Risk assessment from space: Integrating satellite-derived insights for ESG financial decisions

This paper explores how satellite data can be used in sustainable investment analyses by offering a granular approach that differs from conventional environmental, social and governance (ESG) scores. The paper showcases the spatial relationship between abattoir locations and deforestation in Brazil, using asset-level and land coverage data to assess the environmental risks tied to beef traders’ sourcing practices. This approach provides a tool for investors concerned with climate risks who seek alternatives to existing ESG metrics. The findings highlight the benefits of integrating satellite data to comprehensively address material risks associated with some industries. • Challenges in ESG investing have spurred the development of new initiatives. • Satellite data offers an objective and granular alternative to ESG scores. • The study examines the deforestation caused by abattoirs in Brazil. • Satellite data uncovers material risks overlooked by other metrics. • The study highlights the importance of asset-level data for investment decisions.