LONDON--(BUSINESS WIRE)--
Despite economic uncertainty and cost pressures, Europe’s demand for digital solutions that improve sustainability and governance continues to grow, according to a new research report published today by Information Services Group () (Nasdaq: ), a global AI-centered technology research and advisory firm.
The 2024 ISG Provider Lens™ Sustainability and ESG report for Europe says regulatory requirements, rising energy costs and broader stakeholder expectations are the primary drivers of demand for digital ESG (environmental, social and governance) solutions. ISG Research sizes the global digital sustainability market at approximately $21 billion and says the market should reach $34 billion by 2027, a compound annual growth rate of 16 percent, roughly three times that of the overall market.
“Avoiding the risk of fines and brand damage from noncompliance with regulatory requirements is certainly a motivator for many investments in digital sustainability solutions,” said Matt Warburton, Digital Sustainability lead for ISG. “However, research shows most European businesses want to become more sustainable anyway — provided they can find a way to do it profitably.”
Last year saw a flood of new providers and solutions entering the environmental services and sustainability markets. Now, ISG has begun to see some consolidation and recalibration of provider solution portfolios to better align with market demand. The application of AI and machine learning to accelerate the development and enhance the quality of sustainability solutions is now fundamental to this space, the report notes, with new GenAI capabilities distinguishing some providers from others.
Europe’s regulatory landscape continues to lead the world in support of sustainability initiatives. These regulations are forcing companies to become more transparent and demonstrate verifiable progress reaching sustainability goals, ISG says.
Economic conditions and energy security are also paramount considerations for sustainability initiatives, the report notes. The EU’s reliance on Russian gas has dropped from 45 percent to 18 percent in three years, and half of the EU’s electricity generation now comes from renewable sources, with wind power overtaking gas to become the EU’s second-largest source of electricity generation, behind nuclear energy.
Increasingly, European companies are implementing sustainability-integrated digital transformation programs, which now incorporate social sustainability factors. In addition, energy management systems that utilize digital twins, IoT sensors and machine learning are helping optimize energy consumption by facilities.
Organizations benefitting the most from sustainability initiatives include those utilizing industrial, engineering and manufacturing processes that involve physical, resource-intensive assets such as built infrastructure, fuel-consuming vehicles and other machinery.
“New providers not typically seen in the technology markets are entering this space, mostly offering OT and industry-specific solutions,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “These new entrants, including consultancies and engineering firms, have enhanced their digital capabilities, posing a challenge to traditional IT service providers.”
The report also explores other trends, including the growing skills gap among enterprises for sustainability expertise. While service providers continue to enhance their training programs, many are delivering inconsistent client experiences, increasing the likelihood of organizations insourcing their sustainability work.
For more insights into the sustainability challenges facing Europe enterprises, plus ISG’s advice for overcoming them, see the ISG Provider Lens™ Focal Points briefing .
The 2024 ISG Provider Lens™ Sustainability and ESG report for Europe evaluates the capabilities of 103 providers across four quadrants: Strategy and Enablement Services, OT and Industry-specific Solutions and Services, IT Solutions and Services and Data Platforms and Managed Services.
The report names Accenture, Capgemini, Cognizant, HCLTech, IBM, Infosys, TCS and Wipro as Leaders in all four quadrants. Deloitte, EY, Microsoft, NTT DATA, PwC, Schneider Electric and T-Systems are named Leaders in two quadrants each. BCG, CGI, Cority, Deutsche Telekom, EcoVadis, ERM, ESG Book, Hitachi Digital Services, Kyndryl, LTIMindtree, McKinsey & Company, SAP, T-Systems/Detecon, VelocityEHS and Wolters Kluwer are named Leaders in one quadrant each.
In addition, Tech Mahindra is named as a Rising Star — a company with a “promising portfolio” and “high future potential” by ISG’s definition — in two quadrants. Anthesis and Sphera are named Rising Stars in one quadrant each.
In the area of customer experience, PwC is named the global ISG CX Star Performer for 2024 among sustainability and ESG providers. PwC earned the highest customer satisfaction scores in ISG's Voice of the Customer survey, part of the , the premier quality recognition for the technology and business services industry.
Customized versions of the report are available from , and .
The 2024 ISG Provider Lens™ Sustainability and ESG report for Europe is available to subscribers or for one-time purchase on this .
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, Mexico, 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 .
About ISG
(Nasdaq: ) is a global AI-centered technology research and advisory firm. A trusted partner to more than 900 clients, including 75 of the world’s top 100 enterprises, ISG is a long-time leader in technology and business services that is now at the forefront of leveraging AI to help organizations achieve operational excellence and faster growth. The firm, founded in 2006, is known for its proprietary market data, in-depth knowledge of provider ecosystems, and the expertise of its 1,600 professionals worldwide working together to help clients maximize the value of their technology investments.
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