The Payments Association is advocating for the creation of a standardized framework that enables firms to effectively measure carbon emissions within the digital payments value chain.
A new report by The Payments Association’s ESG Working Group indicates that while emissions from digital payments per transaction may be relatively small, the overall impact of the industry’s scale is significant.
The report outlines a comprehensive strategy for measuring and reducing emissions in the industry. This includes establishing a standardized method for carbon emissions, fostering industry collaboration throughout the value chain, considering the effects of regulatory developments, and aligning sustainability goals with commercial viability.
However, the research highlights that progress has been slow, citing a case study from Lloyds Bank, which revealed it took 15 months to establish initial data points due to the complex nature of the payment ecosystem. The bank faced challenges such as the large volume of data points from both physical and electronic payments and inconsistencies in measurements among different organizations.
Tony Craddock, director general of The Payments Association, stated, “Agreement on a standard way to measure emissions when people pay or get paid will provide a useful starting point for meaningful discussion. It will also help us identify the tools necessary to ultimately reduce carbon emissions. We believe this approach will contribute to increasing shareholder value, enhancing customer outcomes, and minimizing the environmental impact of payments.”