+26% for the French ESG software market

The adoption of ESG software is becoming an unavoidable trend in the French corporate and public sector landscape. In 2024, 55% of the CIOs and CSOs surveyed by AdVaes said they were using such software for all or some of the ESG pillars covered in their missions. This figure is expected to rise to 86% by 2027. This increased adoption of ESG software illustrates a growing awareness of the importance of sustainability and governance, encouraged by regulations such as the CSRD (Corporate Sustainability Reporting Directive) or the REEN Act for cities with more than 50,000 inhabitants, as well as demands for transparency.

This growth is a response to the need to automate the collection of useful data, the assessment of environmental impacts, the ESG reporting, its monitoring and management, in compliance with regulations and the expectations of stakeholders. However, the level of maturity and progress varies widely depending on industry priorities and segments being addressed (size of organisations, scope, geography, timing, specific context of SMEs, etc.).

A fast-growing market

The ESG software market, as defined and monitored by AdVaes, covers software dedicated to assessing the environmental impact of IT and digital services, carbon accounting, ESG or sustainability reporting and management. It is made up of software vendors and IT service providers who have developed applications addressing all or part of these segments, with additional support services. Solutions can be delivered in SaaS (Software as a Service) mode, as licences deployed on site (on premise) or as open source. Estimated by AdVaes to be worth around €290 million in 2024, it accounts for less than 1% of the overall IT software and services market in France. With average annual growth of +26%, it is nevertheless one of the fastest-growing segments, and is expected to be worth around €600 million in 2027.

This trend is answering to major expectations expressed by French companies and administrations for tools to automate:

• The assessment and monitoring of the environmental impact of their IT activities and digital services;
• The carbon accounting and sustainability reporting that they need to publish in compliance with the regulations and the demands of their stakeholders.

A market in the process of being structured, with a wide range of solutions

The variety of ESG software and the varying ESG maturity of organisations make it difficult to understand the ESG software market, related needs, challenges and trends. AdVaes has so produced a mapping to clarify the main ESG software categories and their value proposition, bearing in mind that:

• The functional coverage of ESG software can be more or less extensive or reduced to a precise perimeter: global coverage of the organisation or specifically targeting the IT business; targeting of one or all three ESG criteria; typology of information processed/delivered (quantitative, qualitative and/or narrative); evaluation, measurement, reporting and/or automated rules-based management to monitor effective remediation actions.

• Some ESG software may address several purposes and belong to more than one category (IT impact assessment and IT optimisation) or are in the same category but are not competitors in terms of their scope or customer targets.

The ESG software landscape is constantly evolving, influenced by changes in ESG maturity and regulatory constraints. The growing interest of major software vendors (those selling ERP and business application suites) and the need to achieve critical mass could rapidly change this landscape (see acquisitions). The longevity of new entrants is also a factor to consider. Established partnerships is another marker to monitor. Of the sixty or so ESG software vendors analysed by AdVaes, 37% are startups and 32% have raised funds totalling €300 million in July 2024.

In addition to the market data it provides and its overview of the main players, the AdVaes study gives an overview of the strategies and approaches of IT suppliers and their customers, IT and CSR departments, in both a synthetic and objective way. It is an invaluable decision-making tool to help managers and their team navigate this fast-growing market, which is still under construction, given the expectations and regulatory obligations that govern it.

Acknowledgements

AdVaes would like to thank the 80+ managers (software vendors, IT service providers, CIOs, CSOs…) who responded to the survey linked to this study, as well as the companies Aguaro, BlueKanGo, Impakt.io, OxygenIT, Resilio, Tennaxia and Verdikt, which supported the initiative.

To find out more

Go to the executive overview of this study and/or ask for the a marketing presention.