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ESG Digital Solution Launch From EY And Enablon Points To A Big Pivot In 2021

EY’s Climate Change and Sustainability Services practice has announced a new digital solution, built on Enablon’s software, focused on ESG data management and reporting. The joint EY/Enablon ESG solution repackages a broad range of functionality associated with legacy sustainability reporting requirements (GRI, SASB, SDGs) and adds in new capabilities reflecting the need for firms to enhance climate change risk management, conduct more robust materiality assessments and track how projects improve performance against ESG metrics over time. The announcement confirms the central role for EHS software vendors in the development of ESG information architectures that respond to financial markets’ focus on ESG metrics. It also indicates the pivotal role that partners at firms like EY will play in terms of unlocking ESG technology spend.

In 2021, established software vendors in the EHS, product stewardship and GRC markets need to figure out how to pivot their market positioning to be selected as the core system of record for ESG data, risk controls and performance improvement. Why is 2021 the year of the big pivot? Financial markets fully got behind ESG integration and climate change risk management in 2019. But with the pandemic raging in 2020, there was uncertainty about whether the trend would slow or be put in reverse. The opposite happened. MSCI disclosed that it’s FY 2020 Q4 firmwide ESG and climate run rate increased by 53% compared to 2019 to reach $225m. In the same period, assets under management in equity ETFs linked to MSCI ESG and Climate Indexes increased by 208% to $106 billion. The flow of capital into everything ESG is set to continue at pace whether it is from impact funds, SPACs or private equity.

Due to the pandemic, software CEOs haven’t had time to react to this huge market opportunity. So the big pivot is starting now. In the EHS market, Benchmark Digital took the lead in January with their Benchmark ESG messaging. In 2020, EMEX incorporated ESG messaging into its position as did Isometrix. Sphera is connecting enterprise-scale product stewardship and LCA with ESG performance improvements. In the GRC space, NAVEX Global has a specific ESG offering following its acquisition of CSRware in October 2020. Nasdaq Governance Solutions has also launched an ESG reporting application called OneReport. Major players in the GRC market like Diligent Corporation, MetricSteam and SAI Global already commercialize functionality for governance use cases which map to the assessments of ESG ratings providers like Morningstar and S&P Global but to date they have not linked existing capabilities to ESG needs.

The big pivot to ESG has started. But the tech sector has only turned through five degrees. The focus is on positioning and a rebrand of sustainability reporting to ESG disclosures. That’s just the start/ The second half of the year will see new product launches.

To learn more about the fast evolving market for ESG and sustainability solutions register for the Verdantix virtual event ‘Next & Best Practices: Improving ESG Disclosures & Performance’.

ESG ESG Digital Solution Launch From EY And Enablon Points To A Big Pivot In 2021 Verdantix Blog

David Metcalfe

CEO, Verdantix
Verdantix
Verdantix

David is the CEO of Verdantix and co-founded the firm in 2008. Based on his 20 years of experience in technology strategy and research roles he provides guidance on digital strategies to C-level executives at technology providers, partners at private equity firms and function heads at large corporations. His current focus is on helping clients understand their market opportunity tied to ESG investment trends and their impact on corporate sustainability strategies. During his 12 years running Verdantix – including 4 leading the New York office – he has helped dozens of clients grow their businesses through fund raising, acquisitions and international growth. David was previously SVP Research at Forrester and Head of Analysis & Forecasting at BT. He holds a PhD from Cambridge University and also worked as a Research Associate at the Harvard Business School.