Space for sustainable finance services

Climate change and the consequences are causing a strong pressure on industries to adopt sustainable growth policies and foster a green recovery. The financial sector, as an important global player, has been committed in recent years to playing a decisive role in the transition towards a sustainable economy. Sustainable Finance, through the integration of ESG factors in investment and decision making processes, has made important progresses in recent years. However, in the face of a clear desire to operate with a view to environmental and climate sustainability, there is often a lack of awareness of what are the right actions to take. Historically, the main sources of ESG data have been voluntary disclosures by the companies themselves through Corporate Social Responsibility reports. This practice has, however, proved ineffective. Earth observation data from satellites have a high potential to provide important data sets in this respect. In the near future, for example, assets of global companies are expected to be mapped using remote imagery technologies and machine learning algorithms to identify assets all over the planet. With the exponential growth of the space-based sensing, computing power and complexity of machine learning algorithms, these systems will be increasingly available for this type of analysis. Satellite technology can support the system to verify the accountability of companies, which too often manage to engage in evasive behaviors of their environmental responsibilities thanks to remote logistic chains and complex outsourcing systems, since it can collect large, frequent and independent data without the need of sending people in-situ. Artificial intelligence and machine learning algorithm support the need of large amounts of data coming from satellites. Earth observation data from satellite constellation can be used to track the emissions of companies, deforestation and loss of biodiversity, for natural heritage protection, blue economy and climate applications to monitor risks of physical events. Time series measurements are employed in many of those fields of application to track the impact of human activities in specific areas over time. In addition, satellite monitoring can provide frequent data on the environmental and climatic performance of companies’ assets, qualitative data derived from remote sensing, high comparability between assets and companies thanks to the application of global standards, and consistency across multiple scales. Space technologies traditionally support the insurance industry for climate related physical risk assessments, but also portfolio and project monitoring as well as damage assessment. Raising risks awareness and changing regulations have led to the development of climate risks assessments also in the investment and banking industry. In conclusion, space has a high potential to support the financial sector to foster the transition towards a green and sustainable future.