Satellite technology has become ubiquitous. Satellite imagery has made geospatial data available like never before. Coupled with the increasing availability of real-time geospatial data and advances in artificial intelligence, data-driven decision-making can help fight the climate crisis. The term “spatial finance” was coined by the Smith School of Enterprise and the Environment at the University of Oxford and is based on the understanding that economic outcomes, the natural environment, and geography are interlinked.
Spatial finance integrates geospatial data and analysis into financial theory and practice. Spatial finance helps businesses discover a balance between capitalizing on the earth’s rich bounty and protecting it. Executives are already using this new approach to determine future investments, reduce operational risks, and shape partnerships.
Spatial finance can help identify sustainable investment opportunities by providing financial institutions with more accurate and comprehensive information, enabling them to make better decisions that balance economic outcomes with environmental considerations. Thus, a bank can look at satellite imagery and adjust its investments in an automobile company. Integrating geospatial data into financial decision-making processes allows financial institutions to assess the location of a company’s or a country’s assets and infrastructure using ground data, remote sensing observations, and modelled insights. This offers a potentially transformative means to gain improved quantitative ESG insights. In addition, spatial finance can help increase transparency within the financial system for practitioners and data providers alike, allowing sustainability-related risks to be better managed through the use of geospatial data.
Geospatial data and technologies provide relevant insights across all economic sectors with a direct or indirect link to the physical economy and are a key focus for spatial finance. By illuminating sustainability risks and opportunities as never before, spatial finance can help qualify new categories of risks and extend measurement to places that was previously not possible, thereby creating a smoother transition to sustainable development.
Spatial finance will help companies and NGOs in averting the biodiversity and climate crisis and alleviate the ensuing social issues. It also increases a company’s operations to become more transparent and makes the company more accountable. In addition, spatial finance helps bring a balance to business – balancing environmental and financial objectives. Overall, spatial finance is expected to help financial institutions identify sustainable investment opportunities and enhance sustainable development goals.
Utkarsh Majmudar 