The in-depth guide is the firm’s first on vendors in the ESG reporting and data management space.
A new guide from the Independent Research Firm, Verdantix, promises to make purchasing ESG software much more manageable for business executives.
Titled “Green Quadrant: ESG Reporting and Data Management Software”, its objective, evidence-based assessment that evaluates the 20 most prominent ESG reporting and data management software vendors in the market. The report provides an evaluation of the vendors based on scores in two areas. The first being capabilities, which measure the breadth and depth of the provider’s offerings across 15 capability areas, such as data management, configurability, organizational structure, and user interface. And secondly, momentum, which measures each provider on a variety of market momentum factors, such as brand perception, revenue size, partnerships, and customer base. The following provides a deeper look into the report in the following areas:
- Why is there an increased interest in ESG from a corporate and private market standpoint?
- Who are the market leading ESG software solution providers?
- What differentiates market leading ESG data management tools?
- What trends are emerging in the ESG reporting and data management software market?
Timely Release: ESG Reporting on the Rise
As investors and regulators increasingly demand that organizations shed light on their environmental, social, and corporate governance activities, many companies are purchasing software that can help them with data management and ESG reporting.
One recent survey, conducted by Deloitte, found that companies “are moving from commitment to action in their sustainability reporting to address evolving stakeholder expectations”. Nearly 9 out of 10 executives polled by the firm said they currently have ESG initiatives in place and 99 percent said they were likely to invest in ESG-focused technologies over the coming 12 months.
While a few years ago these executives may have struggled with the dearth of technological options that were available in the market, today they face the opposite challenge: As of 2022, according to an analysis from PwC, more than 200 vendors were competing in the ESG software space. The question now isn’t whether companies can find a digital solution for ESG. It’s whether they can identify the right solution—the one that best fits their particular needs.
The Verdantix Green Quadrant report seeks to tackle that problem by offering a “detailed, fact-based comparison” of ESG vendors. The authors of the report used desktop research, vendor responses to a 115-point questionnaire, and two-hour live interviews with company leaders to inform their analyses and conclusions.
Report Reveals 11 Market Leaders
London-based Verdantix is highly respected for the unbiased research it conducts on EHS (Environmental, Health, & Safety), sustainability, and other related topics. It’s also well known for its consulting work, and for producing everything from monthly webinars to market forecasts and predictions on a wide variety of industries.
Based on what the firm describes as its “Green Quadrant” methodology, this particular analysis differentiates between top companies in the ESG software market by placing them in one of four categories— Leaders, Innovators, Challengers, and Specialists.
Ultimately, the report highlights 11 software firms identified as having “the most advanced all-around ESG reporting and data management software capabilities”. Cority is included among these leading vendors and receives special recognition for its recent acquisitions of 2 European headquartered sustainability-focused companies: Greenstone and Reporting 21.
Key Insights and Findings
In a statement announcing the report’s release in July, Verdantix principal analyst Jessica Pransky noted that the ESG software market was poised to surpass $4 billion by 2027. “It is imperative for vendors to proactively stay ahead and remain competitive”, she said. “With a widening scope of business functions engaged in ESG implementation and a continuously evolving regulatory landscape, agility and adaptability are paramount”.
Pransky went on to point out that technology providers in this space would be expected to deliver “fast-to-deploy, scalable solutions that address market trends and cater to the evolving needs of businesses”. Corporate executives should leverage the report to ensure they select software that matches their company’s unique requirements, the Verdantix release explained.
In addition to spotlighting the industry’s software leaders, the report details a number of important findings that should help companies choose an appropriate vendor. The authors recommend, for example, that corporate executives consider ESG solutions that:
- Aggregate ESG data “from all departments to break down silos and facilitate communication with stakeholders such as investors, business functions and the C-Suite”
- Allow customers to report to multiple voluntary frameworks using various ESG metrics
- Integrate sustainability data into financial reports
- Are “highly configurable” and scalable to meet evolving needs
- Facilitate collaboration and “streamline the data collection process”
- Leverage partnerships with “complementary vendors” to expand their capabilities
- Offer “varied use of services, whether to help with implementation or complex functionality” like materiality assessments
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Other Important Takeaways
Beyond the advice the guide offers to executives as they go about weighing their ESG software options, it provides the following key takeaways:
- Competition in the ESG reporting and data management software market is strong. When evaluating software vendors in the ESG market, organizations should consider factors like industry-specific experience, regional expertise, product cost, and ease of deployment.
- Vendors are adapting to industry demands. According to Verdantix, all of the vendors featured in the Green Quadrant have incorporated “core capabilities” into their software solutions, and now they’re evolving to keep pace with new requirements like the EU’s Corporate Sustainability Reporting Directive (CSRD). The rapid advancement in ESG software is a reflection of the world we live in, Pransky writes. “Reporting on ESG and sustainability metrics is no long a ‘nice to have’: it’s a ‘must have’ for many corporations”.
- Vendors are offering solutions that scale to meet the needs of their customers. Software providers are recognizing that different organizations have varying levels of experience when it comes to ESG reporting. “To effectively scale their solutions,” Pransky writes, “vendors may offer starter packages with basic functionality that can be expanded” over time, “or complement their software solution with services to help with customer setup and onboarding”.
Finally, Pransky notes that this Green Quadrant ESG report won’t be the last from Verdantix. “We expect the market to keep changing”, she writes, “with vendors expanding their offerings, new competitors entering and even some vendor consolidation”.
