The last few years have seen an influx of climate laws globally with the goal of limiting global warming. Companies that want to stay ahead of these legislative trends must understand current and proposed laws so that they can adjust their climate change approaches accordingly. EcoCart offers guidance and tools to help ecommerce companies enjoy long-term success, reduce greenhouse gas emissions, and be more climate-conscious. Here’s our guide to climate change laws and how we can help you with your sustainability goals. 

Current And Upcoming Climate Change Legislation

Laws that address climate change are nothing new; legislation such as the Clean Air Act has been in place since the 1970s. However, initiatives like the Paris Agreement have pushed countries around the world, including the United States, to create new laws surrounding greenhouse gas emissions, green energy, climate reporting, and more. The intention is to help create a net zero emissions economy and reach global environmental goals.

While there are many climate change laws that businesses, large and small, need to keep track of, some recent regulations and proposals deserve special attention from ecommerce companies.

Inflation Reduction Act (IRA)

The Inflation Reduction Act is the largest bill supporting clean energy and climate change in the history of the U.S. It provides billions of dollars in loans for the creation of renewable energy sources, offers tax breaks to small businesses that are transitioning to clean energy, and more. Here’s how the IRA can specifically impact your ecommerce business:

• Tax Incentives: Take advantage of tax credits and deductions available for investing in renewable energy solutions like solar panels and energy-efficient upgrades. This can significantly reduce your operational costs over time.
• Funding Opportunities: There’s a pot of government money in the form of loans and grants designed to help you fund big sustainability projects. This is your chance to innovate without straining your budget.
• Compliance and Reporting: Understand and prepare for potential future requirements under the IRA, such as reporting on energy usage and reductions in greenhouse gas emissions. Staying ahead in compliance can mitigate risks of penalties or legal issues.
• Energy Efficiency: Take a hard look at how much energy you use and figure out where you can be more efficient. The IRA’s focus on clean energy could mean lower energy costs for those who invest in efficiency upgrades now. Learn how to conduct a business energy audit.

American Innovation & Manufacturing Act (AIM)

The American Innovation & Manufacturing Act seeks to reduce emissions of hydrofluorocarbons (HFCs). These are greenhouse gasses found in air conditioning, refrigeration, aerosols, solvents, and foam-blowing agents, and they can have thousands of times more global warming potential than carbon dioxide. Although this act was implemented in 2020, it has gained funding from the Inflation Reduction Act to create and expand programs supporting AIM.

The law stipulates:

• A phasedown plan that requires businesses to cut HFC use by 85% over the next 15 years.
• Compliance through the adoption of alternative technologies that use low-global warming potential (GWP) substances.
• Regular reporting and auditing to ensure adherence to the new standards.

E-commerce companies that use refrigeration during transportation or air conditioning units in their facilities should be aware of AIM and begin transitioning to technologies that align with its goals.

SEC Climate Disclosure Rule

In March 2024, the SEC announced its final rules surrounding climate disclosure. Although it does not require companies to make any changes surrounding their climate change impact, it requires specific ESG reporting by publicly traded companies.

Key elements include:

• Mandatory reporting of direct and indirect greenhouse gas emissions (Scope 1 and Scope 2).
• Description of how climate-related risks affect the business strategy and financial planning.
• Discussion of governance and risk management processes related to climate change.

As of April 2024, this rule has been paused pending review, however, it’s expected that it will be implemented in full at some point in the future.

Even if not publicly traded, e-commerce companies may be influenced by these standards as they set a precedent that could extend to private companies. Businesses should:

• Prepare for possible future requirements by setting up internal systems to measure and report greenhouse gas emissions.
• Consider third-party audits to assess and disclose climate-related financial risks.
• Align marketing and communication strategies to ensure transparency and avoid greenwashing.

California disclosure laws

California has its own disclosure laws for companies that operate in the state. It covers both publicly and privately owned businesses and requires disclosures about greenhouse gas emissions, climate-related financial risks, voluntary carbon offsets, and climate-related emissions claims. 

This is intended to create transparency surrounding climate claims and reduce greenwashing, and it affects any companies that do business in California or market their products there. 

For companies operating or marketing in California:

• Implement systems to track and report emissions and related risks.
• Ensure marketing claims about sustainability are substantiated, clear, and compliant with state guidelines to avoid penalties for greenwashing.
• Regularly review and update disclosure practices to stay aligned with evolving regulations.

U.S. National Blueprint for Transport Decarbonization

This framework, created in 2023, seeks to develop strategies to decarbonize the transportation sector by 2050. It was a joint effort by the Departments of Energy, Transportation, Housing and Urban Development, and the Environmental Protection Agency. Although this is not a piece of legislation, it can have implications for future rules as it carries strategies to transition to clean transport options, promote shared and public transportation solutions and minimize the reliance on fossil fuels.

Businesses reliant on transportation for product deliveries should:

• Plan to integrate electric or alternative fuel vehicles into their logistics fleet.
• Consider partnerships for shared logistics solutions to reduce overall emissions.
• Explore government incentives for businesses participating in decarbonization efforts.

National Recycling Strategy

The National Recycling Strategy is a strategy proposition by the EPA to create a better municipal solid waste management program, including stakeholder collaboration. Some of the proposed strategies include updated labeling, consumer education, improving markets for secondary materials, and increasing traceability. Although this is only a proposal, ecommerce companies should educate themselves on certain measures so that they can anticipate policy changes and develop forward-thinking strategies that address potential changes before they occur.

Businesses should:

• Align product packaging and materials to comply with new recycling guidelines.
• Educate customers on proper recycling practices through marketing and packaging.
• Anticipate changes in procurement and supply chain management to accommodate the increased use of recycled materials.

How Ecommerce Businesses Are Impacted By Climate Change Policies

Many of these climate change laws have overlapping requirements, while some are industry-specific and others offer benefits, such as funding for sustainability projects. Here are some of the biggest ways that ecommerce businesses are impacted by these laws:

• Disclosure: With the SEC’s ruling and California’s new laws, sustainability reporting is quickly becoming a required business practice. Ecommerce companies need to start gathering ESG-related data to prepare for disclosure rules.
• Product materials: Proposals like the National Recycling Strategy highlight the importance of product materials, the recyclability of those materials, and the use of secondary materials. Conducting an environmental product declaration can help you understand how your products could be impacted by future laws.
• Transportation: The U.S. National Blueprint for Transportation Decarbonization seeks to decarbonize the transport sector by 2050. Ecommerce companies must pay attention to policy changes that support this goal as they create their sustainable logistics and shipping strategies. See our solutions for sustainability in shipping and logistics.
• Financial support: The Inflation Reduction Act supports businesses that are making sustainable changes and can help finance sustainability initiatives. Business owners can enjoy tax cuts that alleviate the cost of switching to clean energy technologies and renewable energy sources.

Climate change legislation necessitates forward-thinking actions, updated sustainability strategies, and robust sustainability management. It’s becoming clear that companies must incorporate sustainability KPIs into their overall business strategies if they want to avoid complications due to climate measures and environmental rulings.

How Businesses Can Prepare For Climate Change Laws

Ecommerce businesses that are not forward-thinking in their sustainability approaches will be the ones most impacted by climate change legislation. It’s important that decision-makers stay informed on new and proposed laws so that they can ensure that their sustainability strategies are successful in the long term.

Here are some of the best ways that you can prepare for current and upcoming climate change laws.

• Stay informed: Any time a proposal comes forward, educate yourself on suggested changes and areas of focus. Even if the laws or regulations don’t change, it can give you an idea of the mindset of policymakers and help you predict future changes that may come forward. Then, you can adjust your sustainability strategies accordingly.
• Track and measure your ESG impact: Even if your company doesn’t have to disclose its climate-related impact, ESG reporting software will analyze your current standing and give you a roadmap to your impact. This way, you can understand exactly how climate change laws may affect your business and which changes you need to make to stay ahead.
• Set aside a sustainability budget: Sometimes, things take you by surprise. By having a sustainability budget, not only will you ensure that you have the funds to support any new sustainability initiatives, but you’ll also be able to quickly fund any changes that you’ll need to make due to a new climate change law. 
• Identify areas of risk: Conducting a sustainability audit will help you find areas that could be affected by climate change legislation before they become a problem. By identifying areas of risk, you give yourself an opportunity to change them before a law says that you have to.
• Develop a robust sustainability plan: Preparing for climate laws is all about predicting changes and having a plan. A robust sustainability strategy should address waste management, product materials, supply chain sustainability, greenhouse gas emissions, and more. If your sustainability plan is solid, then you should stay ahead of any future laws.
• Gain ESG certification: Although carrying ESG certification does not guarantee that you’ll stay ahead of legislation, it could help. The process of gaining high-level certification is long and thorough. If you earn green certifications like B-Corp, you’ll automatically need to create a sustainability report, undergo an audit, and implement many of the strategies mentioned above. That way, you’ll get to enjoy certification alongside compliance.

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ESG Reporting By Ecommerce Business Size

ESG reporting is essential to staying on top of climate laws. However, it can be a daunting task. Luckily, EcoCart offers plenty of solutions to help ecommerce companies of all sizes. Here are our recommendations for sustainability reporting and management depending on your monthly revenue.

Up to $50K in total monthly revenue 

Companies that are making up to $50,000 every month can do a lot of their own data collection and ESG reporting. Often, companies of this size only need to make small adjustments, and their sustainability strategies are far less intensive than bigger companies. EcoCart helps companies of this size by providing a sustainability scorecard to help them gain an understanding of where they stand and pairing them with carbon removal projects to help them take responsibility for the carbon footprint of deliveries and reduce greenhouse gas emissions.

$50K-$100K in total monthly revenue 

Mid-size companies can still do a lot of the work themselves, but they’ll want to use sustainability management software that integrates with the rest of their tech stack to ensure a holistic approach to sustainability. EcoCart’s carbon accounting software can integrate with your existing tech to help you better understand your carbon footprint, especially associated with delivery and transport. We also offer resources to help you share your sustainability journey with your customers. 

Over $100k in total monthly revenue 

Larger ecommerce companies should consider partnering with a sustainability provider to conduct a sustainability audit and develop a robust sustainability program. These companies often need to make consistent changes to address their impact, and this cannot be done on their own.

Is Your Business Ready For Climate Change Laws?

EcoCart offers plenty of tools to help ecommerce companies address their impact and stay ahead of climate laws. We can be an essential partner in helping you reach your sustainability goals and remain compliant no matter how legislation changes. Interested in learning more? Reach out to our team for a demo today.