ESG Reporting Software Market by Component (Solutions, Services), Deployment Type (On-premises, Cloud), Organization Size (Large Enterprises, SMEs), Vertical (BFSI, Government, Public Sector & Non-Profit, Retail) and Region - Global Forecast to 2027
Updated on : May 9, 2023
ESG Reporting Software Market Analysis
The global ESG reporting software market size in terms of revenue was reasonably estimated at $0.7 billion in 2022 and is anticipated to rise to $1.5 billion by 2027, presenting a CAGR of 15.9%. ESG reporting software automates the collection and organization of ESG data to assist businesses in meeting various disclosure requirements and evaluating key performance indicators. ESG reporting is the publication of information about a company's operations in three areas: environmental, social, and corporate governance. To identify growth opportunities and material risks, investors are increasingly incorporating ESG factors into their company analysis. Few driving forces of this market include consistent growth in corporate data volume, consistent throughput of existing applications, spike in amount of credible corporate disclosures.
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ESG Reporting Software Market Dynamics;
Driver: Consistent growth in corporate data volume
Digitalization has offered various benefits and hence calls for efficient resource planning. Several organizations are currently compelled to store digitalized data securely to improve efficiency at a lower cost. Hence, a cost-effective and efficient cloud-based information management infrastructure offers a feasible option in such scenarios. It offers advantages such as minimal IT infrastructure support and swiftly leveraging the cloud-based data across organizations. An improved financial performance of an organization due to ESG becomes a greater marked factor in the longer sustainability run. Per a report published Oct 2021, ESG data spending is growing at 20% Y-o-Y.
Restraint: Huge initial capital expenditure
Higher expenditure is required to replace existing infrastructure with EHS (Environment, Health & Safety) infrastructure. Therefore, a large amount of capital is required inevitably for infrastructure investments in EHS solutions, which ultimately limits the growth of the global investor ESG software market. The difficulty in integrating ESG software with the ERP systems of enterprises is another major and significant challenge in the market. ESG standards are involved in most of the operational activities of an enterprise across vertical and regions. However, the advantages of EHS standards can be achieved by integrating them with an ERP system. Having said that, this integration is challenging all the way more, as the IT infrastructure (design and structure) of a company might not support the investor ESG software.
Opportunity: Climate stress testing to gain traction among financial services organizations
Major financial institutions and policymakers have begun to acknowledge the associated long-term threat to financial stability. They’re also starting to recognize the critical and crucial role that financing will play in facilitating the low-carbon transformation or transition and ensuring the climate resiliency of the economy. Increasingly, based on the research findings of the Network for Greening the Financial System (NGFS), central banks have commenced incorporating climate risk as a stress testing feature for banks and insurers. The European Central Bank’s economy-wide climate stress testing in 2021 delivered the need for banks to enhance assessment of their exposure to both climate transition risks and physical risks in order to proactively manage and tackle them. For instance, in the US, the Federal Reserve is calculating the implications of climate-related risks for financial institutions and the financial system. China, on the other hand, has been evaluating measures of incorporating climate change risk in its stress testing of financial institutions. A larger portion of the work on climate stress tests comes from collaborative work globally by central banks. Insurance regulators are also incorporating parallel steps to integrate sustainability, climate risks, into their judicious frameworks.
Challenge: Turning net-zero pledges into nearby-term action
The number of government and large-sized companies that have set goals to reach net zero emissions by 2050 has grown rapidly. But these commitments often contained this setback of interim emission reduction targets or plans to prevent/curb indirect emissions that happen along the supply chain. In 2022, it is estimated that pressure from shareholders and other stakeholders will rise on those entities, organizations in order to develop concrete, near-term plans and begin to act to address emissions across the full value chain. With stakes high, investors will likely demand more than merely setting long-term climate commitments. It’s forecasted that governments and companies will have to provide credible, viable near-term milestones on their path to decarbonization. Again, moving beyond the established focus on emission reductions, the spotlight will extend to how these entities manage exposure to physical climate risks, including the presence and adequate design followed by implementation of adaptation and resiliency planning.
Based on organization size, SMEs segment to grow at higher CAGR in the ESG Reporting software market during the forecast period.
ESG initiatives have also been shown to improve efficiencies, lower costs, and boost employee productivity among SMEs. While mandatory ESG regulation is slowly being adopted, SMEs can get ahead of the curve by identifying relevant voluntary frameworks and matching their ESG priorities to best practice. This allows them to capitalize on the head start they have over slower-moving competitors. Businesses could begin with world-renowned frameworks like the Global Reporting Initiative (GRI), which assists businesses in measuring a variety of ESG issues ranging from carbon emissions to human rights and compliance. Transparency is a key trait of ESG.
Based on vertical, BFSI segment to grow at the highest CAGR during the forecast period
Businesses and economies are constantly confronted with sustainability challenges such as climate change, social outbreaks, health crises, and corporate governance. As a result, the risk for BFSI firms and capital invested as financial support (loans, investment services, and so on) to BFSI customers increases. ESG factors have been incorporated into BFSI firms' business processes. Previously, adoption was primarily focused on risk and compliance, operational and process efficiencies, and now even integrating ESG into product innovation to drive purpose. The financial services industry has seen a significant increase in the use of ESG. E.g., BFSI firms have shifted their focus away from CSR and toward a more focused ESG agenda, embracing integration to develop sustainable practices and purpose-driven best practices to meet sustainability goals. Climate change, rising temperatures, and an increase in weather-related disasters have compelled BFSI firms to reconsider their approach to mitigating climate risk in their portfolios. The firms constantly assess their investment, lending, and other critical operational policies. To integrate ESG performance factors and assess their customers' financial performance.
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North America to grow significantly during the forecast period
The region has witnessed a growing adoption of ESG reporting solutions with industrialization, as the world is moving towards industry 4.0. The regional market has been steadily showing positive trends as several companies and industries are adopting ESG reporting software solutions and services at various levels as a part of their strategy to sustain in the market and increase their productivity. Adoption of technologically advanced mobile devices is driving the market in the region as individuals and enterprises are technologically advanced. It has been statistically inferred that this region has increasingly critical importance of transparent, accurate, and comparable ESG data and analytics, predominantly for the financial industry.
Key Market Players
The ESG Reporting software market is dominated by vendors such as Wolters Kluwer (Netherlands), Nasdaq (US), PwC (UK), Workiva (US), Refinitiv (UK), Diligent (US), Sphera (US), Cority (Canada), Intelex (Canada), Greenstone (UK), Novisto (Canada), Emex (Ireland), Enhelix (US), Anthesis (UK), Diginex (Hong Kong), Bain & Co. (US), Keramida (US), Isometrix (US), Accuvio (acquired by Diligent) (US).
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|
Report Metrics |
Details |
|
Market size value in 2022 |
$0.7 billion |
|
Revenue forecast in 2027 |
$1.5 billion |
|
Growth Rate |
15.9% CAGR |
| Market size available for years | 2018–2027 |
| Base year considered | 2021 |
| Forecast period | 2022–2027 |
| Forecast units | Billion (USD) |
| Segments covered | Component, deployment type, organization size, vertical and region |
| Geographies covered | North America, Asia Pacific, Europe, Middle East & Africa, and Latin America |
| Companies covered | Wolters Kluwer (Netherlands), Nasdaq (US), PwC (UK), Workiva (US), Refinitiv (UK), Diligent (US), Sphera (US), Cority (Canada), Intelex (Canada), Greenstone (UK), Novisto (Canada), Emex (Ireland), Enhelix (US), Anthesis (UK), Diginex (Hong Kong), Bain & Co. (US), Keramida (US), Isometrix (US) |
This research report categorizes the ESG Reporting Software market based on Component, deployment type, organization size, vertical and region.
Based on Component:
- Solutions
- Services
Based on Deployment type:
- On-premises
- Cloud
Based on Organization Size:
- SMEs
- Large Enterprises
Based on Vertical:
- Banking, Financial Services, and insurance
- IT and ITeS
- Government and Public Sector
- Manufacturing
- Retail and Consumer Goods
- Healthcare and Life Sciences
- Energy and Utilities
- Other Verticals
Based on Regions:
-
North America
- US
- Canada
-
Europe
- UK
- Germany
- Rest of Europe
-
Asia Pacific
- China
- Japan
- Rest of Asia Pacific
-
Middle East & Africa
- KSA
- UAE
- Rest of Middle East & Africa
-
Latin America
- Brazil
- Rest of Latin America
Recent Developments
- In May 2022, PwC and Sphera formed an alliance to accelerate scale-up of leading ESG management platform. This alliance aims to leverage Sphera's track record of successful ESG platform customer deployments and PwC's proven technology and strategy consulting capabilities to rapidly expand the Sphera customer base, expand the use of the Sphera platform's suite of capabilities, and create a stronger ESG digital ecosystem for its customers.
- In April 2022, Wolters Kluwer launched version 9.4 of the Enablon Vision Platform, which includes enhancements that will allow for greater collaboration and integration, as well as improved communications and mobility. It enables organizations to work together in new ways to manage risk It is built on a foundation that is intended to provide a comprehensive 360° view of risk by breaking down silos between EHS, risk, sustainability, and compliance; integrating safety, risk, and operations processes; connecting workers via mobility; and predicting and preventing incidents.
- In June 2021, Nasdaq launched its ESG Data Hub, the most recent addition to Nasdaq's growing suite of products aimed at assisting investors in making sustainable investment decisions. The new platform connects investors with expert led ESG data sets from leading providers in a variety of areas, including gender diversity, carbon emissions, and climate risk, providing detailed and actionable intelligence on companies' ESG profiles.
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The study involved 4 major activities in estimating the current size of the ESG Reporting software market. Exhaustive secondary research was done to collect information on the market, peer market, and parent market. The next step was to validate these findings, assumptions, and sizing with the industry experts across the value chain through primary research. Both top-down and bottom-up approaches were employed to estimate the complete market size. Thereafter, market breakup and data triangulation were used to estimate the market size of segments and subsegments.
Secondary Research
The market size of companies offering ESG Reporting software was derived based on the secondary data available through paid and unpaid sources by analyzing the product portfolios of major companies in the ecosystem and rating the companies based on their product capabilities and business strategies. In the secondary research process, various sources were referred to for identifying and collecting information for the study. Secondary sources included annual reports, press releases, and investor presentations of companies and product data sheets; white papers; journals; certified publications; and articles from recognized authors, government websites, directories, and databases.
Secondary research was majorly used to obtain the key information related to the industry’s supply chain, the total pool of key players, market classification, and segmentation according to industry trends to the bottom-most level, regional markets, and key developments from the market and technology-oriented perspectives; all of which were further validated by primary sources.
Primary Research
In the primary research process, various primary sources from the supply and demand sides were interviewed to obtain qualitative and quantitative information on the market. The primary sources from the supply side included various industry experts, including Chief Experience Officers (CXOs); Vice Presidents (VPs); directors from business development, marketing, and product development/innovation teams; related key executives from ESG Reporting software vendors, industry associations, and independent consultants; and key opinion leaders.
Primary interviews were conducted to gather insights, such as market statistics, latest trends disrupting the market, new use cases implemented, data of revenue collected from products and services, market breakups, market size estimations, market forecasts, and data triangulation. Primary research also helped in understanding various trends related to technology, component, deployment, and region. Demand-side stakeholders, such as Chief Information Officers (CIOs), Chief Technology Officers (CTOs), Chief Security Officers (CSOs), the installation teams of governments/end users using ESG Reporting software solutions, and digital initiatives project teams, were interviewed to understand the buyer’s perspective on suppliers, products, service providers, and their current use, which would affect the overall ESG Reporting software market.
All possible parameters that affect the market covered in this research study have been accounted for, viewed in extensive detail, verified through primary research, and analyzed to get the final quantitative and qualitative data. Following is the breakup of primary respondents:
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Market Size Estimation
The top-down and bottom-up approaches were used to estimate and validate the size of the ESG Reporting software market and various other dependent subsegments. The research methodology used to estimate the market size included the following:
- The key players in the market were identified through secondary research, and their revenue contributions in the respective countries were determined through primary and secondary research.
- This entire procedure included the study of the annual and financial reports of top market players and extensive interviews for key insights from industry leaders, such as Chief Executive Officers (CEOs), VPs, directors, and marketing executives.
- All percentage splits and breakups were determined using secondary sources and verified through primary sources.
Data Triangulation
With data triangulation and validation through primary interviews, the exact value of the overall parent market size was determined and confirmed using this study. The overall ESG Reporting software market size was then used in the top-down procedure to estimate the size of other individual markets via percentage splits of the market segmentation.
Report Objectives
- To describe and forecast the global ESG Reporting software market based on component (solutions and services), business function, organization size, vertical, and region
- To forecast the market size of regional segments: North America, Europe, Asia Pacific, the Middle East & Africa, and Latin America
- To strategically analyze the market’s subsegments with respect to individual growth trends, prospects, and contributions to the total market
- To provide detailed information related to major factors (drivers, restraints, opportunities, and challenges) influencing the growth of the market
- To analyze the opportunities in the market for stakeholders and provide details of the competitive landscape for major players
- To comprehensively analyze the core competencies of key players
- To track and analyze competitive developments, such as mergers and acquisitions, new product developments, and partnerships and collaborations, in the market
Available Customizations
With the given market data, MarketsandMarkets offers customizations as per the company’s specific needs. The following customization options are available for the report:
Company Information
- Detailed analysis and profiling of additional market players up to 5
Generating Response ...
Growth opportunities and latent adjacency in ESG Reporting Software Market