Strategic Focus: Overview Of Investment Activity In ESG & Sustainability Software And Services
27 Feb, 2024
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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.
In 2023, global M&A activity fell to its lowest level in a decade
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
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 1. Five M&A outcomes for software and services vendors
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
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
Environmental Consultants, Next Frontier Capital, Cherry Ventures, Newlight Technologies, Fair Factories Clearinghouse, Atlas Metrics, Accenture, SOUNDWaves, Alcumus, Ghost, SupplyShift, Abatable, Redwood Materials, Highland Europe, Goldman Sachs, EY, Sourcemap, Natwest, SuperCircle, Novisto, Ecosphere+, ClimeCo, TPG Rise, Dealogic, Partech Partners, Ramboll, Lightspeed Venture Partners, Spinnaker Group, Creandum, Grotech Ventures, 9Yards Capital, AMCS, Closed Loop Partners, Green Domus, EQT Group, Tola Capital, KOMPAS VC, CHOOOSE, Vista Equity Partners, Optera, S&P Global, ESG Global, Deepki, Oritain, Climate Innovation Capital, Orennia, The Weather Company, Everstream Analytics, acondas, IBIS Consulting, Taskforce on Nature-related Financial Disclosures (TNFD), Solactive, BlueMark, Domestique, ESG Enterprise, NZero, UBS, Sortera Technologies, Planetary Health, Fleet Challenge Canada, Xpansiv, Shipcloud, RA Capital Management, Schneider Electric, Recycleye, Nexus Circular, Plan A, ESG Flo, Trove Research, DevonWay, ChainPoint, SLR Consulting, Morrow Sodali, GenZero, WSP, HXE Partners, Energize Ventures, Hartree Partners, Kuva Systems, Ulu Ventures, Sylvera, Cority, Carnstone, Pulsora, Cathay Innovation, Novata, Worldly, Wellington Management, Azora Capital, Rho Ignition, Ecometrica, SMBC (Sumitomo Mitsui Banking Corporation), Eden Global Partners, Balderton Capital, DCVC, ERM, Oxy Low Carbon Ventures, BlueNode, SOCOTEC Consulting, Fidelity International Strategic Ventures, SWCA, civity, Fifth Wall, Material Evolution, Radicle Impact, EcoOnline, Africa Matters, Goldman Sachs Asset Management, Inovia Capital, UL Solutions, T. Rowe Price, Reporting 21, CarbonChain, Francisco Partners, EcoAct, Cloverly, Galvanize Climate Solutions, Sphera, Ideagen, Sway Ventures, apexanalytix, Charter Next Generation (CNG), Apex Companies, b:bot, IBM, Cox Enterprises, Hamilton Lane, J.S. Held, SustainCERT, Prewave, ecoSPIRITS, Morgan Stanley, PACER, Nooco, Carbonplace, Attalea Partners, IntegrityNext, Bain & Company, Calibre, Capricorn Investment Group, UBQ Materials, Matter, Persefoni, Measurabl, Planet Mark, Benchmark Gensuite, Deloitte, Eiffel Investment Group, VitalMetrics, Minerva Analytics, MSCI, FigBytes, Watershed, Source Intelligence, Energy Impact Partners, ALO Advisors, EBS Advisory, Phidex, Coho, Greenstone, PwC, 12Return, S2G Ventures, Ampliphi, b2venture, Palmer Environmental Consulting Group, Evolution Markets, Union Square Ventures, NINT
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…
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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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