Sustainability

Sustainability as Part of Procurement

Deutsche Bank is to require from July any of its vendors with a contract over €500,000 a year to undertake a vendor sustainability rating assessment with EcoVadis, or another eligible rating agency. The agency assesses the vendors ESG work providing a score out of 100 and identifies how companies can increase their SEG rating – ESG Ratings are made up of an overall rating that breaks down into underlying Pillar and Theme Exposures and Scores.

From the start of 2023 high value contracts will only be awarded to vendors who achieve at least 25/100.

A Circular Solution for PET?

A report in Vice.com says scientists at the University of Texas ¹ have created a modified enzyme that can break down plastics that would otherwise take centuries to degrade in a matter of days.

The team, led by Hal Alper, Professor in Chemical Engineering and author of the paper, have created a fast-acting protein that breaks down building blocks of polyethylene terephthalate (PET). The report, published in Nature, says PET accounts for 12% of global waste and is typically used in clothing and plastics. It is also a key component of packaging in the banknote industry.

A catalyst separates the building blocks that make up PET into their original monomers, which can then be repolymerised—built back into virgin plastic—and converted into other products. Most impressively, the enzymes broke down the plastic in one week.

The enzymes that occur naturally are limited by temperature and pH conditions, which limits their usefulness. The enzyme discovered in this research is said to be able to break down 51 types of PET across a range of temperature and pH conditions.

The team named the enzyme FAST-PETase, acronymic for ‘functional, active, stable, and tolerant PETase.’

Further work is now needed to see if the enzyme is scalable, portable and affordable. If it is, then perhaps it can help tackle the global plastic crisis. The next step is to test FAST-PETase on the wide range of different types of PET found in the waste stream.

Re-Thinking Banknotes for Sustainability

G+D has recently launched its Green Banknote Initiative. One element of the initiative seeks to re-think elements of a paper-based banknote to reduce its ecological footprint. Four elements of the solution represent significant changes from today’s banknotes.

First the substrate combines organic cotton, which is used in Eurosystem banknotes today, with certified cellulose from Europe’s forests. This material mix reduces carbon emissions by 63% compared with a banknote made purely from conventionally grown cotton.

Second the carrier film used in the security thread, RollingStar® i+, and the colour changing security patch, Varifeye®, are made from a 70% recycled polyester.

Third, to increase note life, which reduces the number of banknotes required, G+D has used its Hybrid™ product which coats the banknote in a PET film. In this product it has used thinner layers of PET reducing the plastic content by 38% compared with the normal Hybrid product.

Finally, for the first time, the inks for simultaneous printing are based on vegetable oils and so do not use mineral oils.

This is an interesting example of re-thinking the banknote in line with the mantra of ‘reduce, reuse, recycle’. Here G+D reduces the PET and the use of mineral oils, recycles polyester and introduces cellulose and sustainable cotton to move to more sustainable materials.

ESG Gets a New Standards Board

At COP26 in November 2021 a new International Sustainability Standards Board (ISSB) was announced. Its purpose is to develop comprehensive high-quality sustainability disclosure standards to allow investors to make decisions. The ISSB is working with the International Financial Reporting Standards (IFRS) Foundation, the Sustainability Accounting Standards Board (SASB) and the Global Reporting Initiative (GRI) to set the standards.

The ISSB has no legal mandate and cannot make disclosures compulsory. To get regulatory backing it would need endorsement by organisations such as the International Organisation of Securities Commission (IOSCO). IOSCO has said it will assess the work of the ISSB to set standards that create a practical and effective global baseline for climate disclosures to financial markets across the globe. The IOSCO has 130 members.

There is felt to be an urgent need for Environment, Social and Governance (ESG) reporting, disclosures and actions to be comparable, reliable, consistent and convergent across organisations, industries and jurisdictions.

While the ISSB standards build on existing voluntary frameworks and guidance, this means that prior and ongoing work by organisations to prepare for their reporting readiness, will still be valuable and reusable as far as possible. Meeting the ISSB standards is a sensible start for those who want their ESG work to be understood widely.

Banks and Insurers Need to Support Climate Change Action

The Bank of England has published its Climate Biennial Exploratory Scenario considering the financial risks posed by climate change to the largest banks and insurers. Its headline was a risk of losses equivalent to an average drag of 10- 15% on annual profits unless they take immediate action.

The good news was that the costs of a transition to net zero will be absorbable for banks and insurers without a direct impact on their solvency. Early action would be better. 

The Bank of England’s Deputy Governor Sam Woods made the comment that ‘it will be in the collective interests of financial institutions to support counterparties that have credible plans to adapt - and ultimately reduce their exposures to those sectors of the economy that are inconsistent with a net zero policy.’ 

The Bank recommended that banks and insurers collect more data on, and understanding of, customers’ current emissions and transition plans. This can include looking through complex chains of financial relationships between clients and counterparties to see the underlying emissions. They will need to be able to understand that data, model it and understand the projections and be confident in the data supplied to them.

Finally, it recommended scenario planning understanding the implications of different paths for climate policy.

1 - Scientists Discover Method to Break Down Plastic in Days, Not Centuries (vice.com).