Written by Richard Flemmings, Partner and CTO at 4 Earth Intelligence
Aligning with the Digital Leader’s theme of “Tech for Good”, this article describes the 4 Earth Intelligence team’s innovative work to deploy space technology as a crucial tool in the reporting and management of climate change within the financial industry.
Climate change is at the forefront of everyone’s minds. It’s increasingly recognised as a critical risk to global corporate firms. Climate change events have profound impact on business and can severely impinge on production and delivery of services, with interrupted supply chains, market dislocation and loss of asset value. In the January 2020 World Economic Forum report, 5 of the top 10 global risks were attributed to climate change.
Climate change is not new and unexpected. It has been with us since the industrial revolution over 200 years ago, with the risk growing daily. Climate change represents a long term issue that is not going away. The need for change to address the risks is well known and momentum is building to take action. New government and corporate initiatives to mitigate risks are underway, as well as legislative and regulatory intervention.
The Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) is an example of just such an intervention. TCFD focuses management attention on climate change risks posed to businesses and how they can be mitigated. It’s driving the desire for sustainable investment and resilient economies by recommending a structured disclosure approach. However, although this has led to higher incidence of reporting, the quality is often poor. More evidence is required. And this is where space based technology is helping.
Satellite Earth Observation (EO) data analysis allows insight and intelligence to be captured anywhere in the world entirely remotely (i.e. without even needing to leave the desk). As the data is based on actual observation, it provides independent and impartial evidence and is completely transparent. The data can help corporates create a baseline understanding of specific climate change risk which can be developed into approaches to build and achieve ongoing resilience and risk mitigation. The following case study examples, demonstrate where EO technology has been directly applied.
Investment decisions — Understanding the status of an asset is critical to making informed investment choices. For example, a satellite image of a construction site can provide indisputable evidence of construction progress, or awareness of the environment surrounding a site at a specific time. Satellite imagery can also be used for statements of provenance, confirming the presence and status of a newly developed renewable energy site to investors
Asset monitoring — Corporate activities are often linked to a complex network of global supply chains. It can be difficult to obtain consistent, repeatable and objective information in remote and disconnected locations. As the range of satellites in operation increases, images are available for analysis all over the world on a frequent basis (as much as daily). These images can provide vital evidence that a particular asset is performing as expected. Taking the example of agricultural assets, the health, productivity and yield of crops can be calculated through detailed satellite image analysis, to understand the specific impacts of changing weather and climate conditions.
Environmental Impact Assessment — A direct impact of climate change is sea level rise. Coastal regions are becoming increasingly populated, and yet populations and settlements in the coastal zone are at increased risk of flooding, water inundation and extreme weather events. EO data offers the opportunity to monitor coastlines and provide objective and consistent inputs to understand locations most vulnerable to impact. Using EO data, large sections of coastline can be automatically classified into a range of human and natural categories. Coastal protection activities can then be targeted. The investment and maintenance of natural environments (such as mangroves) are increasingly recognised as sustainable ways to protect adjacent human populations and infrastructure.
Where it is not possible to travel or put people on the ground (such as in a pandemic), there has become a greater need and demand for innovative ways to monitor climate risk. Using data from space allows input for informed investment decisions whilst also undertaking asset monitoring and environmental impact assessments without having to leave the desk. The 3 working case study examples here represent some of the numerous ways that space based EO data can be applied. Such tools and methods are becoming increasingly important for understanding and managing financial decision making.
Find out more about 4 Earth Intelligence’s work by visiting www.4earthintelligence.com , or emailing us at .
Originally published at https://digileaders.com on November 3, 2020.