On 1 November the latest UN Climate Change meeting, COP 26, starts in Glasgow in the UK. We can expect significant press interest and focus on the event in particular, and the environment in general.
Stakeholders in the cash cycle are doing tremendous work in this area, in recognition of which we are working with the industry to pull together a paper recording what has been achieved and putting the environmental impact of payments in context.
The first Conference of the Parties (COP) was held in Berlin in 1995. It is the supreme decision-making body of the United Nations (UN) Framework Convention on Climate Change signed in 1992 in Rio de Janeiro.
All states that are Parties to the Convention are represented at the COP, which meets to review the implementation of the Convention and the progress made in achieving its ultimate objectives.
Today, there is more carbon dioxide (CO2) in the atmosphere than there ever has been in at least the past 800,000 years. CO2 makes up 80% of the seven main 'greenhouse gases' (GHG) that act as a warming blanket around the Earth, trapping heat, known as the 'greenhouse effect', and causing the world’s temperature to rise.
A standard ratio is used to convert each of the seven gases into equivalent amounts of CO2 based on their global warming potential (GWP). The ratio allows a common term, carbon dioxide equivalent (CO2e), to be used when measuring the GWP of activities.
Where our industry is today
A number of central banks are currently either updating or carrying out Life Cycle Assessments of their cash cycles, from production through circulation to destruction. The Bank of England and Dutch National Bank (DNB) studies published in 2016 and 2018 are most frequently referenced. It is worth noting that the DNB calculated that payments accounted for 0.009% of the Dutch economy’s carbon emissions.
Both reports showed that the most significant carbon emissions in the cash cycle came from the power needed for ATMs and the fossil fuel emissions caused by the transportation of cash, with production a much smaller part of the story. In this context, anything that allows a note to circulate for longer means they are transported, sorted and handled less, reducing their carbon footprint. In addition, fewer notes need to be manufactured.
Since those reports were written, the cash industry has changed enormously. As just three examples from many, the ECB is working with suppliers to measure and reduce carbon emissions, the Bank of England has required suppliers of its polymer substrate to be carbon neutral in what they supply, and the International Currency Association’s members (ICA) have signed up to a sustainability charter.
Given the COP meeting is in the UK and the government has set a target of achieving net zero carbon by 2050, perhaps it is no surprise LINK, who runs the main shared interbank network of cash machines, has issued a report looking at what the cash distribution supply chain can do to reduce emissions (see this month’s issue of Cash & Payment News™).
NatWest Bank, meanwhile, has led the creation of a Cash Industry Environment Charter which meets monthly to measure, share and drive improvements.
Recent industry environmental initiatives
This edition of Currency News™ reports on the decision of the ECCB Monetary Council to switch to polymer as a banknote substrate, one of the reasons given being its action on climate change (see page 14). Any solution that increases note life reduces the environmental impact of notes, and the decision also demonstrates moral authority while taking real action on global warming.
Similarly, KURZ, the manufacturer of the KINEGRAM®, has built a photovoltaic installation that will supply at least 20% of the power required by its plants by 2024, whilst on page 11, we review a paper from Cashinfrapro on Green Cash Logistics.
When reading reports about the environment, look out for what is known as ‘greenwashing’. This is when organisations promote themselves as being environmentally responsible using green public relations and marketing deceptively.
You can spot it when the focus is on what is going to be done or where statements are made without the supply of ‘before’ and ‘after’ metrics expressed in standardised and appropriate units of measure, or without the source of those metrics being provided.
Frequently no context is given, so you can’t judge whether the change is significant or not.
20 organisations from around the world and through every stage of the cash cycle are contributing to the paper we are writing ahead of COP 26. There will be no greenwashing in it, just real examples of what our industry has done and achieved, demonstrating what is possible with (non-carbon) energy and focus.