australiaen
The spy in the sky for deforestation

The spy in the sky for deforestation

15-11-2019 | Insight
Robeco has teamed up with a satellite data company to detect deforestation in palm oil plantations.
  • Peter van der Werf
    Peter
    van der Werf
    Engagement Specialist

Speed read

  • Satelligence monitors palm oil plantations around the world
  • Imagery can detect deforestation along with other land use changes
  • Engagement program aims to improve standards at investee companies

The agreement with Satelligence will enable checks to be made on whether forests in Malaysia and Indonesia are being cleared to make way for new palm oil trees. The firm accesses data from satellites that can take high-quality pictures from orbit, allowing ‘before-and-after’ comparisons to be made continuously.

Addressing sustainability issues in the palm oil industry is a major engagement theme for Robeco in 2019, using a combination of enhanced engagement and a screening system to target producers directly. A key benchmark is the amount of land under cultivation that has been certified by the Roundtable on Sustainable Palm Oil (RSPO), a not-for-profit group that Robeco joined in January.

Stay informed on our latest insights with monthly mail updates
Stay informed on our latest insights with monthly mail updates
Subscribe

Seeing is believing

To be completely effective, the engagement program requires proof of how well companies are complying with the objectives, and deforestation can be hard to detect from the ground. Robeco has therefore signed a letter of intent to collaborate with Satelligence, a Utrecht-based company with more than 20 years’ experience in leveraging satellite imagery on deforestation.

How it works: the European Space Agency’s Sentinel-1 satellites scan the ground; with AI, all pixels that underwent change are detected. Vegetation clearing including deforestation is shown in red; intact forests are shown in dark green, and plantations are in light green. Source: Satelligence

“Building on the annual benchmark of palm oil companies as published by the Zoological Society of London’s Sustainability Policy Transparency Toolkit (ZSL-SPOTT), which we use in our engagement program, this project now gives us the ability to develop real time monitoring of the palm oil companies commitments to no deforestation,” says Peter van der Werf, Robeco’s engagement specialist working on the palm oil program.

“By collaborating for this pilot, Robeco can be at the forefront of integrating satellite-derived sustainability metrics into sustainability research to support our investment decisions. Together with Satelligence, we can build a system that can monitor the progress of companies towards 100% RSPO-certified plantations, and drive the transformation to a sustainable palm oil industry.”

The spy in the sky

The imagery comes from satellites operated by the European Space Agency (ESA), the Japanese Aerospace Exploration Agency and NASA, orbiting 700 km above South-East Asia, West Africa and Central and South America.

The Sentinel-1 satellite used in the European Space Agency's Copernicus program. Source: Getty Images

The ESA’s Sentinel-1 satellite, launched in 2014 as part of the Copernicus scientific program, is so powerful it can pinpoint and precisely ‘photograph’ pieces of land five meters in diameter through the clouds. Aside from deforestation, it can detect oil spills, melting sea ice and flooding as part of the EU’s Earth Monitoring program.

The satellites can target different crops subject to sustainability issues, including cocoa, soy and timber. Artificial intelligence is used to enhance the data analysis and keep track of quickly moving events. Continuously updated, it provides a real-time commodity map of the world.

The data can be used to engage with plantation owners, traders, intermediaries and other players in the supply chain, as well as to alert authorities of any criminal activity. The methods were developed in close cooperation with scientists at the Netherlands’ Wageningen University, which specializes in life sciences and natural resources.

Threats to portfolios

“With 2020 around the corner, many companies are struggling to show progress of commitment to ending commodity-driven deforestation in their supply chains,” says Niels Wielaard, Director of Satelligence.

“Deforestation and other climate-related risks could also pose a major threat to investors’ portfolios. So for financial institutions, it is crucial to be at the forefront of making impact measurable and visible.”

“Through our collaboration, we help Robeco identify risks, and enable them to start concrete discussions with companies about where and how they should change their business conduct to prevent deforestation.”

A vital commodity

Palm oil is a vital commodity that is an essential ingredient in many consumer goods, from chocolates to shampoo. As the most land-efficient and versatile vegetable oil, its cultivation as a cash crop is highly profitable. This has led to many plantation owners chasing short-term profits by developing land in unsustainable ways.

Aside from the deforestation threat, the sector has a large carbon footprint and has suffered from poor labor standards. Addressing the problems faced by the industry is a major engagement theme for Robeco in 2019, leading to the publication of a position paper earlier this year.

Logo

Disclaimer

BY CLICKING ON “I AGREE”, I DECLARE I AM A WHOLESALE CLIENT AS DEFINED IN THE CORPORATIONS ACT 2001.

What is a Wholesale Client?
A person or entity is a “wholesale client” if they satisfy the requirements of section 761G of the Corporations Act.
This commonly includes a person or entity:

  • who holds an Australian Financial Services License
  • who has or controls at least $10 million (and may include funds held by an associate or under a trust that the person manages)
  • that is a body regulated by APRA other than a trustee of:
    (i) a superannuation fund;
    (ii) an approved deposit fund;
    (iii) a pooled superannuation trust; or
    (iv) a public sector superannuation scheme.
    within the meaning of the Superannuation Industry (Supervision) Act 1993
  • that is a body registered under the Financial Corporations Act 1974.
  • that is a trustee of:
    (i) a superannuation fund; or
    (ii) an approved deposit fund; or
    (iii) a pooled superannuation trust; or
    (iv) a public sector superannuation scheme
    within the meaning of the Superannuation Industry (Supervision) Act 1993 and the fund, trust or scheme has net assets of at least $10 million.
  • that is a listed entity or a related body corporate of a listed entity
  • that is an exempt public authority
  • that is a body corporate, or an unincorporated body, that:
    (i) carries on a business of investment in financial products, interests in land or other investments; and
    (ii) for those purposes, invests funds received (directly or indirectly) following an offer or invitation to the public, within the meaning of section 82 of the Corporations Act 2001, the terms of which provided for the funds subscribed to be invested for those purposes.
  • that is a foreign entity which, if established or incorporated in Australia, would be covered by one of the preceding paragraphs.
I Disagree