“Most questions about climate change haven’t been answered in the muni market,” Stern said. “We’re just in the very beginning stages of getting our heads around the degree of risk that climate change poses to various issuers.”
Other financial markets could benefit from the spatial data too. Investec Asset Management, a South African asset management company, teamed up with the WWF - World Wide Fund For Nature on a report in 2019 about the potential to use spatial data as part of sovereign debt investing decisions. Satellite imagery could be used to help verify adherence to environmental policies, the report said.
Beth Burks, an associate director in the sustainable finance group at S&P, said the company plans to apply similar analysis to other credit markets, though she declined to say where.
“Where we go next is to try and increasingly experiment with these techniques in other areas of credit to broaden that capability,” she said. “We’re looking to really track this space.”
This article was provided by Bloomberg News.