Insights from the WWF and World Bank Report on Spatial Finance
In anticipation of the Sustainable Finance Live event—hosted by Finextra Research and Responsible Risk—the World Wildlife Fund (WWF) and The World Bank have unveiled a report that emphasizes the potential advantages of spatial finance for the financial sector. This emerging discipline aims to enhance ESG (Environmental, Social, and Governance) data streams and presents a framework for a comprehensive taxonomy.
The WWF-World Bank report synthesizes use cases and case studies gathered from industry leaders, startups, and financial data providers. It highlights the pivotal role of environmental non-profit organizations as essential data custodians. By leveraging this data, the sector can achieve greater transparency and accountability, thereby fostering initiatives that protect ecological systems and bolster global economic resilience.
Spatial finance is defined within the report as the independent evaluation of the geographical positioning of a company’s or country’s assets and infrastructure through a combination of ground data, remote sensing, and modelled insights. This innovative approach has the potential to improve quantitative ESG insights significantly.
At its core, spatial finance assesses "asset data," which includes the locations of facilities such as factories, mines, and retail outlets, relative to "observational data" encompassing environmental, social, and governance variables. This information can then be integrated to provide relevant insights across various financial applications, from project financing to sovereign debt assessments.
The report identifies several significant challenges thwarting the mainstream adoption of spatial finance, including insufficient regular and detailed asset-level data, gaps in supply chain information, and inadequate integration of environmental data in financial frameworks. It calls for the financial industry to foster robust dialogue with data experts to create effective solutions.
The findings and implications of this report will be the focus of discussion during the third Sustainable Finance Live co-creation workshop titled "Re-imagining Risk Modelling for Sustainable Finance," set to take place virtually on December 8th. For additional details and registration, please visit Sustainable Finance Live.