Alternative data vendor QuantCube has created a slew of environmental intelligence products using satellite data sourced from the European Space Agency combined with other alternative data sources.
As well as creating four environmental and social economic indicator services, the Paris-based company has also incorporated the new information into its benchmarking and analytical overlays.
The offerings are the fruit of a two-year collaboration with the European Space Agency (ESA) and the French Space Agency (CNES), which gave the company access to its Earth observation data through its business application programme.
Using data beamed from the Copernicus programme’s Sentinel satellites, QuantCube is providing its clients with four environmental indicators at macro-level:
- Global water-stress gauges, utilising optical and radar satellite images of water bodies around the world;
- An urbanisation growth index, derived from studies of optical satellite imagery that track factors indulging vegetation loss;
- Nitrogen dioxide concentrations, an indicator of industrial production levels and pollution; and
- An agricultural index that tracks land use patterns over time.
The data is processed by artificial intelligence software after being harvested from orbiting technology that can take detailed images down to 30 square centimetres on the Earth’s surface. Satellite technology can also identify concentrations of greenhouse gases and pollutants, including carbon dioxide (CO2), nitrogen dioxide (NO2) and sulphur dioxide (SO2). And radar scans can measure water level changes within a 10cm range of accuracy.
QuantCube co-founder and Chief Executive Thanh-Long Huynh told ESG Insight that the new services were a natural extension of the company’s association with its space partners.
“Our objective is to estimate macroeconomic indicators in real time, mixing satellite data as well as our other sources of data, including geolocation data or employment data,” he said. “In fact, we have been estimating economic growth in real time since 2014.”
QuantCube was formed in 2013 to provide economic intelligence such as economic growth, inflation, employment and international trade indicators to financial institutions using geospatial data, and information sourced from social media, transport services, blogs, real estate records and consumer reviews. It also provides analytical tools to capital markets for financial applications such as Asset Allocation and Alpha strategies.
The company applies proprietary artificial intelligence and machine learning software to analyse and interpret its data lake of more than 14 billion end points. QuantCube operates a Macroeconomic Intelligence Platform, which offers real-time visibility into economies via smart indexes.
QuantCube saw value in creating financial models and other tools that leverage the new Environmental Intelligence services.
One of the products the company is creating is a Green Growth Transition Index, which combines QuantCube Economic Intelligence such as its real-time economic growth index with Environmental Intelligence to create sustainable investment strategies.
By combing various satellite data sources, QuantCube can monitor the level of major pollutants emitted by a country (including NO2, SO2 and CO2) but also provide biodiversity indicators by tracking changes in vegetation around the world.
Through this technology Huynh hopes QuantCube, which counts Moody’s Investors Service as an investor, will help fill gaps in the ESG data record.
“We could tell that this sort of data would be useful for financial services clients,” Huynh said. “I think this will benefit financial institutions because it’s about delivering financial performance with a positive environmental impact.”
Another product under development in the future is an environmental value-at-risk (VAR) tool. Based on traditional VAR principles, the new solution enables corporates to calculate what assets are at risk from climate and transition-related factors. “Value-at-risk is very well known in financial markets, but environmental value-at-risk hasn’t existed before now because the data did not exist at the asset level.
“We can use our data to calculate, for instance, how much a company’s activities are at risk from deforestation, the cost of reforestation,” Huynh said.
“Pollution too, because that is going to have a financial impact on the health of people. It helps them and financial institutions look at their balance sheets to see if they have the liquidity to cover their environmental risks.”
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