The Payments Association is calling for the development of a standardised framework that allows firms to meaningfully measure carbon emissions in the digital payments value chain.
A new report by The Payments Association’s ESG Working Group illustrates that while the emissions from digital payments per transaction might be small, the industry's scale makes a significant impact.
The report details a multi-faceted approach for measuring and reducing emissions in the industry, including a standardised approach to carbon emissions, industry collaboration across the value chain, the influence of regulatory development and connecting sustainability goals with commercial viability.
However, the study shows research has been slow to get off the ground, highlighting a case study from Lloyds Bank, which found it took 15 months to establish initial data points due to the complexity of the payment ecosystem. The bank identified challenges like the sheer volume of data points across physical and electronic payments and the inconsistency in measurements across different organisations.
Tony Craddock, director general of The Payments Association, says: "Agreement on a standard way to measure emissions when people pay or get paid will provide a useful starting point for meaningful discussion. And it will help us decide what tools are needed to ultimately reduce carbon emissions, too. We believe this will contribute to increasing shareholder value, improving customer outcomes and reducing the environmental impact of payments.”