The Environmental Impact of Payment Processing and American Express’s Initiatives

In recent years, there has been a surge in the usage of credit and debit cards and contactless payments at brick-and-mortar and online stores. As a result, merchants are compelled to provide their buyers with card payment and digital payment options to offer customer satisfaction.

Most importantly, card payments are convenient for today’s consumers, who don’t like to carry huge amounts of cash, especially when traveling abroad. Moreover, merchants can eliminate the hassles of handling cash daily by accepting card and digital payments.

Apart from the convenience factor, however, using digital payments has a huge positive impact on the environment since cashless payments are greener and more sustainable. It’s a good thing digitization is evolving rapidly, as Mother Earth needs this now! Digital payments are contributing significantly to reducing our planet’s carbon footprint.

Online transactions and other cashless payments enable organizations to become more environmentally friendly by helping companies move towards sustainability. This article will discuss the impact of payment processing on the environment and how American Express green initiatives toward achieving sustainability are assisting businesses to reduce their carbon footprint.

The Role of Payment Processing and the Environment

Digitization is helping merchants provide more convenient and faster payment solutions and minimize their carbon footprint. Online transactions also enhance financial management and boost operational efficiency, such as by reducing waiting periods at checkout points. They also improve customer satisfaction, which means more business for the organization in the long run.

All kinds of traditional payments are associated with some environmental impacts. For instance, debit and credit cards are made of PVC plastic, which is non-biodegradable. These cards also emit a lot of greenhouse gases, and when they expire, they are disposed of in land or water, which increases pollution.

On the other hand, cash payments involve large amounts of energy consumption outside the central bank engaged in cash supply. High amounts of fuel and electricity are required to produce coins and banknotes at the cash sorting centers, which the cash management companies handle. Furthermore, large amounts of electricity are consumed at the cash ATM networks.

Cash transportation also requires vehicles on the roads that run on fuel, such as diesel. When cash is transported between cities and towns, tons of CO2 are emitted yearly. So, both cash and card payments affect our environment in multiple ways.

However, with digital payments, fewer data stops are required. Also, there is little to no involvement of middlemen in cashless payments. On top of that, the funds are deposited to the receiver’s bank account instantly. According to studies, an instant deposit of funds can produce about 80% less carbon dioxide.

Mobile wallets and virtual cards are the most commonly used platforms in digital transactions. Both of these can successfully eliminate paper receipts, thus saving trees. According to a 2019 study from Climate Action, paper receipts use up over 3 million trees and 9 billion gallons of water annually in the United States. Besides trees, paper receipts also generate an alarming rate of CO2 emissions, equivalent to 450,000 vehicles on the road.

To increase the sustainability factor on eCommerce platforms, website owners and online merchants are implementing multiple plugins and other eco-friendly strategies enabling companies to reduce greenhouse gas emissions. This way, companies are helping consumers adopt sustainable shopping methods by reducing these harmful emissions often linked with the products and services they buy.

Moreover, digital card readers or POS terminals are helping businesses run fundraising campaigns to support some charitable or noble causes they are passionate about. They have initiated the provision to allow customers to make some donations along with their purchases. This will send out positive vibrations to the universe, and as a result, we are helping the people around us.

American Express Green Initiatives

American Express promotes the importance of maintaining and implementing sustainable business practices to protect the health of all customers, cardholders, and colleagues. This reputed card network has put forward noble initiatives, as mentioned in the 2022-2023 Environmental, Social, and Governance (ESG) Report of American Express, to ensure the safety of the community and the upcoming generations.

Amex has developed sustainable and eco-friendly business practices in all its operations, including the official buildings it manages its operations from, the business strategies it follows, and the materials it uses. Its primary aim is to reduce nations’ environmental footprint. Amex uses natural resources economically to save them for present and future generations.

How American Express Managed Environmental Impact?

American Express was awarded the prestigious title of CarbonNeutral company in 2018 because of its efforts in reducing GHG (greenhouse gas) emissions, utilizing renewable energy sources, and carbon offsets. American Express has set new goals and objectives to minimize the environmental impact of payment processing.

For instance, Amex aims to decrease the utilization of one-time-use plastics through its manufacturing and processing units. By 2025, the card issuer has also set goals to decrease water consumption and waste generation. Besides, American Express is working towards sourcing all its paper from certified and responsibly managed forests.

Furthermore, American Express is involved with numerous global initiatives to develop a more sustainable future. One such initiative is the Earth Hour since its introduction in 2007. Amex has also offered about $2 million in grants to the Ocean Conservancy and National Geographic Society, which intends to fight and reduce marine pollution through multiple clean-up programs and campaigns.

Earlier in the Earth Month of April, American Express announced its new initiatives to promote and develop low-carbon communities. The card network also focuses on expanding its Carbon Footprint Tool by rolling it out for select corporate clients. The company has also set up a digital pilot to enable US consumers and small business cardholders to understand their carbon footprint.

Moreover, during Earth Month, American Express has returned its “Shop with Purpose” offers for select card members. Amex continues to offer Green2Gether volunteer activities for employees and colleagues. In addition, during Earth Month, American Express introduced modern and intelligent digital solutions that enabled its stakeholders to understand estimated carbon footprints better.

These stakeholders include small business card members, US consumers, and eligible corporate clients. Madge Thomas, American Express Foundation’s Head of Corporate Sustainability and President, stated that all the above initiatives are based on Amex’s commitment to advancing climate standards and protection policies to make the world a better place for consumers, colleagues, and communities.

What is Corporate Sustainability?

Corporate sustainability is an all-comprehensive approach to operating a business while accomplishing key goals like social, environmental, and economic sustainability. A sustainable corporation realizes that its operations and actions have deep and significant consequences on the environment and future generations. It motivates them to adopt strategies to minimize the harmful impacts of their business operations and work practices to bring about positive societal and environmental change while boosting corporate growth.

The key elements or pillars of corporate sustainability include the following.

• Environmental: Corporate sustainability involves practices that address the organization’s ecological consequences on our earth by minimizing and limiting emissions, natural resource consumption, and waste production. More corporate offices are adopting eco-friendly work practices, like reducing water consumption, utilizing renewable energy sources, and promoting sustainable supply chain management.
• Governance: Companies aim to generate profits and a good ROI in a balanced way while developing long-term value for all its stakeholders. This initiative involves responsible investment decisions, stable and smooth financial management, maximizing profits, and promoting ethical business practices.
• Social: Under social sustainability practices, the organization’s responsibility is to positively impact social structures through inclusion and diversity within the workforce. Furthermore, companies ensure fair labor approaches and practices, safeguard human rights, and support local communities.

Some of the benefits of promoting and establishing corporate sustainability practices are:

• Mitigating operational and management risks
• Improved company reputation, thus attracting more consumers, skilled personnel, and investors
• A reduction in environmental degradation, mitigating the potential threats of climatic change, and biodiversity preservation
• Achieving a competitive advantage over rivals and gaining access to new markets
• Accomplishing higher cost savings and bringing innovation within the organization
• Boosting and strengthening relationships with various stakeholders, such as employees, consumers, investors, and communities

Therefore, being a holistic approach, corporate sustainability can mitigate risks, boost revenue, develop brand reputation, attract new investment opportunities, and minimize costs.

Case Study: How American Express is Achieving Sustainability

1. American Express has found concerning areas in the environment of Australia and New Zealand. While Amex focuses on building sustainable practices globally, the concerns were prominent in these two nations. Amex created a report after measuring the eco-friendliness in Australia and New Zealand (A/NZ). The report includes details about the water produced, harmful emissions, every utilization, and Green Building certification.
2. Apart from the Amex A/NZ report, there is another one from them. The American Express 2022-2023 Environmental, Social, and Governance (ESG) report provides an overview of their progress on ESG initiatives and approaches. Under the ESG strategy, American Express aims to continue supporting customers, communities, and colleagues to promote a positive impact on the environment.

The ESG report revolves around Amex’s progress on the three major pillars of the ESG strategy: implementing advanced climate solutions, building financial confidence, and promoting equity, diversity, and inclusion. Furthermore, the 2022-2023 ESG Report by American Express is glued to the reporting frameworks and standards mentioned below.

• Sustainability Accounting Standards Board (SASB)
• Global Reporting Initiative (GRI)
• Task Force on Climate-related Financial Disclosures (TCFD)

1. The Carbon Footprint Tool from American Express is designed for corporate clients and can incorporate additional spending categories for eligible clients. It helps them track and estimate the estimated carbon emissions associated with spending on ground transportation, air travel, food and beverages, hotel stays, and retail.

The Carbon Footprint Tool complies with the conversion standards and factors set by different private and governmental organizations, corresponding to the organizations’ spending on their Amex Corporate Product program. Users can access this tool when clients start logging in to their Commercial Insights. This is a suite of tools and handy digital solutions provided to American Express’s largest corporate clients.

Furthermore, this tool joins the Corporate Carbon Referral Suite, which aims to offer US Corporate clients a comprehensive list of carbon offset solution providers. These are fine-tuned and especially curated by American Express. The participating organizations may work with these providers to invest in carbon offset across large-scale carbon projects. These investments may help companies manage their projected carbon footprint.

1. Here’s good news for card members. They can now participate in American Express’ new pilot experience, which enables eligible small business card members and US customers to understand their environmental effects more efficiently. As a result, it significantly contributes to reducing the efforts and usage of resources to remove carbon. The new pilot digital suite by American Express provides the following features and tools.

• Contribution Services for Carbon Removal Projects: Under these projects, eligible US Amex card members can establish a convenient automatic monthly contribution that varies between $5 and $100 through the Cloverly program partner. These contributions play a huge role in building a good portfolio of carbon removal initiatives while supporting the health and safety of local communities.
• American Express Estimated Carbon Emissions Tracker: Amex developed this tool by partnering with the CoolClimate Network at the University of California. This unique carbon emissions tracker can effectively analyze spending made via an eligible Amex card. The tool also measures the carbon emissions associated with such card purchases. It helps them design and implement more eco-friendly transaction processes.
• Insights on Carbon Reduction: Carbon Direct provides many helpful tips and recommendations to card members regarding reducing their carbon footprint. This informational tool helps American Express cardholders implement more sustainable practices in their day-to-day activities, especially related to transactions.

1. “Shop With Purpose” is a unique selection of offers and benefits available for card members through April, Earth Month. This is the second year Amex has organized this offer and made it available to select US small business cardholders and consumers. Buyers will receive gifts and rewards on their purchases, provided they use an eligible Amex card to make the payment at any retail outlet.

American Express’s Environmental Goals for 2025

American Express has made a promise to achieve the following environmental goals and objectives by the year 2025.

• Energy and Emissions: Amex will remain carbon-neutral in all its operational and managerial practices. It will aim to reduce its energy usage by 35% across all its managed facilities, a significant improvement from 2011. Moreover, the card network will continue to operate with 100% renewable energy sources. The good news is that Amex has already achieved net-zero GHG (greenhouse gas) emissions.
• Sustainable Sourcing: American Express is working towards eliminating all usage of single-use plastics throughout its operations. Also, as mentioned earlier, Amex has started sourcing all its office paper (or any other paper required in customer communications and direct marketing) from certified forests that are sustainably managed. Besides, Amex has eliminated single-use plastics, stirrers, and plastic straws to boost a positive environmental impact.
• Waste Reduction: American Express is taking initiatives to reduce waste generation by 10% per employee. All these waste products come from across its managed facilities and manufacturing units. This is a stark improvement from 2019. To accomplish this goal, Amex has already developed a baseline of 135 kg per team member. Additionally, it has removed all single-use plastic cup usage from its operational and regulatory centers and implemented a robust compositing program.
• Green Building: American Express is working on achieving Green Building certifications across 80% of its operations.

How can merchants participate in and benefit from green initiatives?

Now, we know that participating in green initiatives has innumerable positive impacts. Here are some ways merchants can take a step towards obtaining sustainability.

• Reduce packaging waste by using more sustainable and renewable or recyclable packaging.
• Use more suitable materials and explain how and why these materials are sustainable. Otherwise, you may be engaging in misleading greenwashing.
• Establish more recycling programs to encourage consumers to recycle their used products or packaging.
• Use recycled materials like paper, plastic, or glass to produce their goods.
• Educate the consumers on why and how they should recycle to contribute towards reducing the carbon footprint.
• Use sustainable wood, such as cork, bamboo, or reclaimed wood. Such practices will help minimize deforestation, thus restoring natural habitats.

Key Takeaways

In conclusion, merchants should contribute as little as possible towards achieving net-zero emissions. American Express is already working on its sustainability goals by sourcing raw materials from renewable energy sources. Let’s learn from Amex and help them achieve sustainability by doing our part.