A taxonomy of earth observation data for sustainable finance

Rapach, Seonaid and Riccardi, Annalisa and Liu, Bin and Bowden, James (2024) A taxonomy of earth observation data for sustainable finance. Journal of Climate Finance, 6. 100029. ISSN 2949-7280 (https://doi.org/10.1016/j.jclimf.2023.100029)

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Abstract

Corporate Environmental, Social and Governance (ESG) reporting has been subject to heightened attention and demand within the financial sector, with the objective of efficiently directing capital towards firms engaging in sustainable practices. Effective ESG monitoring is challenging, given the prevalence of self-disclosed internal data and managerial signalling incentives, presenting a need for comprehensive and diverse external data sources to augment existing ESG-related disclosure. Earth Observation (EO) technologies – particularly satellite data – play a crucial role in collecting spatial data on land, water, and atmosphere, making them highly useful for facilitating transition in the sector. This paper aims to outline the various ways in which EO data can be applied for the purposes of (i) future academic research in the subject area of sustainable finance and (ii) detailed ESG reporting and monitoring by practitioners. Using the ESG Key Performance Indicator (KPI) framework established by the European Commission and EFFAS, we present a framework listing all applicable KPIs against the types of satellite imagery that can be utilised in each case. Additionally, for ESG KPIs that EO data cannot directly address, we compile an ancillary list to explore potential indirect applications. To underscore the wealth of available EO data sources that can be used for sustainable finance research, we present a comprehensive catalogue of all open-access and relevant private satellite missions. Listed missions are categorised based on their spatial resolution, temporal resolution, and mission duration, facilitating research with specific requirements for these parameters.

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