Could satellite data propel finance industry into greener orbit?

A new initiative promises to bring together data from satellites and AI technology to help 'green' the finance industry, its backers have claimed.  

The Spatial Finance Initiative - part of the UK Centre for Greening Finance and Investment (CGFI) - launched a report last week into the current use, and future potential role, for rapidly advancing satellite and AI technologies across the finance sector.

‘Spatial Finance' brings together geospatial data from satellites and financial analytics to assess risks and opportunities for investors. Recent developments in satellite earth observation data and artificial intelligence are enabling the financial sector to "understand climate and environmental risks, opportunities and impacts in granular detail", the authors say.

The report, State and Trends of Spatial Finance 2021, explores how spatial finance technologies are already being applied today in areas such as insurance, supply chain monitoring, and climate risk management. Alongside the report the Spatial Finance Initiative simultaneously launched two new asset-level databases for two of the world's most emission intensive industries: cement and steel. 

The Space Finance Initiative is a joint initiative established by the Alan Turing Institute, Green Finance Institute, Satellite Applications Catapult, and the University of Oxford. Those behind the report say the databases will help to hold public and private sector organisations to account by monitoring how they perform against their climate goals, while also identifying the impact of climate change on the global economy.

"These new asset-level databases will allow detailed geospatial analysis of these sectors, helping to understand their exposure to climate-related risks and whether companies have credible net zero transition plans," said Dr Ben Caldecott, director of CGFI and director of the Oxford Sustainable Finance Programme. "This will lead to more targeted, proactive, and impactful engagements from financial institutions, governments, and NGOs with companies in these sectors."

The report will likely get a supportive reading from policymakers who see the potential of spatial finance to reduce the climate impact on the finance industry. In July 2020, the UK government committed to enhancing the quality, coverage and use of geospatial data across all sectors of the economy. 

Dr Sam Adlen, chief strategy officer of the Satellite Applications Catapult, said the report highlighted "significant potential" for the application of spatial finance to be scaled up in the near future.

"We predict its use by financial firms in areas such as stress testing, liability risk assessments, and portfolio management," he added. "It has been great to see the recent acceleration in the level of entrepreneurship, innovation and commercialisation in spatial finance in the last couple of years."