Strategic Focus: Overview Of Investment Activity In ESG & Sustainability Software And Services
Luke Gowland
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Executive Summary
In the ESG sphere, a mixture of regulatory advancements and macroeconomic challenges characterized 2023. On the one hand, pivotal regulatory milestones – such as the EU’s Corporate Sustainability Reporting Directive (CSRD) – underscored the importance of ESG and sustainability matters on the global stage. On the other, macroeconomic challenges cast a shadow over investment and acquisition activities within the ESG and sustainability software and services market. Investors in the US faced further difficulties throughout the year, experiencing unprecedented levels of anti-ESG sentiment, which will likely persist into 2024. Despite a turbulent backdrop, sustainability-related deals continued to materialize, reinforcing the continued importance of ESG and sustainability. This report provides investors and sustainability executives with an overview of merger and acquisition (M&A) and investment activity throughout 2023, delving into the rationale behind acquisitions and investments, before shedding light on anticipated developments for 2024.M&A strategies prioritized five key outcomes
Investment activity focused on pockets of innovation in the market
Market shocks should ease heading into 2024, spurring more investment activity
Figure 2. M&A activity targeting new geographic regions, 2023
Figure 3. M&A activity aimed at expanding services capacity, 2023
Figure 4. M&A activity aimed at strengthening existing software functionality, 2023
Figure 5. Projected spend change on software categories in 2024
Figure 6. M&A activity aimed at broadening software and services capabilities, 2023
Figure 7. Key circular economy investments, 2023
Figure 8. Key ESG and sustainability reporting and data management software investments, 2023
Figure 9. Key supply chain sustainability software investments, 2023
Figure 10. Key carbon management software investments, 2023
Figure 11. Key impact verification investments, 2023
About the Authors
Luke Gowland
Senior Analyst
Luke is a Senior Analyst at Verdantix, specializing in ESG and sustainability reporting software and financial ESG. He advises both technology buyers and software vendor and s...
Kim Knickle
Research Director
Kim Knickle is a Research Director at Verdantix, bringing more than two decades of analyst experience to the evolving world of sustainability. Her current research spans ESG a...
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