Mounting regulatory requirements and growing stakeholder pressure is driving a surge in demand for ESG reporting and data management software, creating a multi-billion dollar market that vendors need to keep up with, according to a report from research firm Verdantix.
Organisations worldwide are recognising the importance of enhancing their sustainability programmes, driving escalated demand for innovative software, says Verdantix.
The report identifies key trends and software needs, while picking out 11 leading vendors in the field: Benchmark Gensuite, Cority, Diligent, IBM, Intelex, Nasdaq, Sphera, UL Solutions, VelocityEHS, Wolters Kluwer and Workiva.
ESG reporting and data management software must aggregate sustainability-related data from all departments to break down silos and facilitate communication with stakeholders such as investors, business functions and the C-Suite, argues the report.
Meanwhile, in the absence of a global framework, corporations are increasingly reporting in alignment with various voluntary reporting standards.
Organisations are transitioning from annual sustainability reporting to more frequent reporting to meet stakeholder demands. To gain a competitive edge, some firms have already begun integrating sustainability data into their financial reports.
A growing number of firms are seeking digital ESG reporting, so software vendors must scale their offerings. This requires providing fast-to-deploy and highly configurable solutions, often with starter packages. Additionally, vendors are adopting pricing models that do not charge for the number of system users.
Software providers are also forming strategic partnerships with complementary vendors to enhance their offerings without significant investment in product development. These partnership help with integrating essential data and insights and expanding into more impact areas, like biodiversity.
Jessica Pransky, principal analyst at Verdantix, says: "As the ESG reporting and data management software market is projected to soar to $4.3 billion by 2027, it is imperative for vendors to proactively stay ahead and remain competitive. With a widening scope of business functions engaged in ESG implementation and a continuously evolving regulatory landscape, agility and adaptability are paramount.
"To meet escalating demand, vendors must deliver fast-to-deploy, scalable solutions that address market trends and cater to the evolving needs of businesses."