New Research Shows That Climate Risk Software Market Will Double By 2029

New Research Shows That Climate Risk Software Market Will Double By 2029

Despite slower than expected growth from 2022 until 2024, the climate risk software market is recovering, as disclosure requirements and physical risks grow. Verdantix predicts that global spend on climate risk software will increase from $553 million in 2023 to $1.16 billion in 2029, at a CAGR of 13%. Our research has identified several key drivers fuelling this market growth, with:

• Mandatory climate risk disclosures coming into force across the globe.
  Reporting regulations require firms that have previously neglected climate risk to consider the impacts of climate change. This is an increasingly global phenomenon. The EU Corporate Sustainability Reporting Directive (CSRD) will apply to firms worldwide, while individual countries – such as Australia, Brazil, China, India and Singapore – are also enacting reporting laws. However, some places are seeing delayed or loosened regulations. For example, following the inauguration of President Trump, there is no possibility that the US Securities and Exchange Commission (SEC) will mandate climate reporting, while California’s disclosure regulations continue to face legal challenges. Although many of the firms witnessing the evolution of these regulations will be subject to the CSRD, challenges in the US will delay growth in the climate risk software market.
  
  
• Growing physical risks spurring increased investment in climate risk management.
  From wildfires in Los Angeles to flooding in Spain, recent climate-related hazards have had devastating effects around the world. In addition to tragic losses in communities, businesses have experienced financial impacts to assets, operations and supply chains. These damages will be most pronounced in industries with complex supplier networks and long-lived assets – such as manufacturing, wholesale and retail trade, and utilities – motivating firms in these industries to invest in climate risk software.
  
  
• Software beginning to play a larger role as firms become more familiar with climate risk.
  Many organizations lack the internal expertise necessary to assess climate risk in-house and will initially depend on consultants for support. However, this can become very expensive, particularly when disclosures must be submitted annually. As regulations and growing risks force firms to mature in this area, we expect that they will invest in software as a more cost-effective option.
  
  

To learn more about the drivers and barriers in this market, as well as regional and industry trends, see Verdantix Market Size And Forecast: Climate Risk Software 2023-2029 (Global).