ESG compliance will require looking to the stars

What’s happening? Environmental Market Solutions researchers have developed a system using AI, satellite and human rights specialists to find fishing operations globally that potentially use forced labour. The partners say the system identified 100,000 potential victims between 2012 and 2018. They had already studied whether vessels using forced labour behaved differently from those that did not, and initially trawled through Global Fishing Watch data about known forced labour users. The researchers then used Google data and machine learning to find similar behaviour on other vessels. Of 16,000 boats studied between 2014 and 2018 the researchers said up to 26% behaved suspiciously.

Why does this matter? Over the past few years, satellite technology has been responsible for uncovering and monitoring a slew of illegal and unsustainable activities.

Satellite images from 2018 were the first definitive sign of the internment of – and human rights abuses against – Uighur Muslims in China. Similarly, in the environmental sector, satellite data is now widely used to track methane emissions and illegal deforestation and logging activity.

Recent focus on ethical labour and transparency in supply chains means that any businesses knowingly or unknowingly profiting from these activities face scrutiny and potential damage to reputations.

We’ve discussed at length the complexity and inscrutability of global supply networks, and highlighted instances such as the proposed US ban on forced labour targeted at China’s practices in Xinjiang. As we noted then, monitoring and auditing supply chains can be an almost impossible task.

Accelerated development of sensitive satellite technology, however, is a potential solution and may well be essential for companies looking to achieve ESG compliance. Many have already turned to satellites for this purpose. Nestle, for example, utilises satellite imagery of suppliers’ palm oil plantations to identify potential instances of illegal deforestation. In cases where violations are suspected, the company can speak directly with the supplier and issue warnings if everything is not above board.

As satellites get smaller and cheaper, and rocket technology becomes more affordable, an increasing number of businesses will likely have access these services, with those providing these well placed to profit.

Lateral thought from Curation – Satellite technology also presents an opportunity for financial firms to evaluate potential investments and monitor their existing holdings from a sustainability perspective, something that could be particularly important given the rise in popularity of ESG-focused investing.

In June this year, for example, investors from dozens of financial institutions issued warnings about Brazilian holdings after satellite data was published showing the extent of deforestation in the country.

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