The Bank of England is to measure the carbon footprint of its money as part of Threadneedle Street’s net zero push.
The central bank has hired private consultants to determine the environmental impact of its polymer banknotes in a bid to reduce its carbon footprint.
It comes after Threadneedle Street discontinued its £20 and £50 paper notes last year in favour of the synthetic polymer model.
While the Bank has said the longer life expectancy of the polymer notes make them more environmentally friendly, some studies have suggested that the new notes are more polluting than their traditional paper predecessors.
A 2019 report by Evergreen Finance London said that the Bank’s polymer £5 notes release nearly 9kg of CO2 over the course of their lifetime, almost three times more than old paper notes.
The Bank has hired specialists from ESG consultancy Ricardo to conduct the £150,000 study and establish how polluting its polymer notes are.
It comes after Andrew Bailey, the Governor of the Bank of England, said last week that there was “no excuse” for failing to tackle climate change.
He said: “Unlike pandemics and wars, which are terrible, and events that we are having to deal with, climate change, I am afraid, is highly predictable. That is the reality. And there is therefore no excuse for failing to tackle it.”
He added that the private sector had a key role to play in tackling climate change. He said: “A big challenge we and the world economy face is that the underlying rate of economic growth in many countries, particularly industrialised countries, has fallen – that is true here.”
In 2021, the Bank committed to target net-zero greenhouse gas emissions from its physical operations by 2050, a date which leading scientists have warned will be “too little, too late” to turn the tide on climate change.
Threadneedle Street has also pledged to reduce its emissions by 63pc in 2030 from 2016 levels.
A source at the Bank said the investigation was “part of our commitment to reduce the environmental footprint of our banknote production”.
The concerns about banknotes negatively affecting the environment may fuel fears that cash could be phased out.
The Bank of England declined to comment.