The focus of the financial community – asset managers, commercial banks, stock exchanges and regulators – on Environmental Social and Governance (ESG) metrics has dramatically changed the context for corporate sustainability strategies according to a new study from independent research firm Verdantix.
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Verdantix’s new Market Overview study identifies 5 high growth segments; fintech ESG platforms, high fidelity ESG data providers, next gen sustainability software, systems of record for ESG operationalization, & digital sustainability consulting.
“For more than a decade, the overwhelming majority of CEOs have felt comfortable with a passive sustainability strategy consisting of producing an annual sustainability report” commented David Metcalfe, Verdantix CEO. “That approach is no longer fit for purpose. Investors and lenders believe that ESG factors drive material risks and opportunities. CEOs need to integrate ESG factors in their strategies, annual plans, operational decisions and disclosures.”
The Verdantix report, Market Overview: Investor Focus On ESG Will Transform Sustainability Strategies, identifies five segments with huge growth prospects.
Fintech ESG platforms. Financial market participants want increasingly granular, frequent and credible data on issuers’ ESG performance. In the last two years, Clarity AI, Deutsche Börse, Moody’s, Morningstar, MSCI, RepRisk, S&P Global and Urgentem have made acquisitions or investments in AI-powered ESG analytics platforms.
High fidelity ESG data providers. A host of ESG data providers have launched to cut through the greenwash and provide trustworthy data. Project Canary focuses on ESG certificates for natural gas production with customers like EQT. ClearTrace validates the renewable energy claims of JP Morgan Chase. GHGSat gathers GHG emissions data with low-orbit satellites.
Next gen sustainability software. Aplanet, Diginex Solutions, Novisto and Persefoni have designed software around new ESG requirements, not the historic CDP and GRI requirements. These new entrants complement existing providers such as Enablon, IsoMetrix, Quentic and UL.
Systems of record for ESG operationalization. When CEOs decide to improve ESG risk, performance and disclosure they will leverage existing systems of record. EHS software providers like Benchmark Digital, Cority, Intelex and Sphera already offer sustainability capabilities. Other categories include sustainable real estate, product stewardship, compliance software and asset investment planning.
Digital sustainability consulting. To pivot from outdated passive sustainability strategies, CEOs seek out management consultants who have both subject matter expertise and the ability to implement an ESG information architecture. Depending on project specifics, CEOs hire consultancies like Accenture, Anthesis, Arcadis, ERM, EY, FigBytes, Golder, McKinsey and Willis Towers Watson.
