Sustainability, in its simplest form – means the ability to meet the current requirements without compromising future generations’ ability to meet their needs. Corporate sustainability is the organization’s ability to manage to meet those requirements – environmental, social, and financial needs.
Corporate sustainability – focused on the environmental, social, and governance (ESG) now set the standards for companies and investors., and not just for ethical reasons. ESG has been shown, repeatedly, to drive increased performance. i.e its not sure about being better for the planet but better for profit.
Across the EU, firms with higher ESG scores tend to show increased returns, in the US there isn’t just higher returns but also increased stability and reduced volatility. The same results have been seen across Asia and Australia.
During the pandemic, there has been a surge in investment with an additional $71bilion moving into the ESG funds between April and June alone. This brings the total ESG assets under management to over $1tillion.
This has been put down to multiple reasons including:
“ESG weeds out unsustainable companies with outdated practices and harmful side effects, while also minimizing risk for investors as they invest in more responsible companies with a greater likelihood of succeeding in the long run.”
What is ESG? And how do you measure it?
ESG has three core areas:
- Consider how a company works with the environment across multiple areas including
- waste and pollution
- resource depletion
- greenhouse gas emission
- climate change
Determining how a company manages its relationships with employees, customers, and the community where it operates, this includes:
- employee relations & diversity
- working conditions, including child labour and slavery
- working with local communities – including poor and underserved communities globally
The company’s leadership, executive pay, internal affairs, shareholder rights, and transparency regarding finances.
- donations and political lobbying
- corruption and bribery
- tax strategy
- board diversity and structure
Measuring governance is reasonably straight forward, based on the company reports and additional data. Social measure can also be measured – based on standard reporting. However, measuring the environmental impact is far harder – especially for companies with long and complex supply chains. This lack of information and the “E” in ESG is the “data gap”. This data gap is such a critical issue that is has been raised by 63% of fund managers, as well a wide variety of industry experts from BNPP and Refinitiv to the OCED
There is no single solution to the data gap but satellite data can certainly provide coverage in areas. Satellites are is constantly measuring and mapping the entire earth every day, from optical image (photographs) and radar to spectroscopy and thermal sensors. This data can be used to set bench marks and measure the impacts of companies.
What can be measured?
A wide variety of environment areas can be measured by alternative data and satellite data – that simply cannot be measured by normal audits
This is one of the most visible forms of environmental damage with illegal logging and deliberate forest fires around the world. This is conducted to free up the land for agricultural purposes or to obtain low cost palm oil for high profits. Satellite are constantly imaging forests and can detect even small changes in land – preventing
Crops are critical not just to feed the world but to run the world – cotton for clothing, sugar for drinks and coffee for cafes. In all of these crops there are numerous cases where illegal or unethical farming practices are used by unethical businesses. Sugarcane fields are illegally burnt, cotton and coffee is grown using forced labor – and intensive farming can involve mistreatment of animals. Pollutants are put into rivers and there is often theft of land. All of these issues can be monitored and detected by satellites.
Monitoring the land and water regions around factories can give clear indicators of pollutions and pollutants. It can help to identify the companies that discard their chemical waste to the environment and allow the relevant authorities to take the necessary preventive actions. Data can also be used to see if land is being over or under farmed, or misused.
t is primarily produced by the burning of fossil fuels has a significant impact on human health. Satellite constantly tracking the levels of NO2, over towns, cities and countries, with incredible accuracy – showing the immediate impact of changes in policies on pollutants – allowing governments and companies to understand and measure their impact and make changes accordingly.
Methane, CH4, is considered to be the most potent greenhouse gas, whose emission seem to be spiking worldwide at an alarming rate.
Responsible companies are taking steps to minimize their emissions – but measuring those changes have, historically, been difficult. A new satellite, being launched in 2022 – “MethaneSAT” will provide high-resolution method detection, that can be used by companies to measure their impact.
Monitoring the Climate and the World
Satellites are constantly collecting data such as precipitation rates, sea temperature, atmospheric temperature, humidity, glacier movement, ice flows, vegetation analysis and forest fires. All of this data is indicators of the impact of humans on the environment and can help companies and government, as well as customers and voters, make more informed decisions.
It’s safe to say that the information obtained through satellite data plays a vital role in companies’ environmentally sustainable development, paving the way to a safe, healthy, and pollution-free planet.