Innovation At The Forefront: How Software Vendors Are Advancing ESG & Sustainability Performance

Innovation At The Forefront: How Software Vendors Are Advancing ESG & Sustainability Performance

In just the last 12 months, ESG software vendors offering product traceability, supply chain management and ESG reporting solutions have raised over $500 million and established themselves as powerful catalyst of innovation in the market. As for the future, Verdantix forecasts a fast growth pace in the circular economy digital solutions (CAGR 27%), ESG reporting software (CAGR 30%) and supply chain sustainability software (CAGR 28%) markets, which are expected to reach $1.7 billion, $4.5 billion and $4.3 billion respectively by 2027.

Corporates are facing many challenges when developing and implementing their sustainability strategies, including ESG data availability, limited resources and upcoming reporting requirements. Complex issues require innovative approaches and solutions. In the recent Verdantix ESG & sustainability market insight report, we highlight examples from 10 trailblazing vendors shaking up the ESG and sustainability market. In line with our 2023 predictions, we find that innovations in the market arose from the use of:

• AI for ESG data collection. ESG and sustainability software vendors from a variety of backgrounds are increasingly leveraging AI to collect and analyse data from a variety of sources. It is also utilized to detect anomalies and aggregate data in line with regulatory and voluntary reporting frameworks.
• Blockchain to enhance product traceability. With more stringent product sustainability regulations, corporates need to be able to trace their products throughout the supply chain at a granular level. Blockchain is gaining traction among software vendors as a mechanism to track and collect product information cradle to cradle.
• Geospatial tools to support ESG risk analysis. Software vendors in the ESG and sustainability space are starting to leverage satellite data to support their clients with biodiversity risk analysis, in line with the upcoming Taskforce on Nature-related Financial Disclosures (TNFD) framework.
• ESG data available for detailed benchmarks. In the last 12 months, the availability of publicly listed and private firms’ ESG data has increased. This allows software vendors to develop in-depth benchmark capabilities for corporates to easily compare their ESG performance to that of their peers, and for financial institutions to monitor the performance of their portfolio businesses.
• New methodologies and reporting mechanisms to measure social impact. Measuring the outcomes of social impact is still a challenge to many corporates. New, innovative methodologies are arising to address this issue. Software vendors are developing tools to collect relevant data from their workers through targeted surveys, as well as direct grievances management using instant messages or web tools.

To learn more about innovation in the ESG and sustainability market, and about the 10 trailblazers we have identified, read Verdantix Market Insight: 10 Innovative Vendors Advancing ESG And Sustainability Performance.