Shopify

RATING

SECTOR

IT Software and Services

WEBSITE

CONTACT

Phone: (613) 241-2828150 Elgin Street, 8th Floor,
Ottawa,
Ontario,
Canada K2P 1L4

Phone: (613) 241-2828

 

STOCK EXCHANGE

LISTING

CDP 2020 Climate Change Response: C

EMPLOYEES

5,000

CHIEF SUSTAINABILITY OFFICER

Stacy Kauk

AWARDS

N/A

CONTENT SOURCE

FURTHER READING

Report created by Kavita Kripalani

Shopify

SECTIONS :  Sustainability    Evaluation  •  Progress  •  Watch  •  Overview

Company Activity

Shopify, Inc. operates a cloud-based commerce platform designed for small and medium-sized businesses. Its software is used by merchants to run a business across all sales channels, including web, tablet and mobile storefronts, social media storefronts, and brick-and-mortar and pop-up shops.

The firm’s platform provides merchants with a single view of business and customers and enables them to manage products and inventory, process orders and payments, build customer relationships and leverage analytics and reporting. It focuses on merchant and subscription solutions. The company was founded by Tobias Albin Lütke, Daniel Weinand and Scott Lake on September 28, 2004, and is headquartered in Ottawa, Canada.

 

Company Sustainability Activity

Shopify is building a 100-year company with their ecosystem of merchants and partners, their people, their communities, and the world. They are headquartered in Ottawa, on unceded and still occupied territory of the Algonquin Anishinaabe Nation. They embrace the opportunity and responsibility to create a more equitable and sustainable future. Their first sustainability report was a comprehensive look at how Shopify supports economic, environmental, and societal well-being. In their second report, they narrowed the scope to shine a spotlight on their sustainability priorities moving forward, including their 2019 actions and impact. These are their sustainability priorities: 

  • Economic Impact 
  • Education for Entrepreneurs 
  • Equitable Entrepreneurship 
  • Computing Education 
  • Climate Change 
  • Diversity and Belonging 
  • Community Care

The company’s Sustainability Fund carbon removal initiative aims to:

  • Kickstart the carbon removal market
  • Allow new companies to prove their impact and scale
  • Generate demand when there previously was none
  • Drive down prices for future buyers looking to make a difference
  •  
 

Highlights

  • Shopify provided free local education to more than 15,000 entrepreneurs at its distributed programs (compared to 10,200, in 2018) and more than 68,000 entrepreneurs in Shopify LA and San Francisco merchant spaces (compared to almost 3,000 in 2018)
  • Shopify co-created theory of change at the inaugural Indigenomics Institute research forum, which guided the development of its strategy to support Indigenous entrepreneurs while furthering Indigenous economic reconciliation and well-being
  • Shopify continued to invest in computing education, with 2,200+ youth engaged via their Technovation Girls and STEMing Up community partnerships and a total of 60+ students enrolled in Dev Degree
  • Shopify launched Shopify’s Sustainability Fund, committing a minimum of $5M annually to fight for the environment, an amount that will increase based on its revenue growth
  • Shopify’s Sustainability Fund invests to remove carbon dioxide from the atmosphere.
  • Shopify identified 10 industries that they believe can help reverse climate change globally. Shopify is working with companies with the most promising and innovative solutions in each industry. 
  • Shopify made 13 purchases across nine of chosen industries.
  • The company has invested in carbon engineering  promising engineered solutions that have proven technology ready to scale, and running tide: a wildly creative nature-based solution that they’re placing a bet on, helping to fund its research and experimentation. Running Tide grows oysters: a zero-carbon superfood that naturally stores carbon within its shell.

Targets

  • In 2019,  launched Shopify’s Sustainability Fund, committing a minimum of $5M annually to fight for the environment. This will house all of their environmental investments, intelligently committing every dollar into the most promising and impactful technologies and projects fighting climate change globally. 
  • Will invest at least $1M annually in carbon sequestration, continue to reduce and offset their emissions, provide opportunities for its merchants and their buyers to reduce their emissions, and develop sustainable packaging solutions for shipping
  • Compensation Fairness Review takes a global approach to reviewing Shopify’s compensation, perks, and benefits programs to ensure that the company is competitive, inclusive, and fair, including looking at gender and race/ethnicity. In 2020, will expand their analysis beyond compensation outcomes to the decision-making process that determines these outcomes.
  • Shopify is committed to investing at least $1 million USD each year into carbon sequestration. Their goal is to kickstart the demand and predictability of this market so industrial engineering can scale and the price can come down.
  • Carbon-neutral operations: They have bought enough renewable energy to neutralize their carbon footprint in Canada, and in 2020 they plan to power 100% of their global operations with renewable energy. They will offset all travel-related emissions too.

Progress

  • Carbon neutral since inception: purchased carbon offsets to cover all of its historical office, data centre, and corporate travel emissions (22,127 tCO2e from 2004-2018).
  • Renewable-powered buildings: purchased renewable energy credits for office buildings in Canada, and are purchasing offsets for other locations.
  • Carbon-neutral corporate travel: purchased offsets for all of its corporate travel emissions up to September 2019, and are purchasing offsets for the remainder of 2019.
  • LEED-certified buildings: 51% of office spaces are LEED certified or equivalent, which means high-energy efficiency and short commutes (53% in 2018).
  • Carbon-neutral platform: platform runs entirely on Google Cloud, which is powered by 100% renewable energy.
  • In 2019, Shopify continued its push for a low-carbon future by focusing on its own emissions. To reduce its footprint, Shopify prioritized efficiency in its operations and promoted employee behaviour changes. For all remaining energy use and emissions, Shopify purchased renewable energy credits and carbon offsets.
  • In 2019, Shopify collected data across four dimensions of diversity to better inform its strategy, including its internal initiatives, and its approach to internal and external community engagement
  • In 2019, Shopify continued to increase the percentage of women across Shopify as 45% of new hires identified as women (44% in 2018). Shopify identified what’s going well from an employee engagement perspective based on results from its annual company-wide survey, which tells them how its employees think and feel about Shopify.
  • In 2019, Shopify conducted research to define what “belonging” means to its employees and created a global diversity and belonging strategy. Shopify piloted anti-bias training to leadership, audited its talent acquisition process, reviewed its compensation outcomes, and created a board-level diversity policy. Shopify also added three new ERGs to support more employees at Shopify and revamped its Belonging Connectors program by compiling a roster of 40 diverse, qualified, and compassionate connectors.
  • In 2019, Shopify supported over 550 total events across local communities through various partnerships. Particularly notable contributions were to the True North, SaaS North, and Fashion Takes Action conferences, as well as to Startup Open House, SheEO, Forum for Women Entrepreneurs, and the Toronto Public Library. Shopify supported these organizations in different ways, such as financial contributions, conference admissions for under-resourced entrepreneurs, opening its doors to the public, and providing Shopify speakers and mentors.
  • Community Crisis Response: In 2019, Shopify supported its communities in New Zealand, Ottawa, Montreal, and California during times of crisis by donating to local nonprofits; partnering with local businesses to provide meals for response volunteers; offering access to its spaces with food, water, wifi and a place to work; and offering credits to heavily impacted merchants.
  • Toronto Public Library: Shopify provided free brand-agnostic ecommerce, marketing, and business education workshops at library branches outside of the downtown core to reach a diverse and underserved audience.
  • In 2019, Shopify engaged 2,230 youth and educators through events and workshops as Shopify continued to build out its flagship outreach programs Link, Technovation, and STEMing UP, among its other partnerships. As part of a new initiative, Shopify donated 218 “retired” Shopify laptops with an equivalent value of $95,600 CAD to its outreach partners to provide participants with access to technology.

Certificates

  • LEED-certified buildings: 51% of their office spaces are LEED-certified or equivalent, which means high-energy efficiency and short commutes (53% in 2018).
 

United Nations Sustainable Development Goals

United Nations SDGs Compliance

SDG 4

  • In 2019, Shopify scaled its online education initiatives to reach more merchants. Shopify created more than 500 FAQs in its Help Centre based on merchant questions, and moved to a new on-demand format for its webinars to reach more people. Shopify migrated its Community Forums to a new platform, making it easier for members to find content and engage in discussion. In January 2018, its online education was available only in English. By the end of 2019, it should have added 20 languages to the Help Centre, made its Community Forums available in an additional seven languages, created videos in six languages, and hosted webinars in five languages.
  • Dev Discover is its computing education outreach program and recruiting path. Shopify leverage partnerships to teach Science, Technology, Engineering, Art, and Math (STEAM) concepts to participants across Canada. Students who build relationships through its programs develop essential skills for careers in tech. 

SDG 5

  • Compensation Fairness Review: Shopify takes a global approach to reviewing its compensation, perks, and benefits programs to ensure that the company is competitive, inclusive, and fair, including looking at gender and race/ethnicity. In 2020, Shopify will expand its analysis beyond compensation outcomes to the decision-making process that determines these outcomes.
  • Compensation Fairness Review Shopify takes a global approach to reviewing its compensation, perks, and benefits programs to ensure that Shopify is competitive, inclusive, and fair, including looking at gender and race/ethnicity. In 2020, Shopify will expand its analysis beyond compensation outcomes to the decision-making process that determines these outcomes. 
  • Board Diversity Policy Shopify formalized its commitment to improve the diversity of the Board. Shopify will attain, maintain, and value diversity on the Board, periodically assess its diversity, provide diversity education and training to all directors, and maintain a list of qualified diverse candidates. Currently, two of its directors identify as women, while none of its directors identify as Indigenous, as having a disability, or as a visible minority.
  • Compensation Fairness Review: Shopify takes a global approach to reviewing its compensation, perks, and benefits programs to ensure that Shopify is competitive, inclusive, and fair, including looking at gender and race/ethnicity. In 2020, Shopify will expand its analysis beyond compensation outcomes to the decision-making process that determines these outcomes. Board Diversity Policy Shopify formalized its commitment to improve the diversity of the Board. Shopify will attain, maintain, and value diversity on the Board, periodically assess its diversity, provide diversity education and training to all directors, and maintain a list of qualified diverse candidates. Currently, two of its directors identify as women, while none of its directors identify as Indigenous, as having a disability, or as a visible minority.
  • NCWIT Aspirations in Computing (AiC) To further promote increased diversity in computing, Shopify and Dev Degree sponsored the AiC Canadian affiliate awards for the 2019-2020 school year. Shopify provided monetary support and swag for winners of the award that honours high school students who selfidentify as women, genderqueer, or non-binary. 

SDG 7

  • The increase in its 2019 energy use and emissions compared to 2018 are likely due to a 25% increase in its number of employees, a 7% increase in its office square footage, and other external factors. Regardless, its energy and emissions intensities decreased by at least 23% as its revenue grew faster than its energy consumption and corporate travel needs.
  • Carbon-neutral platform: Shopify’s platform runs entirely on Google Cloud, which is powered by 100% renewable energy.

SDG 10 

  • Belonging Connectors: The program started in 2017 as an internal volunteer network of 20 Shopifolks from across multiple time zones, offices, teams, lines, and tenure, who engage in multi-way communication and perspective sharing to create awareness about what it means to be a diverse and inclusive organization. After hearing from employees that the program was not meeting the needs of the business, Shopify revamped the program in 2019. This led to 200 internal applications of which a roster of 41 diverse and qualified candidates were chosen to represent and amplify diversity & belonging initiatives globally.
  • Employee Resource Groups (ERGS) ERGs are groups of active and engaged Shopifolk who share, grow, and reflect the richness of their communities, representing employees who are Asian, Black, Indigenous, Latinx, LGBTQ+, women, and people with disabilities. They are matched to an executive sponsor to help guide their work around professional development, talent acquisition, and employee engagement and retention. In 2019, Shopify expanded from 4 to 7 ERGs, added 3 global chapters, and engaged over 1,800 employees.
  • Shopify piloted anti-bias training to 116 leaders, and tested it in its European and APAC offices to ensure cultural relevance. Participants reported an increase in their awareness of unconscious bias in themselves and others, an increase in their ability to address it, and 100% of employees said they would apply their learnings within three months.

SDG 13

  • In 2019, Shopify launched its Sustainability Fund, committing a minimum of $5M annually to fight for the environment. This will house all of its environmental investments, intelligently committing every dollar into the most promising and impactful technologies and projects fighting climate change globally. Going forward, Shopify will invest at least $1M annually in carbon sequestration, continue to reduce and offset its emissions, provide opportunities for its merchants and their buyers to reduce their emissions, and develop sustainable packaging solutions for shipping

SDG 17

  • Building Community Partnerships In support of its Diversity and Belonging strategy, Shopify partnered with Accelerate Her Future, #movethedial, Dolphin Disabilities Mentoring Day, Tent Partnership for Refugees, AfroTech, and Black Professionals in Tech Network to grow the number of voices in tech.

Evaluation

Shopify’s sustainability report describes the company’s goals for offsetting their carbon footprint, renewable energy, providing education, and community partnerships, implicitly in alignment with the UN Sustainable Development Goals.

There is room for improvement with regard to the company’s transparency, as the company ought to provide more specific data supporting its progress. The company does not have any awards and is not listed in any rankings. 51% of Shopify’s office spaces are LEED certified, but the company has no other certifications. 

The company has also recently been accused of fraudulent practices with no efforts shown to rectify this.

The company’s Sustainability Fund initiative is a commendable effort to invest $5 million annually in the reversal of climate change impacts. However, the company achieved $1.5 billion in sales in the last year, so it’s questionable if the company is actually offsetting its carbon footprint. Surely, the company has the resources to do significantly more in this regard. 

 This company has been rated a C. 

Analyst Outlook: Neutral

Indeed, the company has shown much-needed leadership in attempting to offset its carbon footprint. However, the company should strive to align further with UN SDGs and set more ambitious targets to integrate sustainability into their business practices.

Furthermore, their meager amount of certifications, listings, and awards do not support the company’s initiatives and strategies.

Key Points

  • The company’s targets are few and not specific enough.
  • Nearly 21% of Shopify stores pose a risk to their customers, according to analysis by e-commerce authentication service Fakespot.
  • Fakespot found nearly 26,000 of the 124,000 Shopify stores it analysed were “related to fraudulent practices”. Of those, about 39% were described as “problematic sellers”, with counterfeit issues, possible brand infringements or a poor reputation. Roughly 28% were possible scam stores, with privacy leaks and suspiciously cheap listings.
  • The company has become valuable to small businesses during the Covid-19 pandemic, because its services are cheap and easy to set up.
  • Because it is relatively cheap, Shopify is favoured by many smaller businesses that can’t afford to pay for custom website builds.
  • The company’s Sustainability Fund initiative, is a commendable effort to invest $5 million annually in the reversal of climate change impacts. However, the company achieved $1.5 billion  in sales in the last year, so it’s questionable if the company is actually offsetting its carbon footprint. Surely, the company has the resources to do much more in this regard. 
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