Currency services initiative: CCL Secure

Climate change and its associated risks are now a primary area of focus for many central banks, which are striving to reduce the carbon footprints of the financial sector, invest more in ‘green’ assets and asking financial institutions to develop climate-risk stress tests. Similar work is ongoing in currency management, with several central banks and their suppliers making a conscientious effort to ensure the entire cash lifecycle is sustainable – not just the end-product.

The use of both cotton (paper) and polymer banknotes has a substantial climate impact. Paper notes require a lot of energy to produce and to keep in circulation, and cotton crops require large amounts of water. At the end of their life, paper notes typically are put into landfill or burnt for energy. Although made of plastic, polymer banknotes can last 2.5 times longer than paper ones, and can be recycled. Perhaps counterintuitively, then, some studies indicate polymer could have less of a climate impact compared with cotton. Research carried out for the Bank of Mexico in 2018 found that production and distribution of polymer banknotes resulted in a 48.8% reduction in greenhouse gases compared with paper banknotes.

One firm helping central banks with their efforts to reduce their currency carbon footprint is CCL Secure. CCL provides polymer for banknotes in 40 countries around the world, with more than 75 billion of its banknotes having entered circulation. In 2015, the firm launched an initiative to help clients to establish their own recycling programmes. 

“Guardian polymer banknotes help reduce the environmental impact of cash, as they last longer than paper notes, you don’t need to issue as many, and they can be 100% recycled at the end of their useful life,” says Tim Berridge, director of research and development, marketing and design at CCL.

In Mozambique, the programme has been instrumental in making the central bank’s cash management strategy more sustainable. 

“CCL’s programme promoted greater environmental responsibility within the central bank”, Edmundo Juvane, director of issuance, tells Central Banking.

Not only have Mozambique’s banknotes been recycled into new raw materials, but the recycling programme has also helped establish new relationships between the central bank and local waste companies.

New plant in Mexico

Over time, CCL’s strategy has evolved to also invest in recycling capabilities. In September 2020, CCL invested in its own new specialised recycling centre in Zacapu in Mexico. The new plant will recycle CCL’s Guardian polymer substrate, which is already used in more than 160 denominations around the world.

“Although other currency services providers are carrying out important work, in terms of offering eco-friendly solutions and implementing processes based on renewable energy sources and the reduction of pollutants, the impact they have on sustainability issues is not as high compared to CCL,” says Alejandro Alegre, chief cashier at the Bank of Mexico. 

The Zacapu plant transforms old polymer banknotes into polypropylene pellets, which can be used to create new plastic products, including garden furniture and building materials. Berridge notes that CCL could ship polymer waste from other jurisdictions, such as Europe, but this would likely use up more energy than the recycling would restore.

Entire lifecycle

CCL already has a strong presence in Mexico, after it established a substrate production plant in the country in 2007. It was the company’s second polymer production plant after the one in Melbourne, Australia. CCL now has three production sites, the third being in the UK town of Wigton.

“We can now provide a full end-to-end service for our central bank clients in the region,” says Berridge, referring to the new recycling capability in Mexico.

“This has been important for us, and we are already working with a number of countries to take their waste away.”

The decision to establish the recycling plant in Mexico was a strategic one for CCL: the firm already has a track record of in-country recycling programmes in both Nicaragua and Costa Rica. The Bank of Mexico had also expressed interest in increasing the amount of recyclable material following the release of its new 100 peso ($5) note. 

“Polymer was used to produce the new 20 and 50 peso banknotes, observing a durability increase of approximately 500%, which meant an increment on its life from eight to 48 months,” says Alegre. The central bank has since taken the decision to print the 100 peso note on CCL’s polymer substrate.

In 2020, CCL acquired 1 tonne of Mexican polymer banknote waste, which has been turned into pellets. The central bank is now working with CCL to assess the feasibility of recycling waste from Complejo Jalisco, the Bank of Mexico’s Guadalajara printing facility.

CCL has also reviewed how it can make its own operations more sustainable. This is evident at its UK site, where the substrate for its Bank of England’s banknotes are produced. 

As well as supplying the Guardian substrate to the BoE for the past eight years, CCL has invested in its £40 million ($55.6 million) manufacturing facility in Wigton. Recently, CCL implemented a new strategy at the plant that ensures “environmental, ethical and economic considerations are at the heart of all business activities”, CCL’s Berridge tells Central Banking.

The main thrust was the optimisation of its printing process and the implementation of a regenerative thermal oxidiser (RTO) – a piece of equipment that captures the solvent-laden air emitted during printing.

The printing press traditionally used by CCL operated using electricity generated from gas and steam. The inclusion of an RTO means solvents act as an additional input for generating electricity for powering the printing equipment. As a result of these changes, CCL’s UK site has managed to halve its energy consumption during production and significantly reduce steam consumption.

CCL has also developed plans to reduce its environmental impact throughout its supply chain, including raw material procurement, transport, and film and substrate manufacture. 

Expanding business

Berridge says CCL will continue to push its sustainability mandate, but, as each country’s situation is different, a one-size-fits-all solution is not possible. He says CCL will approach each country with a view to meeting their specific needs.

“I think it will be a mixed approach, and CCL Secure will work closely with users of Guardian to ensure we get the right solution for them,” says Berridge. Since the inception of CCL’s recycling initiative, 90% of polymer banknotes issued by the firm are now recycled at the end of their lifecycle. “Our goal is to reach 100%,” he adds.

In Costa Rica, CCL is helping the nation’s central bank recycle 100% of the waste associated with its polymer banknotes, in accordance with the country’s broader climate strategy. 

“CCL has not only taken care of providing this substrate for our banknotes, but also supported us on alternatives for recycling waste,” explains Marvin Alvarado Quesada, director of the currency department at the Central Bank of Costa Rica.

CCL also helped the central bank form relationships with companies that can utilise the recycled product. “Their initiative was the first that offered this treatment of polymer banknotes to us,” adds Quesada.

The Central Banking Awards were written by Christopher Jeffery, Daniel Hinge, Dan Hardie, Rachael King, Victor Mendez-Barreira, William Towning and Alice Shen