U.S. Firms Push Ahead on Sustainability, ESG Amid Changes
Companies implement industry-specific, AI-enabled solutions to achieve business benefits beyond compliance, ISG Provider Lens™ report says
Companies in the U.S. plan to keep investing in digital initiatives for sustainability and ESG despite political change and uncertainty, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a global AI-centered technology research and advisory firm.
The 2024 ISG Provider Lens™ Sustainability and ESG report for the U.S. finds the market for digital solutions to improve environmental and social sustainability and corporate governance is rapidly evolving, with some federal regulations likely to be scaled back while others survive under the current administration. Surveys indicate U.S. enterprises will continue to carry out digital sustainability initiatives to maintain brand value, reduce risks and save money.
"Companies in the U.S. recognize that mandatory ESG reporting is a matter of when, not if," said Matt Warburton, Digital Sustainability lead for ISG. "Achieving accurate reporting will require both investment and time."
As investors consider the impact of climate change on company valuations, demand in the U.S. is higher for environmental solutions than for those aimed at social sustainability or corporate governance, the report says. The market for data platforms and managed services is growing fastest, driven by increasing global regulation. IT solutions and services are growing more slowly than OT and strategy and enablement services, because IT is a relatively small part of the carbon footprint of most enterprises.
More organizations are realizing there is no "one size fits all" sustainability solution and are seeking technology partners with deep experience in regulations for their specific industries, ISG says. The U.S. market has a diverse, growing landscape of providers that collaborate on these intricate transformations. AI, ML and IoT solutions for asset-intensive industries, such as power and utilities, manufacturing and transportation, are most common.
AI and ML have become foundational tools to accelerate and improve ESG solutions, while generative AI has begun to emerge in this space over the past year, the report says. Providers' first GenAI-enabled offerings have created a wave of optimism about how this technology may address sustainability challenges, especially reporting. To show a return on investment, these tools will need to be trained on specific use cases.
Many U.S. enterprises are integrating sustainability efforts into broader digital transformations, ISG says. These projects typically represent 5 percent to 10 percent of the overall program cost and share the implementation cost for greater financial efficiency.
"Many sustainability initiatives lower costs and help companies retain customers and attract employees," said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. "Those effects multiply the benefits of digital transformation."
The report also explores other sustainability and ESG trends in the U.S., including the impact of European ESG laws and steps toward regulation of AI's social effects.
For more insights into the sustainability and ESG challenges facing U.S. enterprises, including a shortage of ESG experts and a lack of employee literacy about sustainability, plus ISG's advice for overcoming those challenges, see the ISG Provider Lens™ Focal Points briefing here.
The 2024 ISG Provider Lens™ Sustainability and ESG report for the U.S. evaluates the capabilities of 100 providers across four quadrants: Strategy and Enablement Services, OT & Industry Specific Solutions, IT Solutions and Data Platforms and Managed Services.
The report names Accenture, Capgemini, Cognizant, HCLTech, IBM, Infosys, TCS and Wipro as Leaders in all four quadrants. It names Deloitte, EY, Microsoft, NTT DATA and PwC as Leaders in two quadrants each. BCG, CGI, Cority, EcoVadis, ERM, Kyndryl, LTIMindtree, McKinsey & Co., SAP, Schneider Electric, VelocityEHS and Wolters Kluwer are named as Leaders in one quadrant each.
In addition, Hitachi Digital Services is named as a Rising Star — a company with a "promising portfolio" and "high future potential" by ISG's definition — in two quadrants. Schneider Electric and Sphera are named as Rising Stars — companies with a "promising portfolio" and "high future potential" by ISG's definition — 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 ISG Star of Excellence™ program, the premier quality recognition for the technology and business services industry.
The 2024 ISG Provider Lens™ Sustainability and ESG report for the U.S. is available to subscribers or for one-time purchase on this webpage.
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 webpage.
About ISG
ISG (Nasdaq: III) 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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