Digital sustainability: e-invoicing for a greener future

The so-called ESG criteria, i.e. the promotion of environmental environmental protection,sustainability and ethical corporate management (governance), are increasingly becoming an integral part of corporate culture. More and more companies are recognising that e-invoicing is a simple step towards reducing digital waste and their environmental footprint. The well-known main culprit is of course the paper invoice, but e-invoices sent by email are not entirely innocent either.

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The ecological footprint of paper invoices

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The impact of invoicing on the environment is significantly influenced by carbon dioxide (CO2) considerations. Assessing the carbon footprint of a paper invoice requires a comprehensive analysis that covers the entire lifecycle of the invoice, from paper production, printing, processing and management of the invoice to delivery to the recipient and finally disposal.

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Numerous studies have already been carried out to determine the exact carbon footprint of paper invoices. The latest billentis market study "The Global E-Invoicing and Tax Compliance Report: Watch the Tornado!" provides an innovative analysis of the e-invoicing landscape, showing how technological innovation and regulatory requirements are reshaping the world of digital commerce. The study also presents some key figures to better understand the environmental impact of paper invoicing. It is important to understand that the CO2 emissions associated with producing a kilogram of paper can vary greatly depending on the type of paper, the source of raw materials, the manufacturing process, and the energy used in production. Paper production typically includes the felling of the tree, the physical transportation of wood and paper, the actual energy-intensive pulp extraction, the subsequent paper manufacturing, and in some cases recycling - each stage contributing to the total CO2 emissions.

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As stated in the latest billentis study, the carbon footprint of paper is generally estimated to be between 1.45 kg and 3.6 kg CO2 per kilogram of paper, taking into account the various production techniques. Based on a conservative estimate of 2 kg of CO2 per kilogram, the carbon footprint of a single 20-gram paper invoice (including transportation, printing and archiving) would be around 40 g. These findings highlight the contribution of paper-based invoicing to CO2 emissions and environmental impact.

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• Approx. 7,500 pages can be produced from one tree, which corresponds to roughly 3,000 invoices with an average of 2.5 pages. The production of 3,000 invoices (i.e. one tree) generates approx. 120 kg of CO2.

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• The US Department of Agriculture (USDA) estimates that a mature tree can absorb approximately 22 kg of CO2 per year. With a lifespan of around 10 years before harvest, that means that a mature tree will have absorbed around 220 kg of CO2 over the course of its life, which equates to an additional 80 grams of CO2 per invoice - which is then missing.

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• With approximately 560 billion invoices per year worldwide, of which approximately 125 billion are currently sent electronically, this leaves roughly 435 billion (i.e. over 75%) paper invoices per year. This means that paper invoices generate approx. 52 megatons of CO2 per year, based on 40 grams of CO2 for the average CO2 emission per invoice and 80 grams of CO2 per invoice that are not offset by the absorption of trees, as these have already been felled.

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The PDF trap: Why e-mail invoices alone are not enough

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Although replacing paper invoices with emails helps to preserve trees, emails and PDF files also generate significant digital "waste", which is considered one of the biggest pollutants on the planet. This digital waste results from the consumption of energy and resources during the production, transmission, and storage of electronic documents. Nevertheless, genuine e-invoices (i.e. not PDFs) are clearly more environmentally friendly than paper invoices. Although a fully structured e-invoice is also a file, its file size is actually 30-50% smaller than that of a PDF invoice, as it does not contain any graphics. This means that less computer capacity is required - and energy-intensive data centers can be saved! E-invoices are therefore undoubtedly a simple step that makes a big difference - especially as the number of e-mails also generally decreases.

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There are also studies that quantify and compare the effects of "real" structured electronic invoicing. For example, the study "Assessing the Carbon Footprint of Paper vs. Electronic Invoicing" (2010) by Maija Tenhunen and Esko Penttinen from the Aalto University School of Economics, which shows that switching from paper-based to electronic invoices reduces the carbon footprint of an invoice (life cycle) by an impressive 63%. This significant reduction is mainly achieved by eliminating unnecessary manual work and reducing material and transportation costs. Structured electronic invoices enable greater automation and efficiency compared to paper invoices or unstructured electronic invoice formats such as PDF files. These findings underline the importance of e-invoicing as an environmentally friendly alternative and illustrate how technological innovations can contribute to a more sustainable business environment.

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It is indeed time to consider the effects of digitalisation on energy and resource consumption. A topic that is only slowly entering the public consciousness!

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Nevertheless, one challenge remains: The growing number of digital documents leads to an excessive accumulation of data that can be considered digital waste. Our tip: Nowadays, there is no reason to store invoices twice. All these invoices stored in different places, including outdated ones, increase the volume of your digital waste to unrealistic levels. With the Banqup Premium - or Optimum - package, you can delete all duplicates and store your invoices in Banqup's digital archive, where they are neatly organised, easy to find, and archived for the legally required duration.

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E-invoices - advantageous in every respect

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Replacing various manual activities with digital solutions significantly reduces the time required, makes paper-based processes superfluous, reduces transportation costs, and creates time for more lucrative activities. All of this actually reduces carbon emissions considerably, as we have already seen.

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While the environmental benefits are the most obvious, e-invoicing also contributes significantly to social and governance improvements. Therefore, companies can use the switch to e-invoicing as a strategic measure to improve their ESG performance and reporting.

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The transition also brings a number of social benefits, especially for small and medium-sized enterprises (SMEs), including better accessibility, even in remote areas, greater transparency of transactions, and significant financial benefits, e.g. through faster invoice payment and new invoice financing solutions. In addition, governance aspects will be improved by simplifying tax compliance, strengthening internal controls, optimising invoicing processes, and introducing and spreading accountability.

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Sending and receiving e-invoices is particularly easy - anyone with a Banqup account can send and process e-invoices with ease, without any complex set-up or development work.

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Conclusion

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E-invoices are not only environmentally friendly, they also offer practical benefits to your business. Reduced CO2 emissions, less digital waste, cost savings, and increased efficiency are just a few examples of how machine-readable e-invoices can transform your business processes. They are not only a step towards a more environmentally friendly corporate culture, but also towards a more efficient and economical future.

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It's time to pay attention to the details and do the right things in the area of digitalisation too!

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Our all-in-one solution, Banqup, simplifies the e-billing process. What's more, Banqup requires no development or implementation effort. Designed specifically for small and medium-sized businesses, Banqup offers a fast and automated way to convert documents and data into any desired format. Sign up for our free Banqup trial today and discover how easy the transition to e-invoicing can be.

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Be one of the pioneers! The environment will thank you!

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