Eyes in Sky: How geospatial finance is transforming our understanding of the earth

🛰️In 1957 Soviet Union shocked the world by launching the first satellite, Sputnik into orbit. Since 1957, around 11,000 satellites have been launched into space by an ever expanding list of countries (Nigeria was the latest to start a space program) and private companies. The recent emergence of low cost and orbit “nano-satellites” (those weighing between 1 – 10 kg) and crucially costing less than half a million dollars has rapidly expanded the market.

Falling costs

📉The lower cost of launching Nano satellites has in turn brought down the cost of satellite imagery. Previously satellite images were largely the domain of the military, NASA and other specialist agencies. Now satellite data is widely accessible to the public and private sector.

🌍Each satellite is another set of eyes on the earth. In combination with terrestrial and aerial sensors we can observe the planet and all its vital signs at a lower cost with more accuracy than ever before. For many this means being able to navigate traffic or look at houses on Google Earth. Others soon realised the transformative scientific and business potential of satellite imagery.

🕶️🔎Satellites provide an accurate, up to the minute view of what is happening to land, sea, rivers, crops, cities, and every other part of the globe. With the aid of computers and machine learning this information can be transformed into valuable data sets. But what can you do with this data?

SustGlobal

I was fortunate to speak with Josh Gilbert CEO who co-founded Sustglobal, 3 years ago. Sustglobal’s AI-powered geospatial platform “empowers you to quantify climate-related risk and capture sustainable value”.

In order to provide useful data to companies Sustglobal first had to tackle a major problem. Namely how to transform petabytes of raw data from satellites into a useful financial signal.

Satellites can monitor dozens of climate data variables, but the quantity of data can be overwhelming. This is where machine learning techniques can be used to handle large amounts of data and help turn them into a useful financial signal.

Satellites monitor greenhouse gas emissions such as carbon and methane. This lens can be applied across widely dispersed mines, factories and power stations to provide company wide analysis of total emissions.

Sustglobal have been working with the European Space Agency to monitor the greenhouse emissions of commodity suppliers such as mining firms. Monitoring these emissions allows independent verification of whether environmental targets have been met.

When a mining company states that it has cut carbon emissions in its mining operations, rather than relying on a report from a company, the claim can be checked independently using satellites.

This kind of accurate and up to date information is crucial for the successful implementation of any potential carbon tax. Governments will need accurate up to date information on emissions levels in order to assess tax levels.

Disaster Recovery

🔥As the number and frequency of wildfires, floods and extreme weather events rises driven by climate change, satellite imagery can provide a real time picture of extreme weather events which can be invaluable in responding to disasters.

👩‍💻Real time information can also be combined with historical data to create scenarios of how these climate risks will unfold in the future. This information is increasingly important to banks and other companies who wish to understand their exposure to climate risks.

Climate Risk

Climate Risk has a data problem. It is impossible to see into the future, but knowing how and where extreme heat, sea-level rise and flooding will occur is central to this new field.

🛰️Satellite data can be transformed into a powerful financial signal. Satellite analytics can show where natural disasters such as flooding or wildfires are more likely to occur. This can be overlaid with information on company assets such as crops, mines, factories and housing. This way firms can understand which assets are threatened.

🏦Banks, insurance companies and the corporate sector are eager to learn how climate risks will impact their portfolio of assets. The emergence of the Taskforce on Climate Related Financial Disclosures (TCFD) has shifted perceptions and within a decade measuring climate risk will be a fixture in every major company.

🌊Gathering granular data on how company assets will be impacted by sea level rise, fires, floods will become standard. Right now there is a great deal of uncertainty around how accurate climate risk models can be. But it is certain that demand for climate risk data is only going to increase.

While it is impossible to know exactly how climate risks will play out in the future. Predicting where a devastating fire will break out or how long a drought will last is very difficult. But it will be possible to create more accurate scenarios of how climate risks will play out in reality.

Foliage Detector

🦅Enjoying a bird’s eye view of the world also means that satellite data can be used to monitor crop coverage and estimate yields. In a similar fashion forests can be monitored to measure deforestation, forest fires and vegetation and even the risk of trees falling onto power lines and causing outages.

This was satellite data can act as a referee for environmental governance. When companies state they are committed preventing deforestation or that they are not building on land which is exposed to climate risk.

These claims can now be tested using satellite imagery. The rise of ESG reporting been tainted by claims of greenwashing, that companies are hiding their true environmental impact.  Satellite data can back or disprove these claims or dismiss shaky assertions with real time evidence from the ground.

Verifying Supply Chains

Understanding complex supply chains is increasingly important for ensure high Environmental, Social and Governance (ESG) standards.  The supplies of raw materials, labour and manufactured goods is crucial. The extraction of metals, minerals and other natural resources which damage the environment could tracked by satellite. This could give assurances about the quality and integrity of supply chains.

Consumer goods giant Unilever has piloted satellite technology to ensure its suppliers are not contributing to deforestation. By taking GPS data and watching for movement around

Conclusion

Mainstream geospatial capabilities enabled by space technology and data science into financial decision-making globally. The emergence of this field is likely to spark many new products, innovations and companies.

What is especially exciting about geospatial finance is that it is still in its infancy. Geospatial data can still still be used for many applications where understanding changes in the natural world or built environment are important.

Some commentators have compared Geospatial data to mapping the human genome. Instead of mapping humans genetics satellites can comprehensively map and monitor the earth and how humans are changing it to an unprecedented degree.