Spatial Finance

From Open Risk Manual

Definition

Spatial Finance is a geospatial-driven approach designed to provide ESG relevant insights into specific commercial assets, companies or portfolios [1]

Practices

  • Spatial finance concerns the accurate Physical Location and definition of Ownership of a commercial asset (i.e. Capital Goods such as factories, mines, fields, ships, or Real Estate) known as Asset Data.
  • Using different data approaches in combination, such as Geographic Information Systems (GIS) and remote sensing it aims to to assess the asset against observational data, such as environmental, climate, governance and social variables.
  • Sub-asset monitoring (e.g., power smart meters) or voluntary reporting (e.g. ESG company reports) can be integrated for further insights. Merging results of multiple assets at the subsidiary, parent company, portfolio or national, or sector level, provides insights at scales relevant to different financial applications, ranging from Project Finance to Sovereign Debt.
  • For a company whose environmental impact is primarily created through its supply chains, its footprint can be defined by running a spatial finance assessment that includes all the suppliers' assets as well as its own direct assets. For example, understanding the footprint of a major car manufacturer willl involve a spatial finance assessment of the car manufacturer’s physical assets, their factories, headquarters etc., and a second assessment on their supply chain assets.


References

  1. Spatial Finance: Challenges and Opportunities in a Changing World, 2020 International Bank for Reconstruction and Development / The World Bank

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