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3
Fewer printed materials. Online e-newsletters and brochures replace their physical
equivalent so saving paper and distribution costs.
4
Less packaging. Although theoretically there is less need for fancy packaging if an item is
sold online, this argument is less convincing, since most items like software or electronic
items still come in packaging. At least those billions of music tracks downloaded don’t
require any packaging or plastic.
5
Less waste. Across the whole supply chain of procurement, manufacturing and distribu-
tion the Internet can help reduce product and distribution cycles. Some even claim that
auction services like eBay and Amazon Marketplace can promote recycling and reuse.
6
Dematerialisation. Better known as ‘digitisation’, this is the availability of products like
software, music and video in digital form.
If companies trading online can explain these benefits to their customers effectively, as HSBC
has done, then this can benefit these online channels.
But how much could e-shopping reduce greenhouse gas emissions? A study by Finnish
researchers Siikavirta et al. (2003), limited to e-grocery shopping, has suggested that it is
theoretically possible to reduce the greenhouse gas emissions generated by grocery shopping
by 18% to 87% compared with the situation in which household members go to the store.
The researchers estimated that this would lead to a reduction of all Finland’s greenhouse gas
emissions by as much as 1%, but in reality the figure is much lower since only 10% of grocery
shopping trips are online.
Environmental and green issues related to Internet usage
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Chapter 4 E‑environment
Cairns (2005) has completed a study for the UK which shows the importance of gro-
cery shopping – she estimates that car travel for food and other household items represents
about 40% of all UK shopping trips by car, and about 5% of all car use. She considers that
a direct substitution of car trips by van trips could reduce vehicle-km by 70% or more. A
broader study by Ahmed and Sharma (2006) used value chain analysis to assess the role of
the Internet in changing the amount of energy and materials consumed by businesses for
each part of the supply chain. However, no estimates of savings are made.
Taxation
How to change tax laws to reflect globalisation through the Internet is a problem that many
governments have grappled with. The fear is that the Internet may cause significant reduc-
tions in tax revenues to national or local governments if existing laws do not cover changes
in purchasing patterns. Basu (2007) notes that around a third of government taxation
Taxation
Box 4.6
HSBC customers plant virtual forest
HSBC has committed to improving the environment since it became a climate‑ neutral
company globally in November 2005. Through the use of green technologies and
emission‑ offset trading, HSBC counteracts all CO
2
emissions generated by its building
operations and corporate travel. In 2006, 35% of operations in North America were
offset by investments in Renewable Energy Certificates from wind power alone.
Another aspect of HSBC green policy is its online banking service, where it encour‑
ages paperless billing. For example, in the UK in 2007, over 400,000 customers
switched from paper statements to online delivery, creating a virtual tree each time
( Figure 4.10 ), and for every 20 virtual trees, HSBC promised to plant a real one.
Figure 4.10
HSBC virtual forest
Source: www.hsbc.co.uk .
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Part 1 Introduction
revenue is from domestic consumption tax, with revenue from import taxation around 17%.
Governments are clearly keen that this revenue is protected.
Government revenue is normally protected since, taking the UK as an example, when
goods are imported from a non-EU territory, an excise duty is charged at the same rate as
VAT. While this can be levied for physical goods imported by air and sea, it is less easy to
administer for services. Here agreements have to be reached with individual suppliers.
In Europe, the use of online betting in lower- tax areas such as Gibraltar has resulted in
lower revenues to governments in the countries where consumers would have formerly paid
gaming tax to the government via a betting shop. Large UK bookmakers such as William Hill
and Victor Chandler are offering Internet- based betting from ‘offshore’ locations. Retailers
have set up retail operations on Jersey to sell items such as DVDs and CDs which cost less than
an £18 Low Value Consignment Relief threshold, so no VAT or excise duty needs to be paid.
This trend has been dubbed LOCI or ‘ location- optimised commerce on the Internet’ by
Mougayer (1998).
Since the Internet supports the global marketplace it could be argued that it makes little
sense to introduce tariffs on goods and services delivered over the Internet. Such instru-
ments would, in any case, be impossible to apply to products delivered electronically. This
position is currently that of the USA. In the document ‘A Framework for Global Electronic
Commerce’, President Clinton stated that:
The United States will advocate in the World Trade Organization (WTO) and other appro-
priate international fora that the Internet be declared a tariff- free zone.
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