Global ESG-Focused Software Market Size (2024 – 2030)

The assessment of the Global ESG-Focused Software Market for the year 2022 reported a valuation of $0.75 billion, with a forecasted expansion to $2.29 billion by 2030. During the forecast period spanning 2024 to 2030, the market is anticipated to grow at a Compound Annual Growth Rate (CAGR) of 15%.

Industry Overview

As organizations progress towards decarbonization, the necessity for precise, dependable, and consistent data to monitor advancements is on the rise. Data analytics tools that enhance ESG reporting and performance are facilitating this endeavor. Software developers are crafting sustainability data and analytics systems tailored to meet audit and assurance requisites. Users are gravitating towards software platforms that present data formats conducive to assembling precise greenhouse gas (GHG) inventories, reflecting recent determinations of emission boundaries.

The demand is soaring for software offering comparable Key Performance Indicators (KPIs), a comprehensive ecological footprint, and global compliance. Normative, a company specializing in automating carbon reporting, is actively promoting its investor ESG software, which assesses the ESG performance trajectory of firms. A growing cohort of asset owners is embracing ESG initiatives, with investment fund managers anticipated to follow suit. This dynamic explains the projected market expansion of investor ESG software to reach US$ 2.3 billion by 2030. Companies within the investor ESG software sector offer platforms for calculations grounded on the Greenhouse Gas Protocol (GHGP), adept at delineating an organization's direct emissions.

Impact of COVID-19 on the Industry

In the aftermath of the COVID-19 pandemic, investors are anticipated to pivot towards addressing Environmental, Social, and Governance (ESG) concerns, endeavoring to fill the gaps left by the crisis. These developments are expected to translate into prospective revenue avenues for participants in the investor ESG software market across the forecasted period. Enterprises, irrespective of size, are cognizant of the social facet of ESG, with the green bond market poised for further expansion as climate change ascends to the forefront of corporate agendas. The investor ESG software industry is poised for significant transformation with the infusion of novel technologies, methodologies, and market players, heralding a renewed emphasis on ESG integration underpinned by data.

The COVID-19 pandemic has wrought havoc across multiple sectors, compelling governments worldwide to enforce stringent restrictions on vehicular and human mobility. The resultant economic downturn, triggered by travel bans, widespread lockdowns, and business closures, has taken a toll on economies and enterprises globally. The imposition of lockdowns has curtailed the production of goods, commodities, and services, leading to diminished operations across sectors such as manufacturing, automotive, semiconductor & electronics, oil & gas, mining, and aviation. Governments worldwide have instituted lockdowns as a measure to curb the contagion's spread.

Market Drivers

Growing impetus to tackle environmental concerns propels market sales

In recent years, various enterprises, government bodies, investors, and stakeholders have intensified their focus on ESG investments to address a spectrum of issues encompassing climate change, environmental degradation, social inequality, and discrimination. Consequently, there is a burgeoning shift towards investor ESG software adoption. Many institutional investors eschew stocks that do not align with Environmental, Social, and Governance (ESG) criteria, auguring a surge in demand for ESG software.

Surge in adoption of investor ESG software for investment deliberations fuels market growth

Post the global financial crisis of 2008, ESG considerations have emerged as a prevalent factor in stock market investment deliberations, constituting a pivotal facet of long-term sustainability. ESG factors in elements such as long-term returns, risk mitigation, and accountability within investment decisions. The anticipated rise in the need for investor ESG software is underpinned by this trajectory.

Mandated adherence to ESG indicators propels market traction

Numerous enterprises are mandated to monitor and report their environmental performance, adhering to environmental, social, and governance (ESG) standards alongside corporate social responsibility (CSR) norms. Consequently, these enterprises are swiftly adopting investor ESG software, thereby enhancing market sales potential. The integration of ESG data into investment decision-making stands to benefit society, the environment, and ESG investors, portending a future surge in the utilization of investor ESG software.

Market Restraints

Predominance of companies falling short of ESG criteria

The stringent ESG analysis often screens out a majority of market players. Most companies aligning with ESG criteria tend to be large-cap enterprises, posing challenges for investors seeking to diversify portfolios based on ESG analysis. This could potentially act as a market constraint within the ESG software market.

Global ESG Software Market - By Components

• Software’s
• Services

Within the investor ESG software market, the segmentation is based on two key components: software and services. In the recent year, the software segment held a predominant share of the market. The appeal of investor ESG software lies in its ability to aid enterprises in mitigating and circumventing various risks associated with their assets, investments, and operational activities. Increasingly, businesses are mandated to monitor and disclose their environmental performance, alongside adhering to standards of environmental, social, and governance (ESG) as well as corporate social responsibility (CSR). Consequently, the rapid adoption of investor ESG software among these enterprises is enhancing the market's potential for sales growth.

Global ESG Software Market - By Enterprise Size

• Large Corporations
• SME’s

The investor ESG software market categorizes its offerings according to enterprise size, distinguishing between large corporations and small to medium enterprises (SMEs). Projections indicate that SMEs are poised to exhibit a more accelerated growth rate during the forecasted period.

Global ESG Software Market - By Region

• North America
• Europe
• Asia-Pacific
• Latin America
• The Middle East and Africa

The regions that encompass the global ESG software market include North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa. In Europe, Invest Europe, the pan-European trade association for the private equity industry, has played a significant role in heightening awareness and fostering the convergence of responsible investing with environmental, social, and governance considerations among its member entities. Europe's distinction as a global leader in the ESG realm stems from its robust regulatory and legal frameworks. The EU Action Plan and the Sustainable Financial Disclosure Regulation (SFDR) have propelled sustainable finance from a secondary concern to a central focus within the European fund industry. Notably, 50 of the top 100 asset managers have introduced dedicated ESG-labelled funds or funds focused on sustainable investments. The United Kingdom leads with 80% of asset managers, followed by Europe with 73%, compared to the United States' 44%. These figures underscore the Eurocentric nature of sustainable investment, attributed to the European Union's legal stance on climate change and the progressive views of its populace.

In the Asia-Pacific (APAC) region, increasing governmental initiatives have significantly influenced ESG investing, thereby augmenting the utilization of investor ESG software. Noteworthy among these initiatives is the mandate by the Chinese government for listed companies to disclose information by the end of 2021, initially set for 2020. Additionally, President Xi Jinping's commitment for China to achieve carbon neutrality by 2060 has hastened the transition toward a low-carbon economy. As governments across nations enact measures to promote sustainable investments, the adoption of technology for thorough analysis is pivotal to the growth of the investor ESG software industry, consequently driving its market expansion.

Global ESG Software Market - Companies

The significant players in the global ESG software market include:

1. Accueilio
2. Dynamo Software, Inc.
3. Enablon
4. EnHelixInc
5. Fincite GmbH
6. FactSet Research Systems Inc.
7. GOBY
8. Greenstone+ Ltd
9. Refinitiv
10. WeSustain GmbH
11. Esko

Recent Developments in the Global ESG Software Market

1. Business Partnership: In 2021, Accuvio announced a strategic collaboration with the Sustainability Accounting Standards Board (SASB), a non-profit organization setting standards for corporations to disclose crucial sustainability information to their investors.
2. Product Launch: March 2021 witnessed the launch of an ESG management and reporting solution by Enablon and EY, built on Enablon's cloud software platform. This solution aims to assist enterprises in managing and reporting ESG data comprehensively.
3. Business Expansion: Workiva Inc. expanded its cloud platform capabilities in 2021 to address the evolving landscape of ESG reporting. The enhanced platform offers a tailored ESG solution to help organizations navigate this dynamic sector effectively.