ESG-Focused Software Market is projected to reach the value of $2.3 billion by 2030

According to the report published by Virtue Market Research, the Global ESG-Focused Software Market was valued at $0.7 billion in 2022 and is projected to reach a market capitalization of $2.3 billion by 2030. Over the forecast period of 2023-2030, market is estimated to grow at a CAGR of 15%.

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The ESG (Environmental, Social, and Governance)-focused software market has been witnessing a significant growth trajectory over the past few years, and it is expected to continue in the long run. One of the primary long-term market drivers is the increasing emphasis on sustainable investing. Investors across the globe are becoming more conscious of the ESG risks associated with the investments they make. This is mainly due to the growing awareness of the adverse effects of climate change and the need to address the social and governance issues in the corporate world.

In the wake of the COVID-19 pandemic, the ESG-focused software market has witnessed a significant surge in demand. The pandemic has brought to the fore the need for companies to focus on sustainability and resilience. With remote work becoming the new norm, companies are increasingly adopting technology solutions to monitor and manage their ESG risks. The pandemic has also led to a renewed focus on the social aspect of ESG, with companies taking proactive measures to ensure the safety and well-being of their employees.

In the short term, one of the key market drivers for the ESG-focused software industry is the increasing regulatory pressure. Governments across the globe are introducing regulations to ensure companies comply with ESG standards. For instance, the European Union's Sustainable Finance Disclosure Regulation (SFDR) requires asset managers to disclose the ESG impact of their investments. This has led to an increased demand for ESG-focused software solutions that help companies comply with these regulations.

One of the key opportunities in the ESG-focused software market is the growing demand for data analytics and visualization tools. With companies generating large volumes of data related to their ESG risks and opportunities, there is a need for software solutions that can help them analyze and visualize this data. These tools enable companies to identify key trends and patterns in their ESG data, which can help them make more informed decisions.

A key trend observed in the ESG-focused software industry is the increasing adoption of AI and machine learning. These technologies enable companies to automate their ESG risk assessment processes, making them more efficient and effective. AI and machine learning algorithms can analyze large volumes of data and identify patterns and trends that may not be visible to human analysts. This can help companies identify potential ESG risks and opportunities, allowing them to take proactive measures to mitigate risks and capitalize on opportunities.

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Segmentation Analysis:
The global ESG-Focused Software Market segmentation includes:

By Components:
• Software
• Services

he ESG-focused software market comprises two main components - software and services. The software segment includes various solutions such as ESG data management software, sustainability reporting software, and carbon accounting software. The services segment includes consulting, implementation, and training services related to ESG management.

Among these two components, the software segment is the largest, accounting for the majority of the revenue generated in the ESG-focused software market. The increasing adoption of ESG reporting standards and regulations across industries has led to a growing demand for ESG software solutions. These software solutions help companies manage and report their ESG data in a more efficient and streamlined manner. The software segment is expected to continue its dominance during the forecast period.

On the other hand, the services segment is expected to witness the fastest growth during the forecast period. This can be attributed to the increasing complexity of ESG reporting and the growing need for specialized expertise in this area. SMEs and other organizations with limited resources may not have the in-house expertise to manage their ESG reporting requirements. As a result, they are increasingly turning to ESG service providers to help them manage their ESG data and report on their ESG performance.

By Enterprise Size:
• Large Corporations
• SME's

When it comes to enterprise size, large corporations currently account for the majority of the revenue generated in the ESG-focused software market. This can be attributed to the fact that large corporations have more resources to invest in ESG management and reporting. Moreover, regulatory requirements related to ESG reporting are often more stringent for large corporations, driving the demand for ESG software solutions.

However, SMEs are expected to be the fastest-growing segment during the forecast period. This can be attributed to the increasing awareness of ESG risks and opportunities among SMEs. SMEs are increasingly realizing the importance of ESG management and reporting in attracting investment and maintaining their social license to operate. As a result, they are investing in ESG software solutions to help them manage their ESG data and report on their ESG performance.

Regional Analysis:
Europe is currently the largest market for ESG-focused software, accounting for a significant share of the global market. This can be attributed to the growing focus on sustainable investing and the increasing regulatory pressure on companies to disclose their ESG performance in the region. European companies are also increasingly adopting ESG reporting standards and guidelines, driving the demand for ESG software solutions.

However, the Asia-Pacific region is expected to be the fastest-growing market for ESG-focused software during the forecast period. This can be attributed to the increasing awareness of ESG risks and opportunities among companies in the region, coupled with the growing regulatory pressure to comply with ESG standards. Moreover, the region is home to a large number of companies operating in industries that have a significant impact on the environment and society, such as manufacturing, energy, and mining. As a result, the demand for ESG software solutions is expected to grow significantly in the region.

North America is another significant market for ESG-focused software, driven by the increasing emphasis on sustainable investing and the growing awareness of ESG risks and opportunities among companies in the region. The region is home to a large number of asset managers and investors that are actively seeking to incorporate ESG factors into their investment decisions, driving the demand for ESG software solutions.

The rest of the world, comprising regions such as South America, the Middle East, and Africa, is also witnessing a growing adoption of ESG-focused software. The region is characterized by a diverse set of economies and industries, each with its own set of ESG challenges and opportunities. However, the lack of a comprehensive regulatory framework for ESG reporting in many of these regions is hindering the growth of the ESG software market to some extent.

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Latest Industry Developments:
• In August 2021, Ethos ESG and Alchemy Acquisition Corp announced a joint venture partnership to rank and rate public companies based on ESG impact utilizing proprietary data and analysis.

• In April 2021, Enablon and EY launched an ESG reporting and management alternative built on Enablon's cloud technology platform to assist enterprises with end-to-end ESG data tracking and reporting.

• In August 2021, FiscalNote announced its acquisition of Equilibrium, an ESG software company.

Virtue Market Research
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Virtue Market Research is a strategic management firm helping companies to tackle most of their strategic issues and make informed decisions for their future growth. We offer syndicated reports and consulting services. Our reports are designed to provide insights on the constant flux in the global demand-supply gap of markets.

This release was published on openPR.