delivery; and forging direct links between companies and
8. The UK is well-placed to take advantage
of the boom in e-commerce. The 1998 Competitiveness White Paper
placed e-commerce at the heart of the Government's vision of a
knowledge-driven economy, and set the ambitious goal of making
the UK "the best environment in the world for e-commerce
This goal was further reinforced by the publication of the Cabinet
Office report firstname.lastname@example.org, and is now being driven
forward by the e-Envoy. But although much attention has focussed
on the economic potential of e-commerce, far less research has
been conducted in the UK or internationally into its wider social
and environmental impacts.
9. A high-tech economy based on knowledge,
skills and innovation should be a cleaner, greener economy. Foremost
among the potential advantages of e-commerce are reductions in
travel and material throughput. For example, some studies show
that ordering groceries and other daily essentials on the web,
and having them delivered direct, could cut four out of every
five shopping trips. This could lead to a sizeable reduction in
vehicle emissions, and fewer retail developments on greenfield
10. In terms of energy and material flows,
there are some sectors where dematerialisation is already taking
effect as a result of e-commerce (eg books, records, banking).
As the table below shows, the ratio of energy used per book sold
in a traditional bricks-and-mortar store versus Amazon.com is
16:1. By far the biggest environmental savings will come from
increased supply chain efficiencies through business-to-business
|Traditional book shop
|Titles per store||175,000
|Revenue per employee||$100,000
|Sales per square foot||$250
|Energy cost per square foot||$1.10
|Energy cost per $100 sales||$0.44
11. There is growing interest internationally in the
environmental impacts of the internet. In December 1999, the US
Centre for Energy and Climate Solutions published a major report
which suggests that e-commerce could reduce overall US CO2
emissions by 1.5 per cent per annum between now and 2007.
Another Swedish study published in January suggests that e-commerce
could cut up to 5 per cent of shopping-related CO2
12. But it is important not to under-estimate the rebound
effect, which could see these environmental gains being outweighed
by an increase in overall consumption. Freight transport could
increase through inefficient distribution systems, and consumers
might replace shopping trips with other, longer journeys. The
ease of access to goods from across the world could increase air
traffic, and might reduce the capacity of consumers to ensure
that adequate social and environmental standards are maintained
at the point of production.
13. On the social side, debates have focused on ways
of closing the "digital divide", and the government
has now set the admirable goal of ensuring universal access to
the internet by 2005.
But looking more widely at the social consequences of e-commerce,
there is great uncertainty about what it will mean for local communities.
High Streets, which have already lost most food retailers, are
likely to see the disappearance of many other service sector outlets.
And with geographical remoteness little barrier, social dislocations
could take place on a far larger scale. Much of British Airways'
routine accountancy work, for example, is now conducted in Bombay.
14. At a broader cultural level, some have warned of
the erosion of "social capital" that could result from
the shift towards disembedded on-line communities. As e-commerce
evolves, it raises important questions about the social function
of shopping, and the nature of community in the digital age.
C. TAKING THIS
15. Despite the opportunities for synergy between emerging
policy on the knowledge economy, e-commerce, and sustainable development,
there is currently little evidence of the joined-up thinking that
is the supposed hallmark of Government policy-making. BT has pointed
out that "technology is essentially neutral with respect
to sustainable developmentit is how people apply it that
really matters. If we
are to harness e-commerce to maximise wider social and environmental
goals, there is an urgent need for dialogue between policy-makers
and the companies who will be driving the dot-com revolution.
Our project is still at an early stage, but the Digital Futures
consortium hopes to play a positive role in promoting this dialogue
over the next 12 months.
On behalf of the Digital Futures consortium (full membership
listed at Appendix A).
James Wilsdon, Senior Policy Adviser
Forum for the Future
24 March 2000
OECD The Economic and Social Impact of Electronic Commerce:
Preliminary Findings and Research Agenda, October 1998. Back
DTI Our Competitive Future: Building the Knowledge Driven Economy,
December 1998. Back
Joseph Romm The Internet Economy and Global Warming: A scenario
of the Impact of E-commerce on Energy and the Environment Centre
for Energy and Climate Solutions (December 1999). Back
Tony Blair, Speech to the Knowledge 2000 Conference, 7 March 2000. Back
BT A Question of Balance (1997). Back