Following the outcry around the inclusion of animal-derived products in its new £5 and upcoming £10 notes, the BoE last year put the tender for the new £20 note on hold until a substitute could be found.

As part of its investigations the Bank has consulted with potentially affected religious groups such as Hindus and Sikhs, vegan and vegetarian representatives and environmental organisations, focusing on palm and coconut oils as an alternative to tallow.

Today the BoE has released an update on the situation stating: “Since December 2016, the Bank has been working with De La Rue and Innovia Security, the potential suppliers of polymer substrate, to assess alternative options, such as palm oil or coconut oil. 

“Their conclusion is that the only practical alternative to animal-derived additives is additives derived from palm oil, which offers a mature supply chain and is available at reasonable cost.”

Palm oil is a particularly controversial industry due to the historical and ongoing devastation its unsustainable production has caused to communities, wildlife and environments across the world. The industry is active in Africa, Asia, North and South America with environmental groups working to eradicate unsustainable practice and mitigate the impact of rising palm oil consumption.

A spokeswoman from the Rainforest Foundation UK, whose palm oil projects in Africa work to reduce negative impacts on communities and the environment, said the organisation hoped to be consulted as part of the BoE’s decision-making process.

“Using palm oil is not an all-round bad thing, it really depends on how much is being used, how they are sourcing it and what criteria they are using to establish whether it is sustainable or not,” she added. “We would hope they are going to be transparent about it and realistic about the impact of using it.”

Alongside today's statement the BoE has published an Efeca report detailing the environmental and social impacts of using plant-based alternatives to tallow. Contained in it are a number of identified impacts that the BoE said could be "potentially mitigated by the Bank’s suppliers acquiring additives that meet an associated certification standard for environmentally sustainable production".

Existing £5 polymer notes will remain in circulation and the roll-out of the new £10 note, which will enter circulation this September will go ahead, but the BoE consultation will consider the option of plant-based alternatives for future print runs of both.

The consultation will remain open until 12 May after which the BoE will need to make a swift decision if it is to stick to its 2020 launch of the new £20 note; it takes around four years for the development and launch of a new note.