ESG Software Market Size
| Study Period | 2019 - 2029 |
| Market Size (2024) | USD 1.09 Billion |
| Market Size (2029) | USD 2.54 Billion |
| CAGR (2024 - 2029) | 18.23 % |
| Fastest Growing Market | Asia Pacific |
| Largest Market | North America |
| Market Concentration | Low |
Major Players
*Disclaimer: Major Players sorted in no particular order |
ESG Software Market Analysis
The ESG Software Market size is estimated at USD 1.09 billion in 2024, and is expected to reach USD 2.54 billion by 2029, at a CAGR of 18.23% during the forecast period (2024-2029).
- The ESG (Environmental, Social, and Governance) software market is witnessing rapid expansion, fueled by tightening regulatory mandates, intensified scrutiny from investors, and an escalating corporate emphasis on sustainability.
- Companies, especially in Europe and North America, are grappling with stringent regulations on ESG reporting. Mandates like the EU Taxonomy Regulation and the Sustainable Finance Disclosure Regulation (SFDR) are driving organizations to embrace robust ESG software solutions, ensuring both compliance and precision in reporting.
- According to a PlanA survey, ESG disclosure policies have surged from 614 in 2020 to 1225 in 2023. This uptick highlights a mounting demand from investors for transparency and accountability, making ESG reporting pivotal for companies aiming to bolster their long-term viability and market stance.
- Organizations are increasingly focusing on innovative data management and analytics. Cutting-edge ESG analytics tools empower businesses to assess their current standing and monitor progress towards new objectives. For example, Downer Group adopted the IBM Envizi ESG Suite to streamline its ESG reporting. This analytics platform monitors the company's GHG emissions and energy usage across 300 sites, all from a unified interface.
- A significant hurdle in the market is the lack of a universally accepted ESG reporting framework. This gap leads to varied methods in measuring and reporting ESG performance across companies. Without standardized metrics, comparisons between organizations and industries become challenging, fostering confusion and inefficiencies in reporting.
- The COVID-19 pandemic has underscored the significance of ESG disclosures for investors. A growing number of institutional investors are now favoring companies with robust ESG practices, perceiving them as more resilient and primed for enduring success. Surveys reveal that over 55% of investors regard the pandemic as a propellant for ESG investing in the years ahead. Concurrently, governments globally are tightening regulations on ESG reporting, with the European Union rolling out directives mandating companies to reveal their sustainability practices.
ESG Software Market Trends
Adoption of AI Drives the Market
- Data analytics empowers companies to establish benchmarks and monitor their progress. Meanwhile, AI and ML not only identify new avenues for ESG enhancements but also recommend actions to boost operational efficiency. A case in point: 8allocate recently assisted a prominent US logistics firm in rolling out a mobile AI-driven app for automatic container label recognition, expediting the company's dispatch processes.
- When paired with on-prem IoT devices and digital twin systems, AI offers deeper insights into facility energy consumption and facilitates real-time optimization. Grid Edge's Flex2X forecasts energy profiles for buildings, pinpointing moments to shift demand to more affordable and eco-friendly times. By integrating data from energy management systems with external sources like weather forecasts, the platform enhances prediction accuracy and optimization suggestions.
- Despite strides, organizations still grapple with DEI (Diversity, Equity, and Inclusion) metrics, from pay equity to racial diversity and inclusivity. Merging data analytics with AI can facilitate real-time data collection and tracking. For example, Diversio leverages data from HR platforms to assess a company's DEI initiatives and measure them against industry standards. This domain presents a significant opportunity for tech-driven ESG solutions.
- Algorithms can gauge a company's risk exposure across various factors, offering early warnings to enhance governance. Datamaran exemplifies this with its AI-driven ESG risk analysis platform, enabling businesses to perform thorough materiality assessments, pinpointing both critical and emerging ESG challenges, and gathering data for essential ESG disclosures.
- AI's capabilities extend to automating a spectrum of compliance tasks, from analyzing regulatory findings to conducting automated audits. In essence, AI streamlines numerous auditing functions, aiding analysts in acquiring, verifying, and reporting ESG data.
North America is Expected to Hold a Major Share of the Market
- Stricter regulations on ESG disclosures are pushing organizations in North America to adopt comprehensive software solutions for compliance. For instance, the U.S. Securities and Exchange Commission (SEC) has proposed climate-related disclosure rules that demand robust reporting capabilities.
- ESG reporting involves generating reports that outline a company's environmental, social, and governance activities. While not yet mandated in the U.S., a growing number of companies are voluntarily sharing this information. Moreover, on March 6, 2024, the SEC finalized rules mandating registrants to include climate-related disclosures in their registration statements and annual reports. Set to take effect on May 28, 2024, these rules will be implemented starting in the fiscal year 2025.
- ESG ETFs have emerged as a favored avenue for investors seeking exposure to ESG stocks. The popularity of ESG ETFs has surged, with over 100 now available in the U.S. Additionally, investors are channeling funds into companies championing social justice, emphasizing diversity and inclusion, and actively working to mitigate poverty and inequality.
- Moreover, the renewable energy sector is poised for rapid growth as governments and businesses pivot towards a clean energy economy. According to the EIA, both production and consumption of renewable energy hit record highs in 2023: production constituted about 9% (8.43 quads) of the total primary energy output, while consumption mirrored this at 9% (8.24 quads) of the total primary energy intake. These surges in recent years are predominantly attributed to significant boosts in solar and wind energy production.
- Investors are not only backing renewable energy firms, like solar and wind power producers, but are also investing in companies innovating and manufacturing renewable energy technologies. Collectively, these factors underscore the heightened demand for ESG software in the region.
ESG Software Industry Overview
The ESG Software market is highly competitive and fragmented, primarily driven by the presence of major players. These key players employ strategies such as mergers, acquisitions, and product innovations to maintain a competitive edge and broaden their global footprint. Key player include Datamaran, Ltd., Ecovadis SAS, NAVEX Global, Inc. and others.
The demand for ESG software is on a significant upward trajectory as organizations increasingly prioritize sustainability and transparency in response to regulatory pressures and investor demands. With substantial growth projected in the coming years, companies are adopting these solutions to enhance their operational efficiency while navigating challenges related to standardization, data quality, and integration complexities. As technology continues to advance, the landscape for ESG software will likely evolve further, presenting new opportunities for businesses committed to sustainable practices.
ESG Software Market Leaders
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Datamaran, Ltd.
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Ecovadis SAS
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NAVEX Global, Inc.
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SAS Institute Inc.
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OneTrust, LLC
*Disclaimer: Major Players sorted in no particular order
ESG Software Market News
- September 2024: Datamaran, one of the prominent player in AI ESG software, announced securing USD 33 million in Series-C financing from Morgan Stanley Expansion Capital. This investment will accelerate the company’s expansion in the U.S. and Europe, while driving innovation in generative AI technology.
- December 2023: Uniqus acquired Goodera’s ESG software. It was making significant investments in augmenting the platform, now renamed ESG UniVerse, with AI-enabled smart search capabilities and features such as value chain assessment, peer benchmarking, and ESG maturity assessment.
ESG Software Market Report - Table of Contents
1. INTRODUCTION
1.1 Study Assumptions and Market Definition
1.2 Scope of the Study
2. RESEARCH METHODOLOGY
3. EXECUTIVE SUMMARY
4. MARKET INSIGHTS
4.1 Market Overview
4.2 Industry Attractiveness - Porter's Five Forces Analysis
4.2.1 Bargaining Power of Suppliers
4.2.2 Bargaining Power of Consumers
4.2.3 Threat of New Entrants
4.2.4 Threat of Substitute Products
4.2.5 Intensity of Competitive Rivalry
4.3 Industry Value Chain Analysis
4.4 Assessment of Impact of macroeconomic trends
5. MARKET DYNAMICS
5.1 Market Drivers
5.1.1 Growing Digitalization Among Enterprises
5.1.2 Growing Demand for Navigating and Mitigating Risks
5.2 Market Restraints
5.2.1 Huge Initial Capital Expenditure
6. MARKET SEGMENTATION
6.1 By Offerings
6.1.1 Solution
6.1.2 Services
6.2 By Deployment
6.2.1 Cloud
6.2.2 On-Premise
6.3 By Enterprise
6.3.1 SMEs
6.3.2 Large Enterprises
6.4 By End-user Vertical
6.4.1 BFSI
6.4.2 IT and Telecom
6.4.3 Manufacturing
6.4.4 Retail and E-commerce
6.4.5 Healthcare
6.4.6 Government
6.4.7 Other End-user Verticals
6.5 By Geography***
6.5.1 North America
6.5.2 Europe
6.5.3 Asia
6.5.4 Australia and New Zealand
6.5.5 Latin America
6.5.6 Middle East and Africa
7. COMPETITIVE LANDSCAPE
7.1 Company Profiles
7.1.1 Datamaran, Ltd.
7.1.2 Ecovadis SAS
7.1.3 NAVEX Global, Inc.
7.1.4 SAS Institute Inc.
7.1.5 OneTrust, LLC
7.1.6 Coolset Inc.
7.1.7 TruValue Labs
7.1.8 Diligent Corporation
7.1.9 Workiva
7.1.10 Persefoni AI
- *List Not Exhaustive
8. INVESTMENT ANALYSIS
9. FUTURE OUTLOOK OF THE MARKET
ESG Software Industry Segmentation
ESG Software is a type of software designed to help organizations manage and measure their environmental, social, and governance (ESG) performance. ESG data can be used to make better decisions about where to allocate resources, how to respond to emerging risks, and what policies or practices to put in place.
The ESG software market is segmented by offerings (solution, services), by deployment (cloud, on-premises), by enterprises (SMEs, large enterprises), by end-user verticals (BFSI, IT and telecom, manufacturing, retail and e-commerce, healthcare, government, other end-user verticals), by geography (North America, Europe, Asia-Pacific, Latin America, Middle East and Africa). The market sizes and forecasts are provided in terms of value (USD) for all the above segments.
| By Offerings | |
| Solution | |
| Services |
| By Deployment | |
| Cloud | |
| On-Premise |
| By Enterprise | |
| SMEs | |
| Large Enterprises |
| By End-user Vertical | |
| BFSI | |
| IT and Telecom | |
| Manufacturing | |
| Retail and E-commerce | |
| Healthcare | |
| Government | |
| Other End-user Verticals |
| By Geography*** | |
| North America | |
| Europe | |
| Asia | |
| Australia and New Zealand | |
| Latin America | |
| Middle East and Africa |
ESG Software Market Research Faqs
How big is the ESG Software Market?
The ESG Software Market size is expected to reach USD 1.09 billion in 2024 and grow at a CAGR of 18.23% to reach USD 2.54 billion by 2029.
What is the current ESG Software Market size?
In 2024, the ESG Software Market size is expected to reach USD 1.09 billion.
Who are the key players in ESG Software Market?
Datamaran, Ltd., Ecovadis SAS, NAVEX Global, Inc., SAS Institute Inc. and OneTrust, LLC are the major companies operating in the ESG Software Market.
Which is the fastest growing region in ESG Software Market?
Asia Pacific is estimated to grow at the highest CAGR over the forecast period (2024-2029).
Which region has the biggest share in ESG Software Market?
In 2024, the North America accounts for the largest market share in ESG Software Market.
What years does this ESG Software Market cover, and what was the market size in 2023?
In 2023, the ESG Software Market size was estimated at USD 0.89 billion. The report covers the ESG Software Market historical market size for years: 2019, 2020, 2021, 2022 and 2023. The report also forecasts the ESG Software Market size for years: 2024, 2025, 2026, 2027, 2028 and 2029.
ESG Software Industry Report
Statistics for the 2024 ESG Software market share, size and revenue growth rate, created by Mordor Intelligence™ Industry Reports. ESG Software analysis includes a market forecast outlook for 2024 to 2029 and historical overview. Get a sample of this industry analysis as a free report PDF download.
