Alibaba Group Holding Limited (NYSE: BABA) has begun leveraging its platform and cloud computing capabilities to create greener supply chains in China. The company’s online grocery service Tmall Supermarket has partnered with Energy Expert, Alibaba Cloud’s AI-powered sustainability and energy management system to assist companies 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,” Pei Yunlong, head of green supply chain at Tmall Supermarket, told Alizila in Mandarin.
Over 90% of the organization’s greenhouse gas emissions come from Supply chains and equate up to 70% of operating costs. Focused carbon reduction at the source will assist Alibaba in cutting both. Since its launch in April the initiative has paved the way for development of 20 eco-friendly consumer products on Tmall Supermarket from biodegradable cups to compostable baking paper. “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.
The company installed heat recovery systems and industrial waste recycling at a new factory as part of its push towards carbon neutrality. “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.
What holds companies from greening their supply chain is primarily the cost. But investment into energy-efficient infrastructure will pay off in the long run, said Wang. “It will help lower operational costs and become part of its competitive advantage.”