Work

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

Year: 2025

Type: article

Abstract: 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.

Source: Finance research letters

DOI: 10.1016/j.frl.2025.106951

Authors: Adriano Barasal Morales, Márcio Poletti Laurini, Anton Vrieling

Institutions: International Institute for Geo-Information Science and Earth Observation, University of Twente, Universidade de São Paulo

Language: English

Topic: Sustainable Finance and Green Bonds

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Climate action, Life on land

Open Access status: hybrid

Estimated APC paid: $3,730