Requiring companies to add data about their environmental impact to financial accounts could greatly expand the market for space-based Earth monitoring services.

Many businesses are already reporting this information as part of environmental, social, and governance (ESG) disclosures they are voluntarily making to attract community-conscious investors and customers. Mandatory disclosure rules in the United States and abroad could put this trend into a higher gear, accelerating demand for satellites that can better monitor a company’s links to greenhouse gas emissions, deforestation, and other metrics that make up their ESG scorecards.

However, the ESG movement also faces significant pushback that has ramped up in recent years from companies, industry-funded groups, and right-wing politicians and activists quick to decry a progressive corporate stance as “woke capitalism.” Space companies also face unique environmental challenges, ranging from the impact of their satellite launches to how they operate in congested orbits.

A lack of regulation to date has led to a confusing mix of competing ESG standards that have reduced the movement to being just a “greenwashing” marketing ploy, according to critics. At the same time, some see rules that would fix this problem as government overreach.

Opponents include SpaceX founder Elon Musk, who called ESG a scam last year after his electric car maker Tesla failed to make a stock index that tracks socially conscious companies.

ESG has been “weaponized by phony social justice warriors,” Musk tweeted, joining a side in an increasingly polarized and charged debate.

Incoming rules

The Securities and Exchange Commission (SEC) outlined plans in March 2021 to put ESG at the core of the U.S. financial market regulator’s agenda.

The SEC proposed rules in March 2022 for mandating certain climate-related disclosures for publicly listed companies.

However, as intense discussions wage on, the regulator is still working on issuing final regulations more than a year later.

The proposed rules would require companies to detail greenhouse gas emissions, disclose information on the climate risks their business faces, and — most controversially — their expenses and investments to deal with climate-related issues.

Republican lawmakers have threatened litigation for what they see as government overreach, and businesses have also expressed concerns about a lack of resources to keep close tabs on these metrics in a challenging economy.

Robert Jackson, who served as an SEC commissioner between 2018 and 2020, told a webinar hosted by carbon accounting firm Watershed in April that he had learned the rules had been pushed back to at least this fall.

The SEC declined to comment on the timing of its rule-making process.

Europe is more advanced in this area and recently strengthened environmental reporting rules for large and listed companies under its Corporate Sustainability Reporting Directive (CSRD). Similar rules for smaller European companies are set to follow, although work is continuing to clarify standards for companies of all sizes.

Resilient trend

“Despite pushback, all signs suggest ESG is very much here to stay and the need for company ESG response and planning is certainly set to increase,” NSR research analyst Sarah Halpin said.

Generally, customers and investors are increasingly attracted to socially conscious businesses despite a vocal backlash against “woke capitalism,” and Halpin said this will push more companies to engage in the ESG movement regardless of home country requirements.

Justyna Kosianka, a senior remote sensing scientist at U.S.-based geospatial and analytics company Ursa Space Systems, pointed to sustained interest in satellite imagery that focuses on environmental topics, particularly illegal fishing, natural disaster response, oil spills, and deforestation.

According to Kosianka, satellite-derived data provides unique benefits for measuring exposure to environmental risks that companies and governments cannot ignore, such as tracking emissions.

“Obviously, some companies and governments want to hide their emissions,” she added, but with “satellite data growing so rapidly, it’s getting increasingly harder to hide.”

Kosianka said she expects the appetite for quantifiable climate data will remain strong, regardless of U.S. regulatory action.

While having rules in place would provide clarity and direction, she said the underlying need stems from a desire by companies to adjust and be prepared — or risk incurring enormous costs.

“For the satellite industry, yes, we need to keep an eye on the regulatory framework, but we also need to remain focused on providing unique solutions.”