Is the rise of online trade benefitting the environment?

Markets used to look like this. Then the stock exchange was invented, and now everything is on the internet.

We say in our times, that we all live in a global village. It sounds true when we see our shared Facebook friends around the globe, but it’s how our economies are run too: Trading exchanges went electronic back in 2011. Before then, traders used to stand on the trading floor, shouting at each other, setting prices there and then. Today, modern trading practices are defined by computers and technology, but twenty or thirty years ago, all trades were conducted with people using bits of paper and telephones. In many ways, this is not a bad thing, even if old-time traders describe today’s electronic trading platforms as ‘soulless’. Computers may lack emotion, but one thing is certain – online trading is better for the environment.

Online trading has eliminated the requirement for in-house trading. Trading platforms operate from the cloud, so very little infrastructure is needed. Employees can work remotely and modern communications allow for a global operation run with very low overheads.

Global Power Shift, Gezi Park, Istanbul, 350.org, Turkey, climate activism, climate change crisis, youth movement, Taksim Square

We are now a global village and our parts are from everywhere!

Renewable Energy

Online businesses can be sustained by renewable energy. Major tech players like Apple, Facebook and Google are committed to using renewable energy to power their operations. Other influential companies are also looking to make changes to the way they use energy, and online trading platforms are no exception. Of course, such decisions are not always guided by altruism. Most tech companies are well aware that renewable energy is a good long-term investment, as it will one day be cheaper than traditional forms of energy.

Before computers came along, financial and trading transactions were recorded on paper. Computers eliminate the need for paper audit trails. Every single trade is recorded in a database, which can be audited and archived. Going digital is, in theory, better for the environment, but what many people don’t realise is that paper is a sustainable industry.

Recyclable Paper

Paper is now one of the world’s most recyclable commodities. 65% of paper in the US was recycled in 2012, and this figure is almost certainly going to be higher in 2017. The majority of paper is made from sustainable forests, which are replanted when trees are cut down. E-waste is far less likely to be recycled.

Alternative Christmas Tree

Recycled paper used in art

There are millions of tons of electronic equipment, from laptops to smartphones, discarded every year. Online trading relies on the use of electronic equipment such as laptops, desktop computers and smartphones, and in the case of high speed trading, equipment needs to be high-spec and capable of handling a large number of complex trades in a short time. Tech businesses can do their bit by ensuring electronic equipment is responsibly recycled.

Working from Home

Online trading has led to a fundamental shift in the workplace. Traders are no longer required to travel into work to conduct their trading activities. It is now very common for traders to work from home instead. To trade online, all you need is an internet enabled device and a high-speed internet connection. This reduces workplace costs, which is better for the environment.

Working from home is cozy

Financial services institutions, including investment banks and trading exchanges don’t need as much space for employees if a large number are working remotely at any given time. This saves on the cost of providing heat, light, and telecoms, not to mention desk space and refreshments. Fewer people working in a building means less energy is used. This helps the environment and saves the business money.

It costs, on average, £90 per square metre to rent office space in the city of London. Providing office space is expensive, both for a business and for the environment. It’s far greener to allow your employees to work from home.

Reducing Carbon Footprints

A study carried out by the Office of National Statistics found that working from home drastically reduces a worker’s carbon footprint. With 75% of British workers travelling to work in a car, fewer cars on the road means less environmental pollution. In London, the majority of workers use public transport, but nevertheless, there is still an important environmental gain to be made from traders working from home.

There are other environmental benefits from fewer vehicles on the road. Vehicles cause a lot of wear and tear on the roads. Current estimates state that around £12 billion is needed to fix Britain’s roads. Local authorities are responsible for road maintenance in their area, but with fewer vehicles on the roads, less maintenance is needed. This money can be spent on renewable energy and green technology instead.

The Benefits of High Speed Trading

High speed trading has become very common in the world of online trading. Computer algorithms have automated trading transactions, making high volume trades easier and much faster. Algorithms look for small discrepancies in prices, which would be impossible for human traders to find in any volume. The rise of high speed online trading has reduced the man power needed to manage institutional trading accounts at investment banks, hedge funds and pension companies. The less people needed to trade online, the lower the cost to the environment.

Online trading is better for the environment, but only if companies allow employees to work remotely and make use of renewable energy in the workplace.

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