The global market for ESG reporting software is poised for substantial growth, expected to reach over $5.6bn by 2029 from its current $1.3bn valuation.
This forecast, detailed in a new report by Verdantix, highlights a significant surge due to stringent regulations and heightened demand for reliable sustainability data. The increase is mainly driven by the EU’s Corporate Sustainability Reporting Directive (CSRD) and the growing need for auditable ESG data to mitigate related risks, claims Business Green.
Europe is anticipated to lead this upswing, with an estimated annual growth of 29% in ESG software expenditure. The implementation of the CSRD, alongside the Corporate Sustainability Due Diligence Directive (CSDDD), is set to affect over 50,000 EU firms and extend to more than 1,000 non-EU companies.
This sweeping change comes as the industry prepares for mandatory reporting standards under the EU’s CSRD, with about 74% of G250 companies already aligning their climate risk reporting with the Task Force on Climate-Related Financial Disclosures standards.
Verdantix’s research director of the ESG and sustainability practice, Kim Knickle, noted, “Global ESG reporting software spend is projected to surge, peaking between 2026 and 2028, before stabilising. Over 50,000 firms globally are facing imminent sustainability reporting deadlines such as the CSRD, with significant risks of non-compliance, driving demand.”
The North American and Asian markets are also on track for robust growth, forecasted at annual increases of 25% and 24%, respectively. Despite potential regulatory rollbacks by the Trump administration, state-level initiatives in the US continue to push for stronger ESG reporting standards. Sectors such as manufacturing and wholesale and retail trade are expected to witness the highest growth rates, with demands for high-quality, auditable data spurred by both regulatory and specific supply chain legislation like the US Uyghur Forced Labor Prevention Act and the Australian Modern Slavery Act.
Knickle further emphasized, “As businesses face ever-evolving complexities, robust, adaptable reporting technologies are critical to ensure transparency, build stakeholder trust, and maintain a competitive edge. Beyond compliance, firms are using ESG reporting and data management tools to enhance decision-making, improve efficiency, and manage risks – which is driving the involvement of a more diverse set of stakeholders, like finance and compliance teams.”
This expansion in ESG reporting software investment underscores a broader trend of increasing reliance on technology to meet complex regulatory and stakeholder demands, ensuring businesses remain compliant and competitive in a rapidly evolving sustainability landscape.
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