Ahead of Sustainable Finance Live, a Finextra Research and Responsible Risk event, WWF and The World Bank have released a report highlighting how the financial sector can benefit from the emerging field of spatial finance, complementing existing ESG data streams and providing an outline for a robust taxonomy.
After retrieving use cases and case studies from industry experts, startups and financial data providers, the WWF-World Bank report explores the role of environmental non-profits as key data holders and how this will lead to increased transparency and accountability, ultimately accelerating efforts to safeguard the natural world and strengthen the global economy.
Defining spatial finance as “the independent assessment of the location of a company’s or a country’s assets and infrastructure using ground data, remote sensing observations and modelled insights,” this field could transform how the sector “improved quantitative ESG insights”.
At a basic level, spatial finance refers to ‘asset data’ location of a company’s factory, mine, field or retail estate, assessed against ‘observational data’ be it environmental, social or governance variables. This would then be integrated with assets at subsidiary, parent company, national or sector level to provide “insights at scales relevant to different financial applications, ranging from project finance to sovereign debt”.
The report identifies the “major data barriers” to spatial finance becoming more mainstream - the lack of regular and granular asset level data, the lack of supply chain data and the poor adaptation of environmental data in financial applications - and calls for the financial sector to engage in a strong dialogue with data experts in these fields to develop solutions.
The report will be discussed in detail at the third Sustainable Finance Live co-creation workshop 'Re-imagining Risk Modelling for Sustainable Finance' is taking place virtually on December 8th. For more information and to register, please click here.