Using Buying Power to Reduce Environmental Impacts

The International Association of Currency Affairs (IACA) held a webinar recently to discuss how sustainability is, and can be, incorporated into tenders by central banks. Purchasing power is, of course, a powerful lever for achieving policy goals.

Two central banks were on the panel, the Bank of England (Andrew Baker) and the Dutch National Bank (Jan-Mark Geusebroek and Annemieke de Gooijer), along with two banknote suppliers, De La Rue (Nikki Strickland) and Orell Füssli (Karim Shoukry).

There were five topics in the presentations and discussion that followed.

• What weighting in tenders should be given to sustainability? This is in the context of the burden it puts on suppliers to respond and the real cost that some environmental choices add to the price of a product, particularly relative to the total price.

• Where should the focus be? For example, should a central bank tender focus on one or a small number of environmental areas (eg. the Dutch National Bank focused on the use of sustainable cotton and the Bank of England on CO2 emissions) or touch on the full range of environmental impacts, eg. CO2, energy, waste, water etc?

• How to get a sense of how serious a company is. Should ‘sustainable pathways’ be the priority, ie. the approach of the organisation to doing better? Can a central bank really understand and evaluate the supplier’s ‘sustainability pathway’ and assess whether it is truly sustainable? And express this in a measured way that stands up in court.

• How do you create a level playing field between suppliers? What about absolute tender ‘scores’ against set criteria compared with discretionary environmental investments made or the culture of the organisation? What metrics should be used, whether for Environmental Social Governance (ESG) reports or performance reporting? To ensure comparable results, how does a rating agency-provided score, for example one by Eco Vadis, compare with Climate Disclosure Plan or Science Based Target initiatives results? How do they compare? Are some better than others?

• If you are a small organisation, whether central bank or another stakeholder in the cash cycle, what is the minimum to include / do? You may have very limited internal expertise or resources and choices may have to be made.

• While tenders for repeat orders are one thing, what about designing new banknote series? Can you have product impact production tools? Can you challenge suppliers to compete to produce lowest impact secure designs?