If you were not in Edinburgh for the Cash & Payments Sustainability Forum™ you missed something special, the first ever event dedicated to sustainability for this industry. The agenda mixed external experts with central bank and industry expertise covering the key areas of policy and operations across the entire cash cycle. While environmental sustainability was core, social and governance issues were included.
Dr Sarah Ivory from the University of Edinburgh Business School opened the Forum pointing out that the CO2 in the atmosphere has doubled since 1990 and asking us to consider the statement that 2022 will be the coolest year in the next hundred years.
Her two quotes, ‘Just because you can’t do everything, doesn’t mean you shouldn’t do anything’ and ‘The person who says it cannot be done, should not interrupt the person doing it’ were a call to arms for us all.
The importance of measuring things was a constant theme during the Forum.
Jan-Mark Geusebroek, Dutch National Bank (DNB) spoke about Life Cycle Assessments (LCAs). In 2015 DNB’s LCA concluded that while there was a gap in carbon emissions per transaction between a debit card and a cash payment, the difference was not enormous. New work addressing some errors in the original study found that cash has a five times greater impact than debit cards.
Despite this unwelcome news, the presentation also looked back to the reduction in the impact of cash since 1990 and discussed the many changes which have taken place since 2015. In 1990 the figure was 19.3 MKG, in 2015 it was 16.5 MKG and in 2019 7.5 MKG.
DNB believes that it can see the way forward for cash to be reduced to the same level of cards.
Central banks, and suppliers, are still working out how to include sustainability in procurement and tenders.
NatWest Bank explained how it is partnering with suppliers, after appointment, to use a ratings agency to understand their environmental impact.
Annemieke de Gooijer from DNB explained how sustainability has been used in the Joint European Tender (JET) for the procurement of euro banknotes for the nine banks who tender together. The focus since 2015 has been requiring suppliers to use a mix of organic, fairtrade or ‘Better Cotton Initiative’ (BCI) cotton. By the 2019 tender all cotton came from these sources.
In the 2021 JET tender sustainability was one criterium used to award the business. The tender required proof of the percentage of energy from renewable sources used by the company and a calculation of the supplier’s carbon footprint based on Green House Gas (GHG) protocols for emissions relating to the order. Points were awarded in line with the level of information provided. Scope 1, 2 and 3 information scored maximum points.
This approach is being refined with the aim of being able to compare supplier calculations in future tenders. More work is needed on the ratio of points awarded relative to the award criteria, how to include water and waste in the criteria and to understand the impact and implications of the current energy crisis.
The cost of power has risen rapidly recently, adding urgency and focus on reducing usage. This works together with the need to reduce CO2 emissions caused by power generation.
Npower gave the perspective of a power provider. Its business customer tracker found 55% of customers said sustainability measures were their most important investment priority over the next 12 months. The tracker also found 58% saw energy efficiency as the best way to reduce energy risk with using energy management tools (48%), an energy specialist (33%) and investing in self-generation (27%) as the best way to do this. Npower went on to offer practical suggestions about how to manage Scope 2 and 3 emissions.
Dr Matthew Brander from the University of Edinburgh Business School also talked about Scope 2 and claims about how renewable energy is enabling firms to claim zero emissions. He explained there are two ways of calculating grid electricity:
First, the locational grid average, which works out the total emissions from all generation as a proportion of the total electricity generated, 0.19kg CO2/kWh in the UK.
Second, the market-based method, where organisations have a contractual arrangement based on Renewable Energy Certificates (REC), Guarantees of Origin or other contracts. For this method users can claim the attributes associated with renewable energy, ie. zero kg CO2/kWh.
The problem with the market-based method is that if the renewable energy project already existed, buying an REC does not add anything. This is known as ‘additionality’. Just because a company can claim zero emissions does not negate the fact that it is still consuming electricity. If companies want to use the market-based method, they need to prove ‘additionality’ if their claims are to avoid being greenwashing.
Finally, THG Eco, a company expert in carbon offsetting, explained how to buy carbon credits ethically, confidently, transparently and cost-effectively.
While Environment, Social and Governance (ESG) initiatives tend to be top down, the Forum included a session dedicated to getting engagement throughout the organisation.
NatWest Bank spoke about training 64,000 members of staff in sustainability, but much of what was said can be carried over at a site level.
At a more immediately relatable level Vaultex, a major UK cash management company, and Giesecke+Devrient (G+D) both explained their staff engagement programmes. Vaultex has been running its Green Path initiative since 2019 and laid out its approach and concrete examples of environmental projects delivered by operational teams. G+D gave an example of its 2022 environmental ‘hackathon’ and the development of a project ESG assessment tool developed by staff on a training programme.
New product development. The European Central Bank (ECB) has completed a Product Environment Footprint (PEF) review of the 2019 Euro Series 2 (ES2) banknotes. The results provide a point of comparison against which design and product decisions about the Euro Series 3 (ES3, a possible future banknote series) development will take place. For ES3, the future banknote, every change to the specification must result in a lower environmental impact across the whole cash cycle relative to ES2. The ECB is prioritising changes that improve the environmental performance of the substrate, increase life in circulation and improve the environmental footprint of the end-of-life treatment of the notes.
Product design. G+D has re-thought the specification of a banknote to minimise its lifetime impact. To maximise note life it started with its Hybrid™ substrate and then made changes that meant this ‘Green Banknote’ generates 23% less CO2 than an equivalent standard Hybrid banknote. These changes included using mineral oil free litho inks, a 50/50 mix of sustainably sourced cotton and wood fibre, using recycled polymer for the security thread and foil and reducing the thickness and weight of the polymer layers on the note.
Energy. CCL Secure’s UK site at Wigton has focused on energy reduction, leading to a 31% drop. Its work resulted in it winning the Energy Institute’s Energy Management award 2022. CCL worked with an external consultancy, Verco, to measure its energy use and to run a rigorous programme to reduce its energy use.
For Scope 3 emissions it has worked with suppliers, including using local suppliers where possible, establishing the carbon intensity of incoming goods, setting targets and plans and sticking to them.
The result has been between 2018 and 2021 a 22% reduction in raw material emissions CO2e/kg of good product, a 90% reduction in incoming transport emissions and a cradle to gate product carbon intensity CO2e/kg reduction of 26%. In addition, it has achieved a 40% reduction in water consumption.
Verco, a long-established consultancy dedicated to helping manufacturing industry get to net zero emissions, presented although without talking about its work with CCL Secure. The presentation focused on the efficient use of energy, how to prioritise improvements and successful process optimisation.
The starting point is understanding where value comes from. When it comes to prioritisation best in class is to develop a bottom-up theoretical consumption and to identify the efficiency gap. This is only possible with good, timely data, which requires focus and investment. Process optimisation is often overlooked but offers significant opportunities to do better.
Measurement and process. While many organisations are only now talking about sustainability, some have been consciously active in this area for a long time. Komori is one of these. All its sites have had ISO14001 since 2003 and all have had zero emissions since 2006. In 2005 Komori measured its carbon footprint and this was used as its base year. By 2009 it had reduced its carbon footprint by 15.3% by taking actions such as changing its air conditioning from electricity to gas.
Komori also made the point that many of its industrial practices help it achieve lower emissions than other industrial businesses. Just in time delivery, Kaizen and Green Purchasing, for example, all lead to less waste, higher productivity, energy and material savings and better products.
Bill Gates said, ‘The first rule of any technology used in business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.’ Komori aims to supply and enable efficient equipment and manufacturing. When applied to print, this means focusing on usage assessments, make-ready times, paper waste, toxic compounds and noise emissions.
Focused approach. After COP22 in 2016, Oberthur Fiduciaire (OF) started its sustainability journey with the adoption of its Earth 365 programme. It has 33 environmental targets consistent with its commitments to the UN Global Compact and 12 UN Sustainable Development goals. These targets have been based on a carbon footprint study and life cycle assessment.
OF has mapped its energy consumption and made changes such as insulating pumps, insulating buildings, introducing energy recovery schemes, not using gas between March and October, and reducing its lighting energy use. It has invested €2 million in cooling systems and introduced new technology for compressed air. Between 2017 and 2021 it reduced its energy use by 12.22%, between 2021 and 2022 by a further 11%.
Sustainable Lean®. OF is engaging its staff through a programme of education and awareness. An example of how this has helped is the development of a standardised way equipment is closed down, with an energy saving result of 2.5%. It has also been applied to reducing water usage. Water consumption was reduced by 50% for intaglio and 2% for other printing processes, 45% for toilets, showers and fountains and 2% for the restaurant.
Wastewater treatment has been optimised and wastewater and rainwater has been used to produce demineralised water.
Waste. OF creates 4,800 tonnes of waste each year. 65 waste treatment processes have been put in place and 82% of waste is now recycled.
Between 2014 and 2021 Oberthur reduced its carbon footprint per 1,000 sheets of banknotes produced by 60%.
ESG programme. The Royal Canadian Mint (RCM) has a full ESG programme. For the environment, the main priorities are to lower the carbon footprint and to reduce water use and waste, along with other environmental impacts. The goal is to be carbon neutral for circulation coins by 2030. RCM is working on energy, coin life cycle management, its Alloy Recovery Programme, charitable medals, social and governance programmes.
Presentations were made by Reconnaissance (unfit cotton banknotes), Royal Dutch Kusters (observations on a survey of 82 central banks), Pakistan Security Printing Corporation (composting), Hunkeler and De La Rue. FedCash® Services and OF also mentioned end of life solutions for cotton banknotes in their presentations.
Four surveys of central banks have been conducted on unfit banknotes and there is a common message whether the substrate is cotton, polymer or a composite. There are a wide range of options for how notes can be disposed of beyond sending the notes to landfill. There are examples of central banks of all sizes and levels of sophistication using these options.
Irrespective of the substrate, what determines what happens to unfit notes is, primarily, the availability of local infrastructure for the various options. There is also the fact that waste disposal is not an area of expertise for central banks and there is a reliance on local waste disposal companies. (See page 18 on the white paper ‘What Goes Round Comes Round’ for information on how to explore different options).
Hunkeler made the point that as central banks introduce a mix of substrates, they need to make changes to their destruction systems to be able to handle them. A key element of this is the separation of substrates for the shredding process. While single substrate users have a dedicated shredding unit, when it is mixed, they need to choose between mixed sequential destruction or parallel destruction. It is possible to have equipment with automated change over systems.
When considering what to do with polymer notes at the end of life, a calculation is needed to understand whether the environmental cost of transportation for recycling is more or less than incineration for energy recovery locally.
This event touched a lot of bases providing food for thought across all stakeholders in the cash cycle. It is clear that considerable work and progress has been made. Equally in many ways stakeholders are only at the start of the journey. As with so many other industries, this is a relatively immature area and there is tremendous scope to do more and to do better. The choice is whether to regard this as an opportunity or a duty. The evidence from Edinburgh suggests ‘opportunity’.
