The space ecosystem is rapidly developing, with the UK government and the private sector increasing investment in recent years to stimulate further growth and capture the wave of interest in the opportunities space technology can offer. As a result of the growing space ecosystem, some innovative fintechs’ are seeking to use space technology, particularly satellite imagery, to develop new products and systems to assist with the drive toward a sustainable future in the financial services sector. In doing so, they are also supporting the trend towards transparency in ESG reporting.
Satellites capable of imaging the earth have been around for a long time, but there is a growing trend towards leveraging the data offered by satellites on a wider scale within the financial services sector. There are thousands of satellites orbiting the earth with many of the images open source and easily accessible to use for a wide variety of purposes. In this financial services context, satellite imagery can assist:
- investors conducting site observations to assess levels of economic activity or pollution levels, thereby helping them make fund / investment decisions;
- traders and brokers monitoring certain agricultural commodities to help determine the current state and likely yield, as indicators of commodity value;
- supply chain monitoring such as tracking the flow of goods internationally to help inform decision-making; and
- the writing of insurance business.
The Prudential Regulation Authority now expects certain financial institutions to have measures in place to mitigate climate-related financial risk. Also, an increasing number of businesses are voluntarily choosing to align themselves to ESG frameworks and reporting standards.
The current reported use is in relation to helping businesses meet their ESG reporting obligations, assessing climate change risk and managing activities towards achieving their environmental and net zero commitments. The use of satellite imagery can provide risk insights, such as exposure to extreme weather conditions or geological hazards.
The use of space tech to help understand financial services’ risk factors and underpin transparency reporting is an interesting development in the complementary advancement of various technologies and innovative data uses. Some might say that the sky’s the limit...
If you would like to discuss further any of the details contained in this web legal update please contact Matthew Loader.
This web legal update was written by Matthew Loader and Sam Efiong.