ESG Software Market Size, Share & Trends Analysis Report By Type, By Organization Size, By Deployment, By Vertical, By Region, And Segment Forecasts, 2024 - 2030

ESG Software Market Size & Trends

The global ESG software market size was estimated at USD 940.7 million in 2023 and is expected to grow at a CAGR of 17.3% from 2024 to 2030. The market is experiencing robust growth, driven by increasing regulatory requirements, heightened investor scrutiny, and a growing corporate focus on sustainability and ethical governance. Companies are required to disclose their ESG metrics and demonstrate transparency, prompting the adoption of specialized software that facilitates data collection, reporting, and analysis. In addition, the rising awareness of climate change, social justice issues, and the need for robust corporate governance frameworks further propels the demand for comprehensive ESG solutions that help businesses mitigate risks.

Governments and regulatory bodies around the world are implementing stricter regulations that mandate more detailed and frequent ESG reporting by companies. For instance, on January 5, 2023, the Corporate Sustainability Reporting Directive (CSRD) became effective. This directive ensures that investors and other stakeholders can access crucial information to evaluate the impact of companies on both people and the environment, as well as to identify financial risks and opportunities related to climate change and other sustainability issues. In addition, by standardizing the information that companies must provide, the CSRD aims to reduce reporting costs for companies in the medium to long term. Companies falling under the CSRD's scope are required to report in accordance with the European Sustainability Reporting Standards (ESRS).

The complexity and breadth of ESG regulations necessitate robust software solutions capable of handling large volumes of data and diverse reporting requirements. Companies need to collect data from various sources, including internal operations, supply chains, and external stakeholders, and then process this data into coherent, compliant reports. ESG software platforms streamline this process by offering integrated solutions that automate data collection, ensure accuracy, and provide real-time analytics. This not only helps companies stay compliant but also allows them to identify and mitigate potential risks associated with non-compliance, such as fines, legal liabilities, and reputational damage.

The integration of AI and Big Data is a significant growth driver in the ESG software market, transforming the way companies manage and report their ESG metrics. AI and machine learning algorithms enhance the capabilities of ESG software by automating data collection, improving data accuracy, and enabling advanced analytics. This automation reduces the manual effort involved in gathering ESG data from diverse sources, such as internal reports, third-party audits, and public databases.

By streamlining these processes, AI-driven ESG software saves time and resources and minimizes the risk of human error, ensuring more reliable and consistent ESG reporting. For instance, in October 2023, C3.ai, Inc., an Organization AI application software company, announced a new partnership with ESG Book, a sustainability data and technology company. This collaboration merges C3 AI’s advanced AI-enabled ESG application with ESG Book’s extensive sustainability data suite. Therefore, sustainability teams within enterprises are expected to benefit from enhanced data-driven analytical capabilities.

As the frequency and severity of climate-related events increase, businesses are expected to assess, mitigate, and disclose their exposure to climate risks. ESG software solutions are becoming crucial tools for companies to identify potential climate-related threats to their operations, supply chains, and financial performance. These solutions offer refined modeling and analytics capabilities that enable organizations to simulate various climate scenarios, understand their potential impacts, and develop robust risk mitigation strategies. By integrating climate risk assessments into their broader risk management frameworks, companies can make more informed decisions, protect their assets, and enhance their resilience against climate-related disruptions.

In addition, the process of gathering, verifying, and managing ESG data can be labor-intensive and prone to human error. Automation technologies streamline these tasks, significantly improving efficiency, accuracy, and reliability. Automated systems can continuously collect data from various sources, including IoT devices, corporate databases, and third-party providers, ensuring real-time updates and comprehensive coverage. This automation only reduces the administrative burden on companies and enhances the precision of ESG reporting, which is critical for regulatory compliance and stakeholder trust.

Type Insights

The environmental management software segment dominated the market in 2023 and accounted for a 35.7% share of the global revenue. The increasing regulatory pressures and environmental policies set by governments worldwide are compelling organizations to adopt robust environmental management systems. Legislation such as the European Union's Green Deal and the Paris Agreement mandates stringent reporting and reduction of carbon emissions, prompting companies to invest in software that ensures compliance and aids in detailed reporting. This regulatory landscape necessitates advanced tools for monitoring and managing environmental impacts, thereby fueling the demand for environmental management software.

The social management software segment is projected to witness significant growth from 2024 to 2030. The increasing emphasis on corporate social responsibility (CSR) and the need for businesses to demonstrate their commitment to social issues such as diversity, equity, and inclusion (DEI), employee well-being, and community engagement. Companies are recognizing that social performance is a moral imperative and also a critical component of their overall ESG ratings, which can influence investor decisions, brand reputation, and customer loyalty. Therefore, organizations are turning to social management software to effectively track, measure, and report on their social initiatives and outcomes.

Organization Size Insights

The large enterprises segment dominated the market in 2023 and accounted for a 67.4% share of the global revenue due to the integration of advanced technologies such as artificial intelligence (AI), machine learning, and big data analytics. These technologies enable predictive modeling, scenario planning, and risk assessment capabilities that are essential for proactive management of environmental impacts, social practices, and governance frameworks.

The small and medium-sized enterprises (SMEs) segment is projected to witness significant growth from 2024 to 2030. There is a growing awareness among SMEs of the benefits associated with adopting sustainable practices. Many SMEs recognize that integrating ESG considerations into their operations can enhance their brand reputation, attract socially responsible investors, and improve customer loyalty. For instance, in April 2023, Schneider Electric, a French multinational digital automation and energy management company, introduced Zeigo, a new sustainability software ecosystem designed to streamline and expedite climate action for businesses of various sizes. Zeigo complements Schneider Electric’s current sustainability consulting services and enriches its expanding range of digital solutions. Through Zeigo Activate, small and medium-sized enterprises (SMEs) can assess their emissions baseline, establish reduction targets, and accelerate their decarbonization initiatives with access to essential tools and expertise, facilitating a seamless transition from aspiration to implementation.

Deployment Insights

The cloud segment dominated the market in 2023 and accounted for a 70.6% share of the global revenue. Cloud deployment offers unparalleled scalability and flexibility, enabling companies to easily expand their ESG software capabilities as their requirements grow. This scalability is particularly advantageous for organizations managing large volumes of ESG data, as cloud solutions provide on-demand resources that can be swiftly adjusted to accommodate fluctuating needs without the need for significant upfront investments in hardware or infrastructure. For instance, in March 2024, Oracle has unveiled Oracle Cloud EPM for Sustainability, a fresh addition to Oracle Fusion Cloud Organization Performance Management (EPM) aimed at aiding organizations in efficiently measuring and managing sustainability efforts.

This solution empowers business leaders to gain actionable insights for advancing sustainability goals by integrating data, plans, and targets across their enterprise. Moreover, it supports organizations in consolidating diverse data sources through direct connections and file-based uploads, ensuring alignment with International Financial Reporting Standards (IFRS) and Global Reporting Initiative (GRI) standards.

The on-premises segment is projected to witness significant growth from 2024 to 2030. Many organizations, especially those in highly regulated industries such as finance and healthcare, prefer to maintain direct control over their data to ensure compliance with stringent data protection laws and internal security policies. By keeping ESG software on-premises, companies can mitigate risks associated with data breaches and unauthorized access, as they have full oversight and management of their IT infrastructure.

Vertical Insights

The BFSI segment dominated the market in 2023 and accounted for an 18.5% share of the global revenuedue to regulations intensified within the financial industry, with stringent mandates requiring firms to disclose and manage their ESG risks and performance metrics. Regulations such as the EU's Sustainable Finance Disclosure Regulation (SFDR) and similar initiatives globally necessitate robust ESG reporting frameworks, pushing BFSI firms to adopt specialized software solutions. These solutions facilitate comprehensive data collection, analysis, and reporting, ensuring compliance with regulatory requirements while enhancing transparency and accountability in ESG practices.

The IT and telecommunications segment is projected to witness significant growth from 2024 to 2030. The IT and telecommunications industry plays a crucial role in enabling sustainability initiatives across other sectors through technology solutions such as IoT (Internet of Things), cloud computing, and data analytics. ESG software helps these companies monitor and manage the environmental impacts of their products and services throughout their lifecycle, from design to disposal. It enhances their sustainability credentials and also positions them as valuable partners in the broader ecosystem striving towards sustainable development goals.

Regional Insights

The North America regiondominated the ESG software market in 2023 and accounted for a 35.3% share of the global revenue. Technological advancements and innovations in ESG software facilitate market growth in North America. Software providers are continuously developing new features and functionalities to meet the evolving needs of businesses for comprehensive ESG management. These advancements include advanced analytics, AI-driven insights, and real-time reporting capabilities, which empower organizations to make data-driven decisions and improve their overall sustainability performance.

U.S. ESG Software Market Trends

The ESG software market in the U.S. is expected to grow at a significant CAGR from 2024 to 2030.Companies are adopting ESG software to meet changing demands from customers and investors. The software helps improve operational efficiency, enhance stakeholder relations, and maintain a positive brand reputation. This includes satisfying rising demands for information transparency, which affects brand reputation related to ESG and, in turn, revenues.

Asia Pacific ESG Software Market Trends

The ESG software market in Asia Pacific is expected to grow at the highest CAGR of 19.9% from 2024 to 2030.Government support and initiatives aimed at promoting sustainable development are playing a crucial role in driving the ESG software market in the region. Governments across Asia Pacific are introducing regulations, incentives, and frameworks to encourage businesses to adopt sustainable practices and improve ESG transparency. ESG software providers are collaborating with governments and industry associations to develop standardized reporting frameworks and benchmarks, facilitating easier compliance and benchmarking for companies operating across diverse markets in the region.

Europe ESG Software Market Trends

The Europe region is expected to witness notable growth from 2024 to 2030, driven by several key factors. The increasing regulatory environment focusing on sustainability and corporate responsibility. European Union directives such as the EU Taxonomy Regulation and the Sustainable Finance Disclosure Regulation (SFDR) are compelling companies to disclose ESG-related information. This has created a strong demand for ESG software solutions that can help companies track, manage, and report their ESG performance in compliance with these regulations. As companies aim to meet these regulatory requirements, the market for ESG software has expanded across Europe.

Key ESG Software Company Insights

Key players operating in the network emulator market include Datamaran, EcoVadis, NAVEX Global, Inc., OneTrust, LLC, Refinitiv, SAS Institute Inc., Sustainalytics, TruValue Labs, Verisk 3E, and Wolters Kluwer N.V. The companies are focusing on various strategic initiatives, including new product development, partnerships & collaborations, and agreements to gain a competitive advantage over their rivals. The following are some instances of such initiatives.

• In June 2024, Wolters Kluwer N.V. launched CCH Tagetik ESG & Sustainability for Carbon Emissions, a new solution designed to assist companies in reporting and disclosing direct and indirect carbon emissions, including Scope 3 emissions. This initiative aims to help organizations comply with the Corporate Sustainability Reporting Directive (CSRD). The updated offering integrates pre-configured carbon data management capabilities based on the GHG protocol, the globally recognized standards for greenhouse gas accounting. This enhancement is intended to bolster CCH Tagetik’s ESG and sustainability portfolio, supporting finance leaders in accurately tracking emissions and ensuring alignment with relevant ESG regulations and standards.

• In April 2022, EcoVadis collaborated with CRX Markets has to incorporate ESG ratings into its corporate financing offerings, thereby advancing incentives related to environmental, social, and governance (ESG) considerations. Through this partnership, EcoVadis ratings integrate into the CRX Marketplace. This integration allows financing partners to evaluate corporate sustainability using objective criteria, facilitating the provision of financing at rates commensurate with ESG performance. By linking financing terms to a company's ESG ratings, the collaboration encourages businesses to enhance their sustainability practices. This initiative underscores a growing trend of leveraging financial mechanisms to foster ESG improvements throughout supply chains.

ESG Software Market Report Scope

Global ESG Software Market Report Segmentation

The report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2018 to 2030. For this study, Grand View Research has segmented the global ESG software market based on type, deployment, organization size, vertical, and region.

• Type Outlook (Revenue, USD Million, 2018 - 2030)

  • Environmental Management Software

  • Social Management Software

  • Governance Management Software

  • Others

• Organization Size Outlook (Revenue, USD Million, 2018 - 2030)

  • SMEs

  • Large Enterprises

• Deployment Outlook (Revenue, USD Million, 2018 - 2030)

  • On-premise

  • Cloud

• Vertical Outlook (Revenue, USD Million, 2018 - 2030)

  • BFSI

  • Energy and Utilities

  • Manufacturing

  • Healthcare

  • Retail

  • IT and Telecommunications

  • Government and Public Sector

  • Others

• Regional Outlook (Revenue, USD Million, 2018 - 2030)

  • North America

    • U.S.

    • Canada

    • Mexico

  • Europe

    • Germany

    • UK

    • France

  • Asia Pacific

    • China

    • India

    • Japan

    • Australia

    • South Korea

  • Latin America

    • Brazil

  • Middle East & Africa

    • Kingdom of Saudi Arabia

    • UAE

    • South Africa