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Etsy: Crafting a Sustainable Future in E-commerce

Etsy is an online marketplace that connects buyers and sellers of unique wares. In the bustling world of e-commerce, they stand out as a unique marketplace for creative goods, connecting millions of creative entrepreneurs with buyers seeking extraordinary, handcrafted items. With a community of 31.7 million active buyers, Etsy is more than just a platform; it's a universe of special, extraordinary items, and a testament to the power of human creativity and craftsmanship.

This level of extraordinary is what the company brings to its sustainability approach. This can be seen in the company's 2022 annual report which provides insights into its financial performance and strategic commitments. Etsy is dedicated to sustainability and social responsibility, with initiatives such as renewable energy procurement, offsetting carbon emissions from shipping, empowering suppliers to meet their sustainability goals and supporting diverse and inclusive communities.

Raina Moskowitz, Chief Operating Officer - Etsy

As a result, Etsy has adopted a yearly integrated report model that combines environmental, social, and governance (ESG) metrics with financial metrics. The company believes that both aspects are equally vital to its strength and resilience. "We believe it’s important to walk-the-walk, not just talk-the-talk, when it comes to aligning our business model and impact strategy," says Raina Moskowitz Etsy's Chief Operating Officer. "That’s why Etsy’s best-in-class Integrated Annual Report includes our Environmental, Social, and Governance (ESG) strategy, targets and performance alongside our financial results. This allows us to combine ambitious goals with strong accountability to ultimately create economic impact through entrepreneurship and business growth."

Rachel Glaser, Chief Financial Officer - Etsy

This shift allows Etsy to align its reporting with global standards and offers stakeholders a clearer understanding of its progress in impact areas. By integrating ESG metrics into its Annual Report on Form 10K, Etsy ensures that its ESG reporting receives the same level of focus, discipline, and accountability as its financial reporting. The integrated annual reports serve as a comprehensive source of information about Etsy's sustainability efforts, social initiatives, and governance practices, exemplifying the company's commitment to positive impact. This approach is the result of a strategy based on rethinking what matters in the business. Rachel Glaser, Etsy's Chief Financial Officer noted recently that "embedding ESG roles into traditional business functions has helped drive greater accountability and improve the adoption of sustainability practices throughout our company. We moved our ESG reporting and Sustainable Cloud Computing roles from the Sustainability Team to the Accounting and Engineering teams." The integrated report is just one example of how the company chooses to lead by example for its industry, its customers, its suppliers and its sellers.

Chelsea Mozen, Senior Director of Impact & Sustainability - Etsy

For its consumers Etsy chose to re-think how sustainability was interpreted, understood and perceived by them. This was critical as they sought to introduce carbon offset shipping as an initiative to reduce the carbon emissions associated with shipping its products. In a 2021 podcast with Well Made, Chelsea Mozen, Etsy’s Senior Director of Impact & Sustainability, explained the company’s approach to sustainability to make sure their wording is accessible for consumers and executives. Mozen highlighted that, "we found when we were talking to our consumers that it was important to use analysis that they understood, so trees were helpful, and also words that they understood. Most companies will talk about a carbon neutral strategy. Our consumers, our buyers didn’t understand what that meant at all. Its very common sustainability language, but not as common in normal language, so the thing they understood the most was the concept of balance. You balance a negative impact with a positive impact elsewhere. That made a lot of sense, so we try to use scales in some of our communications. After the concept of balance, offsetting was more recognizable and understandable to them, so we call our program Carbon Offset Shipping”.

To help sellers and suppliers Etsy took a dual approach. One focused on access to renewable energy and the other focused on helping suppliers reach their sustainability goals. The latter also helps Etsy track and report on their scope 3 emissions. For sellers, Mozen created the Etsy Solar program. This helps eligible sellers in the U.S install custom solar panels on their homes or studios. The solar power helps lower energy bills, reduce greenhouse gas emissions and help sellers build innovative and sustainable businesses. For suppliers, Etsy uses a combination of strategies. First, working with certain ones to help them gather data, the company’s “dedicated Strategic Sourcing Team, with support from [its] Sustainability Team” chooses suppliers that are aligned with its goals. Second, Etsy also uses data such as the distance between shippers and buyers and the weight of packages to help estimate its emissions. The data is assured by accounting giant PwC. According to Glaser this is critical because the company must “gather data from many different internal and external sources” including suppliers, courier partners, and Etsy employees, she said, and the process “entails collaboration across many teams, and requires us to digest data that comes to us in many different formats.” The end product is that Etsy also helps suppliers improve the quality of their data, “especially as regulations around emissions data disclosure increase.” “Ultimately this benefits Etsy and our partners.”

When it comes to its own operations Etsy is committed to investing in renewable energy. ​​Th is shows up in two distinct areas. First, Etsy launched an impact investment fund that will catalyze growth in renewable energy technology. The fund will connect investors with sustainable and socially responsible investment opportunities. Second, since 2020 the company has powered its operations by procuring 100% renewable electricity, for both its offices and the electricity used by the data centers that serve its Google Cloud computing needs. To reach 100% renewable electricity, Etsy chose a unique path. In combination with the use traditional unbundled renewable energy certificates (RECs), Etsy joined Apple, Akamai, and Swiss Re in 2018 to develop a 125 MW wind facility and a 165 MW solar array. This was an innovative aggregated approach in which each company bought different shares of each project. Apple was the largest buyer, contracting 111 MW of the wind facility and 134 MW of the solar array. Etsy took the smallest stake, signing a 4.5 MW contract. This makes it the smallest corporate VPPA on record in the U.S.

Josh Silverman, CEO - Etsy

Despite not publishing a separate Corporate Social Responsibility Report, Etsy continues to refine its impact strategy and ESG reporting as it grows and incorporates acquired marketplaces into its approach. This demonstrates Etsy's dedication to continuous improvement and adaptation in its sustainability and ESG practices, emphasizing its ongoing commitment to positive change and responsible business practices. In a recent Fast Company Impact Council Meeting, Etsy CEO Josh Silverman said, “there’s more consciousness that we want to be a part of something that’s really positive,” he added. “I think that Etsy’s really well positioned over the long term to do something genuinely different than what the big mass producers and retailers are doing”.

The Potential Impact of RECs with Additionality:

To complement their strategy, Etsy's progress could be further improved if the company included RECs with additionality in their approach. RECs with additionality are not only relevant and critical, but they provide several benefits. RECs with additionality are preferred over regular RECs because they drive more significant positive changes in the renewable energy sector. They encourage new projects, foster innovation, promote market transformation, and align better with environmental and sustainability goals.

Investing in RECs with additionality also provides several direct benefits for Etsy. It allows the company to support renewable energy projects and contribute to the development of clean energy sources, reducing greenhouse gas emissions and mitigating its environmental impact. This aligns with Etsy's commitment to sustainability and demonstrates its dedication to reducing its carbon footprint. By using RECs with additionality, Etsy enhances its brand image as an environmentally conscious company, resonating with environmentally conscious buyers who value sustainability. Additionally, investing in RECs with additionality supports the growth of the renewable energy industry, creating demand for renewable energy projects and encouraging the transition to a more sustainable energy system. Etsy's sustainability journey is ongoing, and the company continues to evolve its impact strategy and ESG reporting as it grows and incorporates its acquired marketplaces into its impact strategy. By investing in RECs with additionality, Etsy will meet its sustainability goals, take action to make a positive impact on the environment and promote a more sustainable future.


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