Green Credit Card
Korea Environmental Industry & Technology Institute

A. Problem Analysis

 1. What was the problem before the implementation of the initiative?
In 2010, the Korean government faced a challenge of transformation to low carbon consumption in all sectors including the public, private and industrial sectors in order to meet its voluntary GHGs emission reduction target (30% below BAU by 2020). Due to the marginal GHGs reduction potential of the existing method, a paradigm shift was necessary to expand reduction targets from large energy-consuming industries to all areas including non-industrial sectors and to engage not just the government and companies but also ordinary people in leading emission reduction efforts. In line with this, innovative policy measures were needed to induce GHG emission reduction and develop a framework for monitoring and measuring the outcomes. The biggest obstacles to non-industrial sector GHGs reduction were how to include a wide range of control targets, how to manage marginal reduction output compared with high costs and the un-measurability of GHG emissions. In addition, although the general public were aware of the seriousness of climate change and the need for green consumption, it was not enough to take practical action. As the Paris Agreement was adopted at COP21 in 2015, the global community agreed to keep the global average temperature rise to below 2°C and then 1.5°C. However, the problem is persistent because reduction efforts submitted by each country (Intended Nationally Determined Contributions, INDC) are not sufficient to meet the goal of keeping the average global temperature rise to below 2 ℃.

B. Strategic Approach

 2. What was the solution?
Establish an integrated non-industrial GHGs emission reduction platform. Via the One-Card Platform, a system has been established for integrated management and promotion (Eco-Money Point Scheme) of GHGs emission reduction activities by individuals in various areas. Bridge the gap between awareness and practice. The biggest obstacles to eco-friendly consumption – lack of information on eco-friendly products and price barriers – were eliminated by establishing a green product directory associated with eco-labeling systems and providing financial incentives for purchases of eco-friendly products. Build a sustainable business model. Financial resources to provide financial incentives for eco-friendly consumption and lifestyles were shared by local governments, credit card companies, eco-certified product manufacturers, and distributors. It created a sustainable funding structure.

 3. How did the initiative solve the problem and improve people’s lives?
The Green Credit Card Initiative is a scheme to reduce GHGs emissions in non-industrial sectors by raising awareness on eco-friendly consumption and lifestyles and providing financial incentives for all citizens. As per Green Credit Card usage, Eco-Money points (financial incentives) are awarded to user’s accounts: At least 3% of the amounts paid to buy eco-friendly products and 20% of public transportation fees paid using the Green Credit Card (up to $10 per month) or for energy savings at home(up to $100 worth). The Eco-Money points are redeemable against credit card points, cash, mobile phone bills and public transportation fees, gift certificates, and eco donations for user convenience. The strategies for this are to ① distribute the Green-POS system ② utilize the One-Card platform and ③ build a sustainable business model. First of all, the POS (Point-of-Sales) system at retail stores is upgraded to the Green-POS system that automatically recognizes eco-friendly products. The program operator (credit card company) awards Eco-Money points to consumers based on payment information. Consumers can check the benefits indicated on a receipt. For the identification of eco-friendly products, 10 labeling schemes including Eco-Label and Carbon Footprint Label (Ministry of Environment), and Low Carbon Agricultural Product Label (Ministry of Agriculture, Food and Rural Affairs) are used. The Korea Environmental Industry & Technology Institute (KEITI) updates labeled products to the Green-POS system monthly. The KEITI-managed information on eco-friendly products goes to the Green Credit Card Initiative operator (BC Card) and then automatically links to the Green-POS system installed at 40,464 stores under 8 distributor chains. The system automatically identifies eco-friendly products through barcode scanning when consumers make payments for those products. BC Card, the Green Credit Card Initiative operator, built the Eco-Money point scheme to provide financial incentives for eco-friendly consumption and lifestyles. The operator rewards consumers Eco-Money points at the point of purchase based on the products they buy and the consumers can check the points indicated on a receipt. Secondly, Green Credit Card is a tool to monitor and manage all GHGs emission reduction activities conducted in various areas such as consumption, transportation and in the residential sector via one credit card, that is, the One-Card platform. It can also be used as a tool to monitor SDGs by measuring changes in the eco-friendly consumption and lifestyles patterns of users and the resulting GHGs emission reductions. The transportation and building/housing sectors account for 21% of GHGs emissions in Korea. These sectors are the priority for Green Credit Card to promote a low carbon life style. As of December 2016, a total of 1.4 million tons of GHGs emission reduction was achieved through promotion of public transportation use, energy savings in electricity, gas and water at home. In addition, the purchase of 10 types of labeled eco-friendly products led to 980,000 tons of GHGs emission reduction. Last but not least, a sustainable business model that provides financial incentives for eco-friendly consumption and lifestyles was built. Financial incentives provided for use of public transportation and energy savings at home also create a virtuous cycle as they lead to reductions in socio-economic costs from air pollution, traffic congestion, and energy source imports, resulting in reductions in government spending and increases in financial resources for the Green Credit Card Initiative.

C. Execution and Implementation

 4. In which ways is the initiative creative and innovative?
It provides financial incentives for green consumption and lifestyle. It encourages sustainable eco-friendly consumption and lifestyles by giving back a portion of credit card commissions to customers as Eco-Money points when they purchase eco-friendly products. A portion of the increasing profits of credit card companies and manufacturers is donated to the Green Credit Card Initiative, which enables continuous operation of the initiative without additional government support. It contributes to sustainable development via public/private partnership. It is a sustainable business model that promotes green consumption and lifestyle by engaging various stake holders including the central and local governments, public organizations, consumers, distributors, manufacturers, banks and credit card companies. The core element of the public/private partnership is that the government promotion of eco-friendly lifestyles helps private companies that participate in the Green Credit Card Initiative (manufacturers, distributors and financial institutions). It measure eco-friendly consumption and provide incentives with single credit card. A wide range of eco-friendly consumption and lifestyles such as purchasing eco-friendly products, using public transportation, and saving energy at home can be measured and given financial incentives accordingly by a single Green Credit Card. It communicates with customers via mobile application. People can check the Eco-Money points they earn in real time and find information on eco-friendly products, distributors and events via a mobile application.

 5. Who implemented the initiative and what is the size of the population affected by this initiative?
The initiative is operated by Korea Environmental Industry and Technology Institute (public organization), BC Card and KB Card (private enterprises), led by the Ministry of Environment (central government) engaging 19 financial institutions (card issuers), 1,957 eco-friendly products of 224 manufacturers, 40,464 retail outlets and 17 local governments. All Korean people (about 51.7 million) can join the initiative. As of December 2016, the number of Green Credit Cards issued was 15.08 million, which accounts for about 56% of the nation's economically active population (27.33 million).
 6. How was the strategy implemented and what resources were mobilized?
There was a need to discuss how to provide measures that enable ordinary people to participate in sustainable consumption in their daily life. Accordingly, from April to December 2010, the government-led 'Green Consumption Forum' was held to gather opinions from private enterprises and citizens on sustainable consumption and lifestyle. In December 2010, a framework of “Green Credit Card Initiative“ was developed based on opinions collected through the forum. Green Credit Card refers to a credit or debit card to promote the sustainable consumption and lifestyle of ordinary people by providing financial incentives for purchasing eco-friendly products, using public transportation or saving energy through a credit card point platform. In the first half of 2011, there was an open recruitment of Green Credit Card Initiative operators and an agreement was concluded with participating companies. In July 2011, the issuance of Green Credit Cards began for all citizens. In July 2013, the Green Credit Card was officially certified by Korea Record Institute as the credit card with the highest number of issuances in the shortest period, which proved that the program successfully reached people. As of December 2016, 2 credit card companies, 20 financial companies, 1,957 products from 224 companies, and 40,464 retail stores are engaging in the green card system through continuous cooperation with financial institutions and private enterprises. In 2012, the “Green Credit Card Steering Committee” was established with representatives from the government, private sector, academic and civil societies. Since then, it has been monitoring and evaluating the program to ensure its operation is transparent and fair. In 2011 when the Green Credit Card Initiative was first introduced, a total of $570,000 in finance was procured including $350,000 from the government, $200,000 from KEITI, and $20,000 from private donations. The Green Credit Card Initiative minimized the initial cost of the system by utilizing existing payment systems. It also secured continuous financial resources via contributions from the commissions of Green Credit Card operators. As of 2016, the program’s annual budget was approximately $3.3 million. $2.9 million of this came from private donations contributed from Green Credit Card payment commissions, while $0.4 million was from the government budget. The program’s key technologies are the Green-POS system and green consumption analysis system (Green-CRM). The Green-POS system integrates the information on eco-friendly products participating in this initiative into credit card payment systems at retail stores. It enables people to get financial incentives when they purchase eco-friendly products using Green Credit Cards and to check them through receipts. Green-CRM is a system for external customer relationship management by analyzing overall eco-friendly consumption patterns including energy savings from the use of Green Credit Card and changes in sales of Eco-labeled products. Big data collected through this system is used for service improvements such as associations with relevant organizations or promotion planning. As of 2016, a total of 14 people were deployed for the program including 2 from MOE, 4 from KEITI, and 8 from program operators (credit card companies). They are responsible for building operating systems, managing financial incentives, recruiting participating companies, and undertaking work related to Green Credit Card Steering Committee, education and promotion.

 7. Who were the stakeholders involved in the design of the initiative and in its implementation?
At the planning stage, MOE and KEITI led design and implementation planning for the program. There are a wide range of stakeholders participating in this program including central government (MOE), public organizations (KEITI), operators (2 credit card companies), financial institutions (19), manufacturers (224), distributors (40,464) and local governments (17). In addition, the 'Green Credit Card Steering Committee' composed of government, public organizations, credit card companies, academics, private enterprises and civil society groups is monitoring and evaluating the Green Credit Card Initiative.

 8. What were the most successful outputs and why was the initiative effective?
- [SDGs 12.] It provided more opportunities for ordinary citizens to engage in eco-friendly consumption and lifestyles by expanding eco-friendly products and Green-POS systems. Over the past year, the choice of eco-friendly products by Green Credit Card users increased by 50% to 1.93 million purchases in 2016. In addition, the number of manufacturers participating in this initiative has increased five times over the last four years (224 in 2016) and the number of participating retail stores has increased 54 times (40,464 in 2016). - [SDGs 12.] As a result of providing financial incentives in return for use of public transportation to promote a modal shift to sustainable transportation, the amount of Green Credit Card payments for public transportation surged 57 times from $2.5 million in 2011 to $142.7 million in 2016. And the annual average payment for public transportation per card also increased 2.2 times over the same period. - [SDGs 12.] According to a survey on Green Credit Card users, the number of people with higher interest in eco-friendly products grew from 80.8% to 88.6% between 2011 and 2016, and the number of people with preference to eco-friendly products increased from 65.4% to 68.2%. This shows that the Green Credit Card Initiative raised public awareness regarding sustainable development and living and induced behavior changes. - [SDGs 13.] The initiative also contributed to non-industrial GHGs emission reduction by promoting sustainable consumption and production such as Eco-labeled products purchases and public transport use by Green Credit Card and energy saving at home. The non-industrial GHGs emission reductions achieved by this initiative amount to 2.39 million tons as of 2016. This was calculated based on a comparison of eco-friendly product purchases, use of public transportation and energy savings between general credit card users and Green Credit Card users.

 9. What were the main obstacles encountered and how were they overcome?
The main obstacles to introducing and operating the Green Credit Card Initiative were as follows. First, roles and responsibilities among ministries and government agencies needed to be coordinated in order to engage existing policies for green consumption and lifestyle established and implemented by other organizations. Second, encouraging various private entities to participate in the initiative and securing financial contributions to guarantee financial incentives for eco-friendly consumption and lifestyles. Efforts to attract non-industrial GHGs emission reduction were made from a high level organization, the Committee on Green Growth, which plans the basic direction and strategies for green growth policies. Thanks to the high level organizations’ support for cooperation among ministries and government agencies by taking the program as a major policy, this obstacle could be overcome. As an incentive for participating manufacturers, contributions to this initiative were recognized as donations, which resulted in corporate tax cuts, and Green-CRM data was given. The initial investment cost for establishing the Green-POS system was regarded as the biggest obstacle, however the Green Credit Card Initiative operators (credit card companies) paid for it, making it easier for distributors to join this program. The Green Credit Card operator could get more profits from commissions, if consumers use their Green Credit Card(instead of other credit card) to purchase eco-friendly products or use public transport.

D. Impact and Sustainability

 10. What were the key benefits resulting from this initiative?
By 2016, financial incentives worth $38.9 million in total were awarded for eco-friendly product purchases, public transport use and energy saving at home. The rewards were used as cash, automatic deductions from credit card payments for services like public transportation, conversion to other types of points, alternative payment methods at credit card affiliates, donations, etc. The Green Credit Card does not require annual membership fees and it allows the poorest and most vulnerable people to access financial services such as credit card services. In addition, about $100,000 of the initiative fund were used for pilot projects to enhance the residential environment for the poorest and most vulnerable people. Citizens got discounts or exemptions from fees for use of 897 leisure facilities or tourist sites operated by 17 local governments across the country. The benefits worth $750,000 aimed to promote the leisure activities of citizens. 10 kinds of public services including transportation, food, and welfare were delivered through one platform, which efficiently enhances the way of providing various public services. A mobile application was developed for users to check eco-friendly products, retail stores or Eco-Money points associated with the Green Credit Card Initiative, which narrowed the information gap between users and service providers.

 11. Did the initiative improve integrity and/or accountability in public service? (If applicable)
The “Green Credit Card Steering Committee” engage various stakeholders. It is being operated to ensure the fairness and integrity of public services. The Steering Committee consists of various stakeholders including the central government (Ministry of Environment), public organizations (Korea Environmental Industry and Technology Institute), program operators (BC Card, KB Card), academia and civil society organizations. The Steering Committee was established in 2012 and holds a meeting three times a year. The term of committee members is limited to a maximum of four years (one two-year term and one renewal). New members of the Steering Committee are nominated by incumbent members and approved by the committee. - The Steering Committee evaluates initiative operation performances, presents development directions, approves budgets for the initiative and determines fund appropriations. This makes delivery of public services transparent and inclusive. The Green Credit Card Initiative manages the whole process from collecting information on eco-friendly consumption and lifestyles of individuals to providing financial incentives using data based on IT solutions, which minimizes the possibility of errors during initiative operation. Users can check the financial incentives they earn in return for their eco-friendly consumption and lifestyles through a mobile application or receipt in real time.

 12. Were special measures put in place to ensure that the initiative benefits women and girls and improves the situation of the poorest and most vulnerable? (If applicable)
Annual membership fees for Green Credit Card (credit/debit) were exempted to ensure financial services without discrimination. Users get discounts on fees for public transportation or local government-operated facilities paid by Green Credit Cards. To help socially-challenged people enjoy benefits from this initiative, the benefits are embedded into one card which also offers other welfare services provided by other ministries. ‘Happy Child Card’ for babies and infants, ‘Happy People Card’ for pregnant women and poor and vulnerable people, and ‘Country Love Card’ for soldiers are those that deliver relevant welfare services along with the benefits of this Green Credit Card Initiative.

Contact Information

Institution Name:   Korea Environmental Industry & Technology Institute
Institution Type:   Public Agency  
Contact Person:   Hyunju Lee
Title:   Ms.  
Telephone/ Fax:   +82-2-2284-1918
Institution's / Project's Website:  
Address:   215, Jinheung-ro, Eunpyeong-gu
Postal Code:   03367
City:   Seoul
State/Province:   Seoul

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