Companies Set Aside $158 Billion for Environment, Social, and Governance
According to a new IDC report, companies will spend $158 billion on environmental, social, and governance (ESG) business services in 2025, with a five-year compound annual growth rate (CAGR) of 32.3 per cent.
Businesses are under increasing pressure to improve and document their environmental, social, and governance (ESG) performance. According to the IDC prediction, sustainability-related consultancy investment has become a top priority because the early steps of a sustainable transformation can be challenging for organisations that have not attempted anything similar earlier.
Dan Versace, research analyst, ESG Business Services, said: "In 2022, all enterprises are being pushed to transform and fundamentally change the way they do business to become sustainable enterprises."
The ESG business services are focused on accomplishing environmental and social sustainability goals.
A business strategy, human capital management solutions, and risk management are the primary emphasis areas for organisations' investments in sustainability.
The most significant area of spending, strategy consulting, will enable businesses to effectively integrate sustainability into their company strategy, which is the driving force behind the corporate purpose and, as a result, sustainable operations.
The report cited, "Human capital management will be the fastest-growing area of spending. This is primarily due to the dual challenge of creating large-scale organisation-wide training and process efficiency improvements necessary for sustainability efforts to succeed in the future, on top of addressing social pillar topics such as human capital management internally."
Increased investment across functions is prompting businesses to take a more holistic approach to corporate sustainability, moving away from the random approach of previous years.
"Firms should assess their sustainability-linked business services to determine where these offerings can best be utilised and identify other end-user pain points where new offerings will be needed," Versace said.