Spending by companies on ESG and sustainability consulting is set to more than double over the next five years to a record $16bn, according to a new report that was exclusively shared with ESG Insight today.
The market will grow at a CAGR of 17%, from around $6.24 billion at the end of last year with regulatory change and pressure from stakeholders combining with GDP growth and policy development to boost all regions and sectors, research and advisory firm Verdantix forecasts.
Growth will be strongest in the EMEA region with North America and APAC close behind. All ESG and sustainability consulting services are expected to achieve double digit growth over the period but corporate reporting and disclosures will see the biggest increases with a CAGR of 21%.
The report ESG and Sustainability Consulting: Market Size and Forecast 2021-2027 expects further steps in ESG mandatory disclosures by the creation of new laws or updates to previous national regulations.
It highlights how, with the regulatory requirements setting a framework for sustainability initiatives, firms will recognize fundamental changes in their business model, operations, and strategy.
Speaking to ESG Insight, Kim Knickle, who is Verdantix’s research director and the report’s author, said that “over the next five years, businesses will have to reorientate themselves around ESG and Sustainability priorities.”
“This represents a complex challenge that will take place against a rapidly evolving regulatory backdrop,” she added.
“Consultancies stand to benefit as firms look for external expertise to help them achieve transformational change and more rigorous standards of reporting.”Kim Knickle
These initiatives will include demand for product innovation and stewardship as well as supply chain sustainability improvements and increased scrutiny on resource requirements and greater transparency.
In addition, ESG factors will become more integrated into investment and M&A decision making, Knickle concluded.