Sustainability Thoughts from the Payment Industry

A recent article on the Raconteur website ¹ looked at what the payment industry is doing on decarbonisation. It is worth having a look at what others are doing, particularly since cash is sometimes looked at in the frame of payments generally.

The article offers five areas for effort:

1. Rationalise and consolidate systems 

The example used is North American Bancard, the parent company of PayAnywhere, which consolidated its systems and operations from six to two sites. All now use 100% renewable energy. Its call centres staff use energy efficient Chromebook devices.

When one reads claims about using renewable energy, based on the recent presentation by the University of Edinburgh Business School at the Cash & Payments Sustainability Forum™, the first question is whether the renewable energy was additional or not.

2. Bring customer networks on board 

This appears to cover a broad range of initiatives. The article included comments by a University of Cambridge paper, ‘Payments for Net Zero’, about using data driven design insights to produce more targeted products. PayPal has introduced ‘return bars’ to allow customers more easily to return products they don’t want and Ripple, a real-time gross settlement system, currency exchange and remittance network created by Ripple Labs Inc., has joined the Crypto Climate Accord, with the goal of reducing emissions linked to crypto payments and blockchain.

Sendi Young, Managing Director of Ripple’s European payments settlement system made the comment, ‘organisations should prioritise learning from others and take advantage of partnerships. We need to work as a collective to make our industry fully sustainable.’

PayPal said, ‘We’ve learnt that enabling climate solutions is not just about individual businesses; it’s also about markets and ecosystems. Innovation and entrepreneurship are also essential.’ In the currency sector various industry associations have created charters and working groups around sustainability, but perhaps there is something to learn from the payment sector about thinking and working more broadly.

3. Invest directly in removing carbon 

Some companies are investing directly in carbon removal schemes. Klarna, the Buy Now Pay Later company, has introduced an internal tax on all of its emissions, including those of its supply chain. The money raised is put aside for decarbonisation initiatives. It has spent £1.4 million on four projects that will remove 11,000 tonnes of carbon.

Ripple has committed to spend $100 million on carbon removal, building carbon credits and giving users access to a digital credit token system.

Given that money changes behaviour, perhaps there is something here for the currency industry to consider.

4. Commit to science-based targets 

A number of organisations in the currency industry have committed to Science Based Targets within the Science Based Targets Initiative (SBTi). PayPal has set a goal of net zero green house gases by 2040 and uses 100% renewable energy at its data centres. It is also working with its supply chain vendors, persuading them to set their own targets.

Visa has achieved carbon neutrality using the Carbon Disclosure Project (CDP) framework. All of its premises use 100% renewable energy. It has set a target of its supply chain achieving carbon neutrality by 2040. It is using the CDP Supply Chain programme to achieve this with its suppliers. Visa’s supplier code of conduct sets out its expectations and suppliers are asked to measure emissions, set reduction targets and report on progress.

Interesting examples of working with supply chain partners.

5. Use technology that is sustainable by design

The example in the piece was Ripple using a low energy consensus model for its XRP ledger. Better examples from the currency industry are the use of mineral oil free litho inks or choosing sustainable cotton in the substrate.

Final word

It can be hard to know where to start, so it is useful to hear the approach of other adjacent industries. Thoughts on partnership, carbon pricing, working with supply chain partners and focusing on design may be useful for the cash industry.

1 - 5 ways to help payments companies reach net zero.