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Tech Industry Giants Kick Off Growth Strategies Aimed At Sustainability And Decarbonization

As the fog of the pandemic begins to clear tech vendors are figuring out how to position themselves to succeed in the ESG and sustainability market. Amazon announced earlier this week that it had raised $1 billion through its Sustainable Bond Framework to fund projects relating to fleet electrification and sustainable building initiatives. To deliver on its carbon negative by 2030 pledge, Microsoft has announced multiple carbon capture and storage partnerships with the likes of Climeworks, Chevron and Ørsted. This strategic drive into the carbon capture and storage market may offer Microsoft sales upside around data management, business intelligence and IT infrastructure. In September last year Google announced its plan to run all its data centres on clean energy 24/7. The commercial objective is to align with customers’ supply chain decarbonization plans. In April this year, SAP and Accenture announced the creation of new solutions to accelerate progress towards the decarbonization of supply chains. This announcement is the latest in a series of developments that suggest SAP is targeting serious expansion into the sustainability space, with a focus on product supply chain and decarbonization themes. SAP’s Climate 21 initiative, launched in 2020, provides customers with analytics to minimize emissions and reduce their product carbon footprint. In January 2021 Salesforce announced the launch of its Sustainability Cloud with the intention to leverage its platform and partner ecosystem to support thousands of firms with their sustainability goals.

What do these developments mean for the large number of sustainability, climate change, EHS and GRC software vendors who are racing to develop an ESG product offering? Microsoft’s strategy is squarely targeted at solving climate change business problems and forms part of a corporate commitment rather than a product strategy. The firm is, however, well positioned to provide industrial scale data management and analytics capabilities for energy and carbon reduction strategies. This could pose a threat in the future to firms that sell software for enterprise GHG emissions reduction and decarbonization project portfolio management such as ClearTrace, Sinai Technologies and Watershed. Google’s current focus, like Amazon’s, is largely internal and tied to the firm’s own ESG strategy. So no problems for ESG and sustainability start-ups. In fact, Google is trying to position itself as the cloud platform provider of choice for the burgeoning ESG tech community. If Fortune 500 firms get serious about operationalizing an ESG performance improvement strategy, SAP will be on the shortlist due to its ownership of many installed transactional systems. Salesforce is likely to pose a bigger near-term threat to the forty-four ESG, carbon and sustainability management software providers we recently assessed. A portfolio of sustainability and ESG apps rolled out on the force.com cloud platform to thousands of customers would be a powerful play. Pricing for Salesforce carbon accounting starts at $4,000 per organization per month. Entrepreneurs take note…

ESG Tech Industry Giants Kick Off Growth Strategies Aimed At Sustainability And Decarbonization

Connor Taylor

Analyst, Verdantix
Verdantix

Connor is a Technology Analyst in the ESG & Sustainability practice. His current research agenda focuses on emerging software solutions across financial markets, and broader market trends in the ESG space. Connor joined Verdantix in 2021 and has experience in EHS technology sales and development. He holds a B.A from Cambridge University in Anglo-Saxon, Norse and Celtic.