The Payments Association is urging the development of a standardized framework to measure carbon emissions across the digital payments value chain. While the per-transaction emissions of digital payments may seem negligible, the industry’s scale makes its collective environmental impact significant, according to a report by the association’s ESG Working Group.
Key Findings of the Report
The report highlights several challenges and opportunities for reducing emissions in the payments ecosystem:
- Standardized Carbon Measurement: A unified approach to calculating emissions is essential for meaningful progress.
- Collaboration Across the Value Chain: Industry-wide cooperation is necessary to address emissions from both physical and digital payment systems.
- Regulatory Influence: Governments and regulators have a role in aligning sustainability initiatives with compliance frameworks.
- Balancing Sustainability with Profitability: The report emphasizes that eco-friendly measures can drive shareholder value and enhance customer outcomes.
Case Study: Lloyds Bank
Lloyds Bank’s journey illustrates the complexity of tackling emissions in the payments sector. It took 15 months for the bank to establish initial data points due to challenges such as:
- Managing the volume of data across payment channels.
- Overcoming inconsistencies in measurement methodologies among stakeholders.
Industry Call to Action
Tony Craddock, director general of The Payments Association, stressed the importance of standardization:
“Agreement on a standard way to measure emissions when people pay or get paid will provide a useful starting point for meaningful discussion. This will help us decide what tools are needed to reduce carbon emissions, contribute to shareholder value, improve customer outcomes, and reduce the environmental impact of payments.”
The Path Ahead
The Payments Association sees the adoption of standardized emissions metrics as a first step toward broader industry change. The integration of sustainability goals with commercial viability is not just a necessity but an opportunity to transform the sector.
