Mounting regulatory requirements and increasing stakeholder pressure are fueling a significant rise in demand for ESG reporting and data management software, creating a multi-billion dollar market that vendors must keep pace with, according to a report from research firm Verdantix.
Organizations around the globe are acknowledging the importance of improving their sustainability programs, leading to a surge in demand for innovative software solutions, the report indicates. It highlights key trends and software requirements, identifying 11 leading vendors in the sector: Benchmark Gensuite, Cority, Diligent, IBM, Intelex, Nasdaq, Sphera, UL Solutions, VelocityEHS, Wolters Kluwer, and Workiva.
The report argues that ESG reporting and data management software must aggregate sustainability-related data across all departments to eliminate silos and enhance communication with stakeholders, including investors and executives. In the absence of a global framework, companies are increasingly aligning their reporting with various voluntary standards.
Organizations are shifting from annual sustainability reporting to more frequent updates in response to stakeholder demands. To gain a competitive advantage, some companies have begun integrating sustainability data into their financial reports.
A growing number of firms are seeking digital ESG reporting solutions, necessitating that software vendors expand their offerings. This involves providing quick-to-deploy and highly customizable solutions, often accompanied by starter packages. Additionally, vendors are implementing pricing models that do not charge based on user count.
Software providers are also forming strategic partnerships with complementary vendors to enhance their offerings without heavy investments in product development. These collaborations assist in integrating essential data and insights, as well as expanding into impactful areas like biodiversity.
Jessica Pransky, a principal analyst at Verdantix, notes that “as the ESG reporting and data management software market is forecasted to reach $4.3 billion by 2027, it is crucial for vendors to proactively stay ahead and remain competitive. With an expanding array of business functions involved in ESG implementation and a constantly changing regulatory landscape, agility and adaptability are key.”
To meet increasing demand, vendors must deliver fast-to-implement, scalable solutions that align with market trends and cater to the evolving needs of businesses.