From Satellite to Supply Chain: New Approaches Connect Earth Observation to Economic Decisions

why we need more transparent supply chains?

• A growing share of countries’ environmental and social impacts occurs abroad;
• Businesses and shareholders need to identify and evaluate the potential
  environmental impacts and biodiversity loss of their foreign producers;
• Individual consumers increasingly ask for the locations and magnitude of the impacts associated with their choices;
• Contributing to an accountability framework that would trigger higher environmental standards in the specific industry of producing countries.

Main perspectives

To help businesses and governments realize more sustainable supply chains, new approaches are using spatial data and machine-learning techniques to connect Earth observation data to conventional economic tools¹.

Businesses, consumers, and shareholders demand robust data on climate, biodiversity, and resource footprints to inform their economic decisions:

• Microsoft’s carbon-negative pledge;
• Nestle’s blockchain-based supply-chain transparency platform;
• Black Rock’s decision to integrate climate risk into investment analysis.

Latest satellite sensor technologies and hyperspectral image-processing approaches can deliver high-resolution and almost real-time information on a wide range of ecosystem changes on a worldwide scale:

• Crop type and productivity;
• Urban and road expansion;
• Seasonal availability of surface water;
• Deforestation and biodiversity loss.

A game changer when integrating spatially explicit supply-chain information into financial dashboards:

• Assess impact hot-spots within complete supply-chain footprints;
• Choose cost-effective interventions to decrease environmental-impact profile;
• Evaluate investment risk.

Information theory combining multiple layers of spatially explicit model:

• Maximum-entropy models;
• Bayesian methods.

Examples for this approach:

• Linking supply chains to global biodiversity hotspots²;
• Mapping supply chains of tropical-forest risk commodities and their embedded deforestation with company-level detail³;
• Europe’s raw-material footprint and related global impacts⁴;
• Industrial Ecology Virtual Lab⁵.

Industrial-specific initiatives for supply-chain transparency at the producer end (such as the Extractive Industry Transparency Initiative or the Roundtable on Sustainable Palm Oil) are valuable.

At the consumption end of supply chains, a growing share of many countries’ environmental and social impacts occurs abroad.

Individual consumers too are increasingly asking for the locations and magnitude of the impacts associated with their choices.

Better supply-chain transparency can enable an accountability framework that triggers the adoption of higher environmental and social standards in producing regions.