Sunday, 19 September 2021 09:23 GMT

Richard Liu’s JD.com Poised for a Sustainable Future with ESG Reporting


(MENAFN - Digital solutions)

The way in which the world looks at business is evolving. In the past a company was expected to operate in the best interest of their shareholders, but in today’s day and age this is no longer enough. Increasingly, the expectation for companies across the globe is to also place a large amount of consideration in their decision to their stakeholders – their employees, their customers, the communities in which they operate, and the world as a whole. In a study conducted by Markstein, they found that 70 percent of the consumers surveyed wanted to know what the brands they support are doing to address social and environmental issues, and studies show that younger investors tend to favor investments in companies that are good global citizens. Business leaders are taking note, with a recent survey conducted by Accenture and the World Economic Forum finding that 61 percent of the 20,000 young emerging leaders surveyed said that business models should be pursued only if they improve both societal outcomes and profitable growth, and 76 percent saying citizen trust will be critical to their competitiveness in the next five years.

For JD.com’s founder Richard Liu, trust and accountability have been at the core of his company’s business since he started over two decades ago. From guaranteeing authentic and non-counterfeit products when it was just a tiny four square meter booth in Zhongguancun to building a massive in-house logistics network to ensure customer satisfaction as well as providing accessibility to the more rural areas of the country, as chairman and chief executive officer of the company Liu has worked to ensure the sustainability of both his company and the planet. Today the company’s vision is to be “the most trusted company in the world” and their mission is to be “powered by technology for a more productive and sustainable world.”

Most recently, JD.com and Liu have shown their commitment to these values by publishing their first ESG sustainability report, which disclosed the company’s efforts and achievements in the field from 2018 to 2020. Standing for environmental, social and governance, ESG has become shorthand for investment methodologies that embrace these factors as a means of helping to identify companies with superior business models. Through ESG factors one can look past a company’s financial information, gaining insight into the quality of their management, culture, how forward-thinking they are, whether they meet positive standards of corporate responsibility, and the focus of their long-term development.

By putting together this comprehensive report, Liu has made sure that trust remains JD.com’s priority. Below are some of the key takeaways from it.

A Sustainable Supply Chain

No longer simply an ecommerce website, today JD.com is a full-blown supply chain-based technology and service provider. In addition to global climate action, China has committed to cut carbon intensity per unit of GDP by more than 65 percent from 2005 levels, as well as increase the share of non-fossil fuels in energy consumption to 25 percent by 2030, and Liu has sought to contribute to these goals by ensuring his company is building a cleaner supply chain system with a lower carbon footprint, spanning logistics, warehousing and transportation.

According to the ESG report JD.com’s reusable packaging boxes have been used over 16 million times, and by introducing cold chain boxes JD has realized a cumulative reduction of 180 million disposable foam boxes and 600 million disposable ice packs. Even by simply slimming their tape width from 60 to 45 millimeters they were able to reduce the amount of tape used each year by 400 million meters, which is roughly 100 times the circumference of the Earth.

JD Logistics, JD.com’s logistics arm that recently made its debut on the Hong Kong Stock Exchange, has been particularly active in sustainable efforts on a widespread scale, playing an important role in promoting the entire industry’s environmental-friendly development. It launched the Green Packaging Alliance as well as the China Ecommerce & Logistics Packaging Standards Alliance which developed the industry’s first packaging standards, and by facilitating brands to join its green manufacturing initiative it has reduced industry-wide disposable packaging usage by nearly 10 billion pieces.

Although the company’s Shanghai Asia No. 1 intelligent logistics park has made headlines for being a fully automatic warehouse operated by robots, it is also pioneering in its green efforts. Through a rooftop-distributed solar PV system, since opening in 2017 the power generation has reduced carbon dioxide emissions by 2,000 tons and saved approximately 800 tons of standard coal.

Green Data Centers

Data centers are now on the radar of environmental groups for their carbon emissions, which account for up to 200 million metric tons of carbon dioxide in a year. At JD.com, they have used low-carbon design, green procurement, energy management, and efficient resource use and waste management to achieve greener data center practices with a lower carbon footprint. One way to track such reductions is through annual average power usage effectiveness (PUE), and the data centers’ is decreasing each year. An ideal PUE ratio is close to 1.0, and by utilizing energy-saving technologies such as frequency conversion and indirect evaporative cooling, as well as refining operations and maintenance management, the data centers’ PUE have reached below 1.3.

Liu and JD.com have committed to introducing new technology to the company’s data centers that recycles residual heat derived from operations within the data center itself to provide a green and clean heat source for urban integrated heat supply networks. Two new green data centers are also currently being built in the Hebei and Jiangsu provinces that will have a PUE of around 1.21.

Charitable Action

Moving beyond the environmental commitments of JD.com, the report also indicated their social impact, with JD.com’s charity affiliate JD Foundation donating around $30 million in 2020 alone. The company also introduced the JD Giving Platform, an internet fundraising platform that was the first to be recognized by the Ministry of Civil Affairs of the People’s Republic of China. Through the novel platform, purchases can be made by adding them to their shopping carts just as they would other items, but rather than delivered to their homes they are sent directly to the charity program through JD’s logistics system.

The platform allows for the collection of material goods such as clothing and toys as well as monetary donations and one-click purchasing of materials from JD to be donated. The platform saw a total participation of over 3.5 million people, raising $3.05 million and collecting more than one million charitable items, including more than 473,000 items of clothing from across 90 cities in China in partnership with the China Charity Federation to help children with premature heart disease.

Rural Revitalization

Having come from a small village himself, Richard Liu has had a long-held belief in promoting the development of the countryside economy, and has aimed to ensure sustainable business through JD.com for people in those areas. More than 80 percent of JD’s front-line employees are from China’s rural areas, and by the end of September in 2020 JD.com had already helped 110 impoverished counties put more than 3 million local commodities online, achieving nearly $15.5 billion in poverty alleviation-related sales and directly driving more than one million impoverished households to increase their income. The company’s social ecommerce platform Jingxi has additionally helped tens of thousands of farms sell products to consumers across China, selling out over one million local specialties.

JD Logistics has also played a key role in helping rural farms bring their produce across the country through their in-house logistics network and supply chain expertise. In Hubei province’s Zhuxi township, JD.com has provided support for local farmers of the plant Konjac, aiding them by helping improve their logistics and supply chain as well as marketing and digitalization, resulting in significantly increased revenues for the farmers.

Publishing an ESG report is currently voluntary, and in doing so Liu has indicated that for him purpose and profit are inextricably intertwined. Through a commitment to transparency that has existed well before the company’s first ESG report, Liu has managed to build a loyal and trusting consumer base. Leveraging this along with its smart supply chain technology, JD.com has continuously created value for the economy, social development and environmental protection. As Liu said in a letter to shareholders: “A company which stays in awe and stays enthusiastic should not pursue omnipotence in its industry. Instead, such a company should assume responsibility and create value for its users, partners, society, environment, communities and employees.”


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