reward card by rabbisendak


									              A Sustainable Reward Card for London
    Proposal by Mike Tuffrey, Liberal Democrat London Assembly Member
This paper proposes a trial scheme for a London-wide
sustainable reward card, which would:

• Reward consumers who switch to environmentally
  friendly purchases
• Stimulate markets for sustainable products and services
• Use ‘smart card’ technology like Oyster

The threat of climate change and increasing concern over environmental and social
sustainability issues are rapidly altering the UK policy agenda. Nationally there is growing
recognition of the role that fiscal incentives and disincentives can play in combating global
warming. At regional level, tax raising powers are limited. But there remains considerable scope
for policy makers to influence and incentivise people to live in a more sustainable and
environmentally friendly way. This document puts forward a plan for a London-wide reward
card. Pilots and investigations into similar schemes have already taken place in Rotterdam,
Amsterdam and Tokyo, from which we in London can learn. The National Consumer Council1
and the Welsh Consumer Council2 have also carried out relevant studies. This note reviews
previous experiences and considers how such a scheme might apply in London.

        Helping to Achieve London’s Sustainability Goals
Rewards cards are a relatively simple mechanism to influence behaviour, used by retailers and
service providers to encourage brand loyalty in consumers. Points are collected according to the
amount of money spent, stored on the card, or captured by a central server. Each point has a
real monetary value, allowing collected points to be redeemed on new items, determined by the
retailer. In some cases vouchers are issued when points accumulate, and in others, points can
be spent directly from the card in shops or via web-based electronic catalogues.

Reward card schemes are highly developed in the UK, with most major retailers operating card-
based systems to encourage loyalty. One of the most well-known is the Nectar reward card
scheme, which allows consumers to collect points from a whole range of services including high
street shops, car rental firms, fuel suppliers, a major supermarket and a travel agent. Points can
then be exchanged for further savings in shops, for items from a designated electronic
catalogue, or for air miles and travel.

Recent innovations have seen cards used to promote commitments to sustainable, healthy or
ethical behaviour. The Tesco Clubcard scheme, for example, is offering green clubcard points
for customers reusing plastic bags or recycling printer cartridges and mobile phones. However,
for as long as such schemes continue to offer air miles as a ‘reward’, the sustainability
objectives remain deeply flawed.

  Holdsworth, M. Boyle, D.(2004) 'Carrots not sticks: the possibilities of a sustainable consumption reward card for
the UK'. National Consumer Council and New Economics Foundation.
  'A Sustainability Reward Card for Wales: outcomes of a seminar on the Netherlands NU card’ (2004). Welsh
Consumer Council.

Mike Tuffrey, May 2007
The firstly public sector led reward card scheme aimed at
promoting sustainable behaviour was developed in the
Netherlands. The NU Spaar-pas Card was trialled in
Rotterdam 2002. The concept of the scheme was
straightforward: people were rewarded for their efforts to
consume more sustainably. In the Rotterdam trial, points were
collected for separating waste and for buying sustainable
products, including those labelled organic, energy-efficient or
fair trade, as well as bicycles, renewable energy, or green
financial products.     Points were exchanged for more
sustainable products, public transport or leisure activities.

The benefits of the mechanism for the Rotterdam authorities
were threefold: a significantly improved recycling rate, a
stimulated market for sustainable products, and increased take
up of public transport. I believe that there are considerable
potential benefits in developing a reward card scheme for

The existing Wedge Card scheme might further inform possibilities for a London-level scheme.
Although a fee based scheme, with a £20 annual fee, it has declared sustainability objectives.
The Wedge Card aims to re-vitalise communities by giving discounts to customers using local
shops and services. It also supports local charities, with 25-50% of the price of each card
bought going directly to local projects of the cardholder’s choice.

               Objectives of the Reward Card Scheme
A London-wide reward card scheme should be aimed at London’s householders, a target group
for improving municipal recycling rates, as well as reducing household energy consumption and
encouraging more sustainable and healthy purchasing decisions.

On recycling alone there is scope for dramatic progress to be made, with the Mayor setting a
goal to bring London’s municipal recycling rate up to 25% (some boroughs achieved less than
10% in 2005/06). Trials of new waste collection systems in London have already seen
microchips being used to identify bins with households. The same technology could be a
successful mechanism to incentivise Londoners to earn reward points by recycling more. The
retail side of the scheme could also be used to dissuade people from buying over-packaged

On household energy there is also considerable scope for an incentive scheme to bring real
benefits. The Mayor’s Climate Change Action Plan published in February 2007 set a target for
London households to reduce consumption by 20% over the next decade. Encouraging more
Londoners to shift to renewable energy suppliers and to purchase energy savings products
including insulation, are key steps to reducing overall consumption. (London Electricity – now
EDF Energy – is already part of the Nectar scheme.)

Sustainable food and purchasing decisions are another important area for a London scheme to
address. The Mayor’s Food Strategy launched in 2006 already commits the Mayor to
undertaking a feasibility study and (subject to this) a pilot of a London reward card scheme to
encourage food choices contributing to healthy, social and/or environmental objectives. This
commitment could be extended to take in a broader range of sustainable consumption
objectives, including encouraging people to switch to renewable energy suppliers and ethical
financial products, to buy bicycles or to purchase seasonal travel cards.

Mike Tuffrey, May 2007
There is also scope for the extension of the reward card mechanism. In addition to rewarding
people for helping to achieve London’s environmental goals, points might also be used to
reward people working to improve their local environment and community through linking to
existing time bank schemes. It might also be possible for points to be ‘donated back’ through
the scheme to help fund local community projects or causes, for example, tree planting.

                       How the Reward Card would work
This plan achieves double environmental benefits:

     •  first by encouraging a switch in consumption to activities that reduce impact, such as
       renewable energy;
     • then, promoting a second switch when points are redeemed, for example from travel by
       car to public transport.

To be effective the scheme needs to be well branded and simple to follow, backed up by
synchronised labelling and publicity campaigns. Rewards needs to be attractive enough to
encourage Londoners from all groups to make changes. The following table shows the type of
activities for which points might be collected and redeemed in a London scheme:

 Points collected for:                               Reward points used for:
 •       Waste separation and recycling at ‘bring    •   Buying fair trade brands and
         sites’                                          environmentally friendly products –
 •       Buying fair trade brands, low carbon, and       (including coffee in a participating coffee
         environmentally friendly products               chain?)
         through a branded labelling scheme          •   Shopping locally in identified
         agreed with major retailers – including         independent retailers
         energy saving light bulbs, insulation or    •   Crediting Oystercards/reducing season
         energy saving boilers                           ticket payment
 •       Shopping locally (through agreements        •   Paying for activities such as the London
         with specialist or local retailers)             Eye and cinema tickets
 •       Buying renewably generated electricity      •   Vouchers for gardening equipment
         or ethical financial products               •   Book tokens
 •       Hours donated to local time bank for        •   Mobile phone minutes
         voluntary activities                        •   DVD rental
 •       Buying or renting bicycles

The scheme would need to run on a commercial
basis, with private sector partners and points             Boots Advantage Points: 4 points
having a real monetary value. After initial start up       are collected for every £1 spent. Points
costs, service providers and retailers would pay an        have a value of 1p to spend in the
agreed amount of money into the scheme for each            shop on selected products. Points can
point issued. The rate could be varied in order to         only be redeemed for cash at the rate
enable smaller shops to get involved. Londoners            of 0.0001p per point.
would collect points on a smartcard for the various
activities and purchasing decisions listed above.

At the end of each day points issued by shops and service providers would automatically be
collected and registered. Each shop or service where points were redeemed would have a

Mike Tuffrey, May 2007
contract agreeing the monetary value that they would be able to claim from the scheme for per

The NU Spaar Pas pilot demonstrated that a reward card scheme could be self-financing after
the initial start up costs. Two million euros were needed to get the NU scheme in Rotterdam to
pilot phase (10,000 households). Funding came from statutory funders, the EU and businesses.

        Compatibility with Existing Smartcard Schemes
There are a number of card schemes already operating in London. The Oyster card is one of
the most successful. Meanwhile there is also growing local authority interest in developing
borough level card schemes for accessing local services with schemes already operating in
Newham, Croydon, Greenwich and Kingston.

London Connects has published a vision document for the ‘Your London’ card scheme, which
suggests that borough level schemes might be federalised through a London-wide brand. The
aspiration is for cards that are issued locally for council residents to access library or leisure
services and to pay their council tax, might become part of wider scheme with London wide
applications – for example, travel, parking, libraries and leisure.

There appears considerable scope for the reward card mechanism
outlined here to be allied with both the Oyster Card and the Your
London card. Bringing these functions together would reflect
London-wide sustainability aims, and help to foster a sense of the
responsibilities and benefits of London citizenship.

                          Taking the Vision Forward
To move forward with the reward card scheme this proposal needs London level ownership and
funding. A feasibility study such as that discussed in the Mayor’s Food Strategy, should
establish how a reward card scheme could most successfully balance the interests of Londoners
as well as retailers and service providers, and produce ‘wins all round’. A key objective of this
work should be to establish how the reward card scheme can be integrated with existing
smartcard schemes including the Your London vision and plans to extend the Oyster card.

Once the parameters of the scheme have been decided, including how the cards are to be
disseminated, a pilot study can be conducted in one London Borough, perhaps Tower Hamlets
or Newham where recycling rates are lowest. Advice from Dutch consultants involved in the NU
card scheme suggests that the pilot should run for two years, with monitoring after 12 months
of operation to inform future London-wide deployment.

Mike Tuffrey
London Assembly
Leader of Liberal Democrat Group and Environment Spokesperson
020 7983 4383
City Hall, The Queen’s Walk, London SE1 2AA

Mike Tuffrey, May 2007

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