ISG Research Finds U.S. Companies Increasingly Turn to ESG, Sustainability Service Providers

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(Credit: ISG)

by | Feb 27, 2024

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A new research report from Information Services Group indicates that as ESG measurement expectations grow, U.S. firms are increasingly working with a wide range of ESG service providers to support sustainability initiatives and fulfill reporting needs.

The Information Services Group (ISG) 2023 ISG Provider Lens Sustainability and ESG report has found that demand for sustainability and ESG services will likely double from 2022 to 2030. Despite the United States experiencing less demand for ESG services than Europe, ESG initiatives within the country are expected to expand considerably in the coming years. Further, impending federal and state laws may legally require companies to improve transparency in terms of emissions and other climate-related risks.

“New regulations will significantly increase the data collection and reporting burden on U.S. companies, driving demand for services to help them comply,” said Jan Erik Aase, partner for ISG Provider Lens Research. “Many firms today store this data in disparate systems or do not record it at all.”

According to the report, companies and investors are seeing benefits in ESG projects beyond compliance alone — such projects also may allow for lower costs, higher margins, better brand value, and more. U.S. companies reportedly express interest in improving ESG performance but struggle with its complexity, and ESG service providers may make the process more manageable.

The report evaluates 103 ESG providers in terms of five categories: strategy and enablement services; IT technology solutions, OT technology solutions; data platforms and managed services; and rating and benchmark services.

Report Shows the Value of Digital Tools for ESG Improvements

In addition to evaluating ESG service providers, the ISG report explores several growing digital ESG trends, such as the use of digital twins for sustainability initiative simulation and the role of artificial intelligence.

Digital platforms, specifically ESG data management tools, remain crucial for companies as they work to track emissions, comply with regulations, and streamline potentially cumbersome ESG-related tasks. These digital tools are also improving as additional regulations come into play and companies increasingly seek guidance with ESG initiatives.

For example, IBM, one of the leading players named in the report, recently released a digital tool for tracking Scope 3 emissions, and earlier this year, Microsoft integrated ESG-related data management and AI-based capabilities into its Cloud for Sustainability and Microsoft Fabric applications.

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