Global spending on purpose-built sustainability to reach USD 65 bln by 2027

Tuesday 29 August 2023 10:56 CET | News

A new forecast by the IDC has shown that ESG business services are expected to grow from USD 37.7 billion in 2023 to nearly USD 65 billion in 2027.

The IDC forecast focuses entirely on purpose-built ESG professional services, those being the consulting, implementation, engineering, and IT services that are designed to drive sustainability-related outcomes as the main output from their use. The forecast only measures services whose sole intent is to drive sustainable outcomes for their users.

A 2022 IDC survey reveals that about two-thirds of respondents planned to allocate a significant portion of their professional services spending to sustainability services over the next two years. The main focus areas for these investments are strategy development and implementation, human capital management, and ESG reporting. IDC expects sustainability strategy and human capital management services to represent nearly 60% of the total spending on ESG professional services by 2027.

IDC believes that strategy consulting will continue to grow in importance as it is a key part of an enterprise's sustainable transformation. It serves as the conduit to seamlessly incorporate sustainability considerations into a company's overarching business strategy, effectively shaping its corporate purpose and influencing its sustainable operations. As the market matures, it is expected that resources committed to developing and implanting sustainable business strategies will taper and be shifted to focus on the actual implementation of these strategies.

A new forecast by the IDC has shown that ESG business services are expected to grow from USD 37.7 billion in 2023 to nearly USD 65 billion in 2027.

Among the dynamic segments within ESG services, human capital management is forecast to be the fastest-growing segment with a five-year CAGR of 28.3%. This is mainly due to the large-scale need for organisation-wide training and process efficiency improvements necessary for sustainability efforts to succeed in the future.

While the importance of ESG reporting remains important as mandated sustainability disclosures draw nearer, many organisations are already prepared for this due to voluntary reporting on their climate-related performance. However, professional services will still be needed to increase the process efficiency as more resource-intensive reporting becomes required. 

Sustainable Business Services 

Sustainable business strategies integrate environmental and social considerations into a company's strategy for long-term value creation. This has created opportunities for business services firms to provide sustainability-related services around strategy, operations and business models, human capital, and more. Therefore, sustainability-linked consulting spending continues to be a high priority as the initial steps to beginning a sustainable transformation can be a difficult task for those firms that have not attempted anything similar in the past. 

ESG business services include traditional professional services that are centred around achieving sustainability goals. It can also include ESG-enabling services, known as sustainability-linked professional services that enable organisations to improve sustainability capabilities through traditional business process improvement, such as services focused on increasing process efficiency or supply chain services to reduce risk.

The redefinition from ESG-enabling services to purpose-built sustainability services allows for a more in-depth look into both market trends and end-user spending intentions for the years to come. For vendors to effectively market, sell, and develop their services, understanding the needs, wants, and requirements of their clients is of the utmost importance. 

About IDC 

International Data Corporation is a global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,300 analysts worldwide, IDC aims to offer global, regional, and local expertise on technology, IT benchmarking and sourcing, and industry opportunities and trends in over 110 countries. IDC's analysis and insight are expected to help professionals, business executives, and the investment community to make fact-based technology decisions and achieve their key business objectives. 

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Keywords: ESG, data analytics, green finance, sustainability , research
Categories: Banking & Fintech
Companies: IDC
Countries: World
This article is part of category

Banking & Fintech


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