The Future of ESGTech: Goal 13

Take urgent action to combat climate change and its impacts. This is an excerpt from Finextra’s The Future of ESGTech 2022 report.

Priority target 13.1: Strengthen resilience and adaptive capacity to climatic hazards and natural disasters in all countries.

According to the Norwegian Refugee Council’s Internal Displacement Monitor (IDMC), climate-related disasters displaced 7 million people by the end of 2020. The overall cost of one year of displacement was $20.5 billion in 2020, which came from relocation, education, health and safety, etc.

Fortunately, ESG data is available to help financial services players and fintech companies build their resilience and adaptive capacity to climate change. In June 2021, a collaboration between Copernic Space, Exodus Orbitals and the Lady Rocket Foundation made headlines for using satellite data to map rhino habitats and combat poaching activities across Africa. Basically, their “satellite as a service” and “mission as a service” platform has huge potential to monitor climate-related risks.

With a “satellite carpool license”, purchasers of Copernic Space’s product can access specific satellite images, at preferred times, to, for example, monitor the earth via change detection capabilities.

According to the World Development Report 2021, when a sudden and unexpected climate shock occurs – such as a natural disaster – data is essential to provide valuable, real-time insights into human mobility and call density. “The timeliness of private intent data contrasts with public intent data, which is typically collected at 1, 5, or 10 year intervals and is therefore not always very timely.” The collaboration between Copernic Space and Exodus Orbitals can provide faster access to data by democratizing space.

There are other projects to fill the climate data gap. On the meteorological level, information is now shared in real time between the European Center for Medium-Range Weather Forecasts (ECMWF) and the 37 countries participating in the Regional Integrated Multi-Hazard Early Warning System for Africa and Asia ( RIMES), says the World Development Report. “The Bangladesh Meteorological Department, for example, has increased the number of stations sharing three-hourly observational data from 10 to 32 and provides almost 40 years of historical data. The total number of stations added by all RIMES members is now 500 and is expected to increase to 1,500 soon. This sharing of ESG data should result in a significant improvement in the accuracy of weather forecasts and strengthen our ability to respond to environmental hazards.

Basically, financial institutions can use this ESG data – along with artificial intelligence (AI) and machine learning (ML) tools, such as those provided by the climate intelligence platform, EarthScan – to model the impact of climate change on the assets on which they depend. This is essential for reducing the risks associated with business decisions and fueling coping strategies.

In 2019, the European Bank for Reconstruction and Development (EBRD) launched two new bonds: Climate Resilience Bonds and Green Transition Bonds. Climate Resilience Bonds focus on adaptation to climate change, while Green Transition Bonds focus on economic sectors that depend on the use of fossil fuels to enable their decarbonization trajectories. At COP26, the bank announced its intention to double the mobilization of private sector climate finance by 2025.

Once again, ESG data will play a leading role in ensuring this kind of capital is well placed – and will bring us ever closer to achieving the 13th UN SDG around climate action.

ACTION FOR 2022: Use data to build our resilience and adaptive capacity to climate change.