ESG Reporting Software Market To Approach $6 Billion In 2029

ESG Reporting Software Market To Approach $6 Billion In 2029

While many organizations have been conducting sustainability reporting for years, the current push for high-quality data – coming from regulators, investors and other stakeholders – is fuelling rising demand for ESG reporting and data management. In our 2024 market size and forecast report, Verdantix predicts global market spend on ESG reporting software will grow from over $1.3 billion in 2023 to over $5.6 billion in 2029, at a CAGR of 26%. What are some of the key takeaways from our research?

• Some firms have delayed spending on ESG reporting software.
  In our 2023 market size and forecast, we predicted that the ESG reporting software market would grow to over $1.4 billion by 2023, which is approximately $32 million more than our current calculation of the 2023 market. There are several reasons for this discrepancy. First, regulatory delays – such as the US SEC postponing and then staying its climate-related disclosure regulations; as well as some EU countries not yet having transposed the EU CSRD into law – have caused confusion for many firms. Additionally, many organizations are concerned over the global economy and uncertainty over the geopolitical environment, and have delayed purchasing decisions accordingly. Finally, as more and more decision-makers become involved in purchasing decisions, many firms are experiencing longer buying cycles, pushing purchasing decisions into the next year.
  
  
• Regulations, especially the CSRD, are a main driver in purchasing decisions.
  The CSRD will be a significant driver behind ESG reporting software purchasing decisions through 2029, with nearly 50,000 firms in the EU alone and another 10,000 firms outside of the EU subject to reporting requirements. Due to the complex reporting requirements associated with the CSRD – as well as the CSRD’s requirement to have data assured by a third party – many firms will find it difficult to comply with the regulation without a digital solution. Meanwhile, many other jurisdictions, especially those in Asia and North America, are also implementing regulations aligned with the ISSB or other climate-related requirements that will drive purchasing decisions. As a result, we anticipate the fastest growth rate in Europe, followed by North America and Asia.
  
  
• Industries with complex supply chains will see the highest growth, due to increasing regulatory pressures.
  Industries with complex supply chains – particularly manufacturing, and wholesale and retail trade – are expected to have the highest growth rates between 2023 and 2029. Firms in these sectors will also feel the ripple effects of the CSRD, which requires subject organizations to report on metrics throughout their supply chain. They will also experience the impact of other regulations like the US Uyghur Forced Labor Prevention Act and the Australian Modern Slavery Act, both of which require firms to report on social matters in their supply chains.

To learn more about how and why spend on ESG reporting software will increase, see our 2024 market size and forecast report, and stay tuned for our upcoming Smart Innovators report on this market.