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Sustainability is becoming a business imperative and more companies are investing in environmental, social and governance (ESG) initiatives.
“ESG-oriented investing has experienced a meteoric rise. Global sustainable investment now tops $30 trillion — up 68% since 2014,” McKinsey & Company predicted in 2019.
Businesses are paying more attention to ESG standards as corporate responsibility becomes increasingly important to communities, customers, employees and investors. In 2020, the World Economic Forum published a framework for consistent standards to support integrated annual reporting. Many leading organizations have since adopted it.
At the highest level, ESG standards operationalize and align with the UN Sustainable Development Goals (SDG):
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- Environment, including climate change, management of greenhouse gases (GHG), impact on biodiversity, water neutrality, air pollution, waste and reuse of resources.
- Social, focusing on relationships with customers, employees, suppliers and other stakeholders.
- Governance, with attention to internal practices and controls to make effective decisions, comply with legal requirements and report to external stakeholders.
ESG standards can sound restrictive, but they are a framework that actually creates business value in several ways. McKinsey & Company finds that ESG initiatives increase top-line growth by tapping into new markets and expanding current ones. It allows for improved trust among customers, reduce operating costs through more efficient energy consumption, waste disposal and other inefficiencies. This also minimizes regulatory and legal interventions and raises employee productivity by establishing a strong external-value proposition.
Research by KPMG has found that “80% of companies worldwide now report on sustainability.” Environmental sustainability reporting has made significant gains in recent years with 63% of organizations prioritizing climate-change emission reporting.
As these initiatives proliferate, climate technologies are emerging more and more. Indeed, McKinsey & Company estimates that 35-45% of the technologies needed “to solve the net-zero equation” are currently in development.
Even though life on land and in water remains well behind, with less than 20% of organizations prioritizing biodiversity-based ecosystem sustainability, these areas are quickly emerging as regulatory requirements in many regions.
No such thing as too much data
As with most important initiatives, data is vital. Development of these technologies and the programs that deploy them rely on data. With accurate, accessible and actionable data, organizations can make better business decisions, evaluate detailed results, and create more precise reports.
One emerging data source comes from satellites. Well beyond weather forecasting and online maps, modern satellites now produce prodigious amounts of data that help to evaluate what happens on the ground. In fact, with predictive modeling, it’s even possible to anticipate and prepare for likely future scenarios with great precision. The latest views from space offer fresh, useful and prompt perspectives on understanding and solving the problems below.
What data can satellites provide?
Currently, more than 1,000 satellites enter orbit every year, carrying a wide range of capabilities. Various technologies, such as multispectral bands and synthetic aperture radar (SAR), capture high-resolution images, some of which the human eye cannot interpret unaided. With expertly trained artificial intelligence (AI), the digital images yield data about chlorophyll content and moisture levels in vegetation, releases of greenhouse gasses, the extent of biodiversity and more.
With historical data from a previous hour and even a previous decade, AI analysis can detect in-depth trends in asset health, air quality, terrain, flora, fauna, and many other factors typically unavailable in boots-on-the-ground analysis. Able to inspect more than 10,000 miles per day, AI-powered satellites can cut the labor costs of routine, physical inspections, freeing up budget and workforce to focus on the higher-value, exceptional aspects of their work.
ESG: You can’t improve what you can’t measure
One of the applications of that data is to measure progress in ESG initiatives. The approach adopted by the United Nations is known as measurement, reporting and verification (MRV), which has seen wide acceptance by governments and industries. In essence, MRV is needed because corporate and governmental commitments to sustainability metrics require baseline measurements to compare against ongoing progress measurements.
Typically, ESG and sustainability measurements fall into four areas.
One area is the nature-based measurement of land and water. It includes carbon stocks and annual change, biodiversity, water extraction, return water quality, contribution to air pollution impacts and changes in land use.
The second common area is GHG emission monitoring to quantity GHG levels, which are reported in terms of CO2 equivalents from operational activities and progress toward reducing GHG targets.
The third is carbon offset measurements, which are often used in a strategy to net out operational emissions that are hard to displace.
Fourth is biodiversity measurement of sustaining life, including species and habitats. Unlike carbon and GHG measurements, there is no widely accepted standard unit to measure biodiversity, though many measures do exist.
4 ways to increase business value for ESG using satellite data
With all of this in mind, here are some ways to use satellite data to build business value from ESG initiatives. They are especially useful for industries that have assets distributed over large geographic areas, including electric utilities, gas utilities, energy, water and wastewater, mining and transportation.
1. Optimize operations
Satellites can provide valuable information on weather, land, and vegetation to optimize day-to-day business operations. For example, electric utility companies can reference satellite images when maintaining their distribution and transmission corridors. Satellite data can also help oil and gas companies plan pipeline routes, detect leaks, identify encroachments and prevent environmental disasters. Other core industries with widely distributed assets, such as mining and transportation, also benefit from regular evaluations of their assets’ health and risks.
2. Evaluate environmental impact
Land mapping helps to monitor the environmental effects of various assets, but it has historically required hiring professional environmentalists to inspect the land on foot or from helicopters throughout multiple days. The cost of these methods limits their scope and how frequently they can be used.
Now, satellites can complete land surveys within just a couple of days for 10-20 times less cost. Water and wastewater organizations are among the beneficiaries of these advancements. Faster and cheaper satellite land surveys can be done more often and for more accurate verification of gains and losses within environmental footprints.
3. Predict and mitigate challenges
Satellite data allows organizations to create accurate, predictive models to minimize their environmental impact by establishing a baseline and measuring progress against biodiversity net-gain goals, as is the case for all land development in the UK.
For example, satellite data allows oil companies to forecast how much environmental damage will come from laying a new offshore pipeline and form their mitigation plans. Similarly, satellite data can help electric power utilities forecast vegetation growth so they can manage rights-of-way, detect invasive vegetation and prevent potential outages and wildfires. The data helps them deploy maintenance crews before equipment and land are compromised.
4. Demonstrate progress to stakeholders
Satellite data also provides a way to measure, improve and report environmental metrics to customers, investors and regulatory bodies.
For example, satellite data helps to monitor carbon, methane and other greenhouse gas emissions to make sure regulatory standards and public commitments are met. Transportation companies and power utilities can use the data to carefully plan and manage routes through wetlands and other sensitive areas that host protected species.
The bottom line for ESG
Ultimately, climate technologies, like satellites, improve the accuracy of information used by core industries, enhancing the effectiveness of their ESG efforts and relationships with communities, customers, employees and investors while simultaneously building a better future for everyone.
ESG-savvy businesses can transform their operations, maintenance, and sustainability in industries with geographically distributed assets by using satellites and AI. With access to a continual, near real-time stream of dependable, critical data, core industries can make more informed decisions and optimize long-term plans, all while reducing costs, improving reliability and achieving their sustainability goals.
Abhishek Singh is the cofounder and CEO of AiDash.
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