Options Abound as Europe’s ESG Services Expand Rapidly

Rhea-AI Summary

A new report by ISG Provider Lens™ highlights the growing demand for sustainability and ESG solutions in Europe, with the market set to double from €50 billion in 2022 to over €100 billion by 2030. Companies are leveraging service providers to enhance sustainability efforts and meet consumer expectations.

Insights

Market Research Analyst

The forecasted growth of the sustainability and ESG solutions market in Europe, as indicated in the ISG Provider Lens™ report, represents a significant shift in business priorities. The projection of the market doubling from €50 billion in 2022 to over €100 billion by 2030 underscores a strong trend towards sustainable business practices. This surge is likely driven by a combination of factors, including increased consumer demand for environmentally responsible products and services, as well as stringent government regulations aimed at curbing emissions and promoting sustainable operations.

From an investment perspective, this trend suggests potential growth opportunities in sectors that provide sustainability and ESG solutions. Companies that are early adopters of these practices may gain a competitive advantage, not only in terms of market share but also by attracting investments from funds that prioritize sustainability. This could lead to a reevaluation of stock valuations for companies that are leaders in sustainability, potentially resulting in higher price-to-earnings ratios and market capitalization.

Financial Analyst

The anticipated expansion of the sustainability and ESG market has direct financial implications for businesses operating in Europe. The increased costs associated with implementing sustainable practices and reporting on ESG metrics may affect short-term profitability for some companies. However, in the long-term, these investments can lead to cost savings through improved energy efficiency, reduced waste and lower regulatory compliance costs. Additionally, companies that successfully integrate sustainability into their core business strategy may see improved financial performance due to increased consumer loyalty and brand value.

For investors, the growth of the sustainability and ESG market could lead to the emergence of new financial instruments and investment vehicles, such as green bonds and ESG-focused mutual funds. As the demand for sustainable investment options rises, asset managers and financial institutions may need to adapt their offerings to meet investor preferences, potentially reshaping the asset management landscape.

Economist

The projected doubling of the sustainability and ESG market in Europe by 2030 has broader economic implications. As companies invest in sustainable solutions, there could be a significant impact on job creation in sectors such as renewable energy, sustainable agriculture and green technology. This shift may also stimulate innovation and drive economic growth as businesses seek to develop new products and services that meet sustainability criteria.

However, the transition to a more sustainable economy may also pose challenges, particularly for industries reliant on traditional, non-renewable resources. These sectors may face increased pressure to adapt or risk becoming obsolete. The economic landscape could see a reallocation of capital towards more sustainable industries, influencing patterns of trade and investment both within Europe and globally.

As the urgency of addressing global challenges intensifies, sustainability and ESG emerge as vital frameworks for driving positive change, ISG Provider Lens™ report says

LONDON--(BUSINESS WIRE)-- Growing consumer concerns and ambitious government mandates will lead to surging demand for sustainability and ESG solutions in Europe, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.

The 2023 ISG Provider Lens™ Sustainability and ESG report for Europe finds the global market for sustainability and ESG solutions and services is on track to expand from approximately €50 billion in 2022, to more than €100 billion by 2030.

“Enterprises are increasingly recognizing the importance of sustainability to gain the trust and loyalty of environmentally conscious consumers,” said Andreas Fahr, ISG partner in Europe. “With the help of service providers, companies are finding ways to increase and transparently communicate their sustainability efforts.”

The rapid escalation of energy costs across Europe has required many organizations to reduce consumption and brought about an opportunity to begin addressing decarbonization efforts, the ISG report says. The reliability and security of energy supplies has come under greater scrutiny, resulting in a fertile market for digital solutions that help manage energy infrastructure and consumption, the report says.

When it comes to defining the role of sustainability in building future economic growth, the European Union has sent a clear message to investors and service providers, the ISG report says. The European Green Deal is a comprehensive program initiated by the European Commission with the overarching aim of making the EU carbon-neutral by 2050. The ISG report notes the program includes more than €1 trillion of planned investment by 2030 in renewable energy, energy efficiency measures and other areas.

By 2026, more than 60 percent of EU companies will be required to begin externally reporting certain sustainability and ESG data in specific formats. Because digital services will be critical to this transformation, portions of this funding will find their way to providers of those services, the ISG report says.

“Europe’s elevated environmental and social awareness makes it home to some of the most ambitious organizations for sustainability,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “Many enterprises are going beyond regulatory compliance and seeking to derive sustainability premiums and differentiation for stronger financial results.”

The report also examines how ratings and benchmarking services play a vital role in driving ESG initiatives by providing standardized assessments.

The 2023 ISG Provider Lens™ Sustainability and ESG report for Europe evaluates the capabilities of 106 providers across five quadrants: Strategy and Enablement Services, Technology Solutions and Implementation Services – IT, Technology Solutions and Implementation Services – OT, Data Platforms and Managed Services, and Rating and Benchmarking Services.

The report names Accenture, Cognizant, HCLTech, IBM, Infosys, TCS and Wipro as Leaders in four quadrants each, while Capgemini, Deloitte, LTIMindtree and PwC are named as Leaders in three quadrants each. EcoVadis, Hitachi Digital Services, SAP, Siemens and T-Systems are named as Leaders in two quadrants each, while Bain & Company, BCG, Bloomberg, CDP, CGI, Cority, Deutsche Telekom GK, ERM, ESG Book, EY, FactSet, ISS ESG, Moody’s ESG, MSCI, LSEG Data & Analytics, S&P Global, Schneider Electric, Sustainalytics, T-Systems/Detecon, VelocityEHS, Wolters Kluwer and WSP are named as Leaders in one quadrant each.

In addition, Hitachi Digital Services, Intelex, NTT DATA, RepRisk and Tech Mahindra are named as Rising Stars — companies with a “promising portfolio” and “high future potential” by ISG’s definition — in one quadrant each.

Customized versions of the report are available from Computacenter, Deutsche Telekom GK, HCLTech and T-Systems/Detecon.

The 2023 ISG Provider Lens™ Sustainability and ESG report for Europe is available to subscribers or for one-time purchase on this webpage.

About ISG Provider Lens™ Research

The ISG Provider Lens™ Quadrant research series is the only service provider evaluation of its kind to combine empirical, data-driven research and market analysis with the real-world experience and observations of ISG's global advisory team. Enterprises will find a wealth of detailed data and market analysis to help guide their selection of appropriate sourcing partners, while ISG advisors use the reports to validate their own market knowledge and make recommendations to ISG's enterprise clients. The research currently covers providers offering their services globally, across Europe, as well as in the U.S., Canada, Brazil, the U.K., France, Benelux, Germany, Switzerland, the Nordics, Australia and Singapore/Malaysia, with additional markets to be added in the future. For more information about ISG Provider Lens research, please visit this webpage.

A companion research series, the ISG Provider Lens Archetype reports, offer a first-of-its-kind evaluation of providers from the perspective of specific buyer types.

About ISG

ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 900 clients, including more than 75 of the world’s top 100 enterprises, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in Stamford, Conn., ISG employs more than 1,600 digital-ready professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry’s most comprehensive marketplace data. For more information, visit www.isg-one.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240214977585/en/

Press Contacts:

Will Thoretz, ISG

+1 203 517 3119

will.thoretz@isg-one.com

Philipp Jaensch, ISG

+49 151 730 365 76

philipp.jaensch@isg-one.com

Source: Information Services Group, Inc.

FAQ

What is the market expansion projection for sustainability and ESG solutions in Europe according to the ISG Provider Lens™ report?

The market is expected to grow from approximately €50 billion in 2022 to more than €100 billion by 2030.

How are companies leveraging service providers in the context of sustainability efforts?

Enterprises are partnering with service providers to enhance and transparently communicate their sustainability initiatives to appeal to environmentally conscious consumers.

Who is the partner mentioned in the press release?

The partner mentioned is Information Services Group (ISG) with the ticker symbol 'III'.