A new global report by Verdantix, the independent research and advisory firm, reveals the ESG reporting software market is set to skyrocket, growing at a compound annual growth rate (CAGR) of 26 per cent from 2023 to 2029. The market will expand from USD1.3 billion to over USD5.6 billion, fuelled by tightening regulations such as the EU’s Corporate Sustainability Reporting Directive (CSRD) and increasing investor and stakeholder demands for auditable sustainability data that minimizes ESG-related risks.
Europe will spearhead this growth, with the region expected to drive a CAGR of 29 per cent. The phased implementation of the CSRD, along with complementary measures such as the EU Corporate Sustainability Due Diligence Directive (CSDDD), will drive rapid adoption among over 50,000 EU firms and more than 1,000 non-EU organisations.
North America and Asia are also set for strong growth, with CAGRs of 25 per cent and 24 per cent, respectively, as US firms look to tackle changing international, federal and state-level ESG reporting commitments and in Asia, the adoption of the International Sustainability Standards Board (ISSB) standards gains traction.
Manufacturing and wholesale and retail trade are forecasted to see the highest growth rates among industries, with CAGRs of 28 per cent and 29 per cent, respectively. These sectors, which have highly complex supply chain networks, face increasing pressure to provide holistic and high-quality, auditable data. This is driven by regulatory requirements, and sector specific supply chain legislation such as the EU CSDDD, the US Uyghur Forced Labor Prevention Act (UFLPA) and the Australian Modern Slavery Act.
Kim Knickle, Research Director of the ESG & Sustainability practice at Verdantix, comments: “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.
“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. As adoption accelerates, these systems will become integral to how businesses operate in an evolving sustainability landscape.”
