Despite Setbacks, The Carbon Management Software Market Is Growing

Despite Setbacks, The Carbon Management Software Market Is Growing

Demand for carbon management software is increasing as more and more corporates turn their attention to climate risks. From setting net zero targets to reporting on and reducing GHG emissions, firms worldwide are looking for help in their carbon management activities. Software has a vital role to play and can support a wide variety of use cases. In the 2023 market size and forecast report, we calculated the global carbon management software market to be worth $407 million in 2022, and forecast a CAGR of 20% until 2028.

Firms worldwide are choosing to report on their carbon emissions and many that do not currently disclose will be forced to do so under a wave of new policies – such as the EU Corporate Sustainability Reporting Directive and the anticipated climate rules from the US SEC. Combined with rapid acceleration in net zero target setting and growing ambition to decarbonize, these climate risk disclosures – both voluntary and mandatory – are driving growth in the carbon management software market.

Despite growing interest in carbon management software, the market is not immune to global shocks. Comparing a similar Verdantix report from last year to our recent study, the 2022 market size that we previously predicted is nearly identical to what we observed in the new research. However, we are now predicting slower growth in the short term. Verdantix expects that, facing the threat of recession and high inflation, corporates will have increased spending by the end of 2023 to a lesser degree than previously forecasted. Furthermore, as the SEC is slow to roll out its regulations and momentum for long-term sustainability initiatives wanes, businesses are dragging their feet when it comes to spending money on carbon management.

We expect that, once the global economy recovers, pressure will be on to measure, report and reduce emissions. At that time, software providers must be ready to meet the diverse and complex carbon management use cases that corporates demand, such as tracking Scope 3 emissions. Assuming that these capabilities are well developed, we predict that growth in the carbon management software market will accelerate rapidly. By 2028, the market will be worth $1.2 billion, as firms from all regions of the world and across diverse industries rely on software to manage and reduce their carbon emissions.