IT services providers that are expanding their portfolios to target environmental, social and governance (ESG) opportunities are making a wise move as many enterprises require assistance developing and implementing ESG-related initiatives, says GlobalData.
The leading data and analytics company notes that these companies must continue to adapt to shifting market dynamics to stay ahead of the curve.
According to a recent GlobalData survey, 34% of respondents indicate that their company has made adjustments to its ESG initiatives in the last 12 months.
Rena Bhattacharyya, Service Director for Enterprise Technology and Services at GlobalData, said: “For the most part, IT service providers are focusing on the environmental aspect of ESG by offering services and solutions related to sustainability such as carbon emissions assessments and advice on methods for reducing carbon footprints.
“Additionally, providers are helping customers implement circularity with strategies targeting reuse, reduce, and recycle initiatives. IT services providers are also embedding the sustainability conversation into the sale of complementary solutions, such as procurement and supply chain-related products, or smart city and fleet management solutions.”
GlobalData’s latest reports, ‘IT Services Providers Build Portfolios to Monetize ESG (part 1)’ and, ‘IT Services Providers Build Portfolios to Monetize ESG (part 2)’, found that IT services providers are developing sustainability portfolios to help customers with ESG-related initiatives, but not all are equally well-positioned in this emerging area. Many focus primarily on sustainability, but the most forward looking are offering best practices related to inclusivity.
Providers utilize a variety of strategies to expand their portfolios, ranging from acquisitions and partnerships to development of new services and solutions, and re-packing of existing tools. For example, IT services providers, including Accenture, Atos, and IBM acquired niche players that focus on emissions consulting or data analytics services.
Bhattacharyya added: “Not surprisingly, given the importance of sustainability in Europe, acquisition targets tend to be based in that region. However, the competitive landscape is evolving quickly with repositioning of players likely as acquisitions continue and as small ESG-focused boutique consultancies continue to carve a niche for themselves in the market.”
Most IT services providers offer little in the way of guidance to customers when it comes to the social and governance aspect of ESG. However, this lack of focus on social and governance-related offerings may change as ethical issues, particularly with respect to data management and privacy, cloud sovereignty, artificial intelligence, and the metaverse, become increasingly top of mind amongst organizations, and regulatory requirements evolve and mature, especially for emerging technologies.”
Bhattacharyya concluded: “Looking ahead, IT services players will need to embed sustainability elements in all business operations and not as a separate workstream.
“Although environmental sustainability is receiving a large amount of focus at present, other aspects of ESG will become increasingly top of mind. Issues related to data privacy, ethics, bias, and Responsible AI will continue to grow in importance and organizations will need help responding to these governance-related issues.”