S'pore cuts back on use of notes, cheques to curb carbon footprint

Cutting back on the use of currency notes and coins can reduce the carbon footprint - and fortunately, that is already starting to happen, according to the Monetary Authority of Singapore (MAS).

About 24 per cent fewer notes were issued last year for $2, $5, $10 and $50 denominations compared with 2019.

The volume of ATM withdrawals has also dropped from 205 million transactions in 2019 to 172 million in 2020, the report said.

Cheque clearance also declined, by 31 per cent, from 45.8 million pieces in 2019 to 31.5 million in 2020.

"Ultimately progress on emissions reduction in currency operations hinges on a reduction in public demand for notes and coins," said MAS managing director Ravi Menon yesterday at the launch of the central bank's first sustainability report.

The report noted that MAS issues about 100 million pieces of new notes for Chinese New Year and other festive periods annually.

Mr Menon said MAS would continue to promote electronic payments, the use of good-as-new $2 notes for Chinese New Year, and e-gifting during festive seasons.

Highlighting the importance of such initiatives, he added: "Our biggest challenge is to reduce the environmental footprint of our currency issuance."

He said MAS is still collating emissions data on the excluded outsourced currency operations, but estimates that they will eventually account for 40 to 60 per cent of the carbon footprint.

MAS is engaging its currency vendors to reduce their emissions, with some of them sourcing renewable energy and printing carbon-neutral notes through carbon offsets.

MAS is working out a road map to set its own targets and strategies to cut emissions in its operations.

MAS' carbon emissions have dropped over the last two years, mainly due to reduced air travel due to the Covid-19 pandemic.

"We will, by next year's sustainability report, set targets for emissions reduction in 2025 and 2030 and consider the earliest possible timeframe to achieve net-zero emissions," Mr Menon said.

Going beyond its own operations, MAS is seeking to build a climate-resilient reserves portfolio.

"We aim to reduce risks to the portfolio across different climate scenarios, seize investment opportunities from the transition to a lower-carbon future and support the transition of portfolio companies," said Mr Menon.

MAS partnered Singapore's sovereign wealth fund GIC and other consultants to conduct climate scenario analysis on the portfolio.

The analysis over a 20-year horizon found that climate change will dampen expected returns especially for equities and will present risks that MAS needs to manage, said Mr Menon.

Given this, MAS is developing a climate risk overlay programme for its equity portfolio, which will include reducing exposure to carbon-intensive sectors, such as energy, materials and utilities, he said.

"But instead of simply avoiding carbon-intensive sectors, we will maintain some exposure to companies within these sectors that are likely to make a successful transition," Mr Menon noted.

The report showed that MAS' equities portfolio has a lower carbon intensity than its market benchmarks.

A version of this article appeared in the print edition of The Straits Times on June 10, 2021, with the headline 'S'pore cuts back on use of notes, cheques to curb carbon footprint'. Subscribe