ESG reporting software market is anticipated to grow at a significant CAGR of 10.7% during the forecast period (2024-2031). The market growth is attributed to the increasing integration of loT sensors and real-time data feeds, that allow enterprises to monitor their ESG performance continuously. Additionally, companies are using ESG reporting tools to show their commitment to environmental stewardship in response to the growing sustainable investing in the private sector driving the growth of the global ESG reporting software market.  According to the Atlantic Council, in June 2023, the rise of sustainable investing in the private sector boosted sustainable development and ESG priorities. Moreover, sustainable investing, mostly in renewable energy, was the fastest-growing Foreign Direct Investment (FDI) theme in 2021 with 70.0% directed to developing countries. Up until 2021, financial markets have also experienced large shifts toward sustainable investing, with ESG fund issuance increasing by 53.0% to $2.7 trillion in 2021.

Market Dynamics

Increasing Expansion of ESG Data Quality and Analytics

The development of ESG data analytics and quality - new areas of measurement and openness. Companies will undoubtedly need a procedure to generate high-quality, tenable ESG data that is more in line with financial reporting standards as a result of increased legislation and investor pressure. A company's ESG performance is only as good as the quality of its data for investors. Poor data quality can lead to erroneous reporting, a lack of openness, and even criticism from stakeholders if actions are thought to be untrustworthy. Investors can guarantee the accuracy and non-misleading nature of the ESG information by insisting on data transparency. Therefore, major end-user industries are highly adopting such solutions to show transparency in their business. To meet the growing demand for ESG software & solutions, in March 2022, ESG Data Services Inc. announced the release of ESG Analytics, a next-generation AI-powered ESG data, analytics, and research platform. ESG Analytics is a web-based solution and API that uses broad-based alternative data sources and AI to uncover risks and opportunities in the ESG practices of countries, companies, and exchange-traded funds (ETFs). 

Market Segmentation

• Based on the offering, the market is segmented into software and services.

• Based on the deployment, the market is segmented into on-premises and cloud.

• Based on the vertical industry, the market is segmented into BFSI, government, public sector, & non-profit, manufacturing, food & beverages, retail & consumer goods, energy & utilities, and other (transportation and logistics).

Software is projected to Hold the Largest Segment

The software segment is expected to hold the largest share of the market. The primary factors supporting the growth include businesses' high use of ESG software to gather, examine, and present information on various environmental parameters, including waste production, energy and water use, carbon emissions, and air and water quality. In July 2022, Accenture invested $10.0 million in pulsESG to advance ESG and sustainability measurement, decision-making, and reporting for companies. The pulsESG software provides organizations with a flexible and integrated software as a service (SaaS) platform with internal data sources and external investor-facing systems to define, measure, report on organizational ESG performance, and address issues around ESG data quality and timelines.

Government, Public Sector, & Non-Profit Segment to Hold a Considerable Market Share

The government, public sector, & non-profit segment is expected to hold a considerable share of the market. The increasing adoption of ESG reporting software by government, public sector, & non-profit organizations to create long-term sustainable practices that ensure the continuity of their work is a major contributor to the high share of this market segment. Treating a government's ESG exposures the same as a nation's total emissions has been a common strategy owing to the emphasis on global emissions reporting. Governments have the power to greatly affect outcomes through their regulatory and legislative roles, as well as assist with the management and transition costs of ESG risks. 

Regional Outlook

The global ESG reporting software market is segmented based on geography including North America (the US, and Canada), Europe (the UK, Italy, Spain, Germany, France, and the Rest of Europe), Asia-Pacific (India, China, Japan, South Korea, and Rest of Asia-Pacific), and the Rest of the World (the Middle East & Africa, and Latin America). 

Growing Demand for ESG Reporting Software in Europe

• The regional growth is attributed to pivotal factors such as increasing demand for ESG reporting software to enhance operational efficiency. The growing adoption of ESG reporting software across various industries in countries such as Germany, the UK, and France across Europe is further aiding regional market growth. 

• According to the Atlantic Council, in June 2023, although evolving European and UK, frameworks regulating ESG have similar objectives, the approaches towards sustainable investing vary among the jurisdictional regulations and oversight bodies, especially around labeling and reporting. This disparity has also encroached on the financial industry, where many banks are starting to require local asset managers to comply with European ESG standards despite the existence of similar local regulations.

Global ESG Reporting Software Market Growth by Region 2024-2031

North America Holds Major Market Share

North America holds a significant share owing to the presence of numerous prominent ESG Reporting Software companies and providers such as IBM Corp., Microsoft Corp., and Salesforce, Inc., in the region. The market growth is attributed to the increasing demand for ESG reporting software in the region owing to the increased emphasis on sustainable business practices and corporate social responsibility. ESG reporting software plays a critical role in supporting businesses in North America as they monitor, oversee, and document their sustainability performance and objectives. In July 2023, IBM Corp. announced that Digital Realty is using the IBM Envizi ESG Suite to collect, analyze, and report on its Environmental, Social, and Governance (ESG) performance across its portfolio of 300+ data centers across 50+ metros across 27 countries on six continents. Such developments across the region are further driving the regional market growth.

Market Players Outlook

*Note: Major Players Sorted in No Particular Order.

The major companies serving the ESG reporting software market include IBM Corp., Microsoft Corp., Salesforce, Inc., SAP SE, and UL Solutions Inc. among others. The market players are increasingly focusing on business expansion and product development by applying strategies such as collaborations, mergers and acquisitions to stay competitive in the market. 

Recent Development

• In February 2024, Dasseti collaborated with Clarity AI, the sustainability technology company, to deliver ESG benchmarks to Dasseti’s platform users. Through this partnership, Dasseti’s users will gain access to Clarity AI’s industry benchmarks for selecting ESG metrics including 14 of the mandatory SFDR principal adverse impact indicators. This integrated offering empowers users to address data gaps effectively and conduct comparative analyses, thereby enhancing the depth of their insights on their sustainable portfolios.

• In April 2023, Finastra announced its partnership with Alygne, a sustainability technology platform that provides tailored ESG alternative data, to help asset managers globally make more informed ESG investments. A new connector seamlessly integrates Alygne's data into Fusion Invest, allowing users to leverage the portfolio management capabilities of the solution to ensure portfolios support their ESG-related values.

The Report Covers

• Market value data analysis of 2023 and forecast to 2031.
• Annualized market revenues ($ million) for each market segment.
• Country-wise analysis of major geographical regions.
• Key companies operating in the ESG reporting software market. Based on the availability of data, information related to new product launches, and relevant news is also available in the report.
• Analysis of business strategies by identifying the key market segments positioned for strong growth in the future.
• Analysis of market-entry and market expansion strategies.
• Competitive strategies by identifying ‘who-stands-where’ in the market.