The compliance issues surrounding ESG, Net Zero and various climate change regulations are set to grow, especially for insurers. Faced with verifying supply chains, office carbon usage each year, in different locations, plus explaining investments and appointments to regulators, is all going to cost time and money. That means using bespoke software systems to sublit the correct data, on time, in every market. In fact, spending on environment, health, and safety (EHS) software will hit $1.39 billion in North America within five years says Verdantix.
The report from the leading independent research and advisory firm estimates the EHS software market in North America will expand to $810 million this year and grow by around 11% for the next five years.
Its Market Size and Forecast: EHS Software 2022 -2027 (Global) report estimates North America makes up 51% of the global market which it forecasts will expand to $1.57 billion this year and continue to grow at around 11.9% a year to reach $2.7 billion by 2027. Growth is being achieved despite fears of worldwide recession and economic uncertainty given the impact of the Russian invasion of Ukraine, spiralling costs of goods and rising inflation and interest rates, Verdantix says.
Its report forecasts the North American market will continue to dominate global EHS software spending even though spending in emerging regions has been growing at a faster rate for some time. The number of oil and gas, chemicals and construction firms in North America mean it will remain the biggest market.
However another factor which will drive spending and technology innovation is continuing tough action by regulators – a recent example is discount retailer, Dollar Tree which faces potential penalties of $1.2 million after inspections by the US Occupational Safety and Health Administration (OSHA) uncovered a series of workplace safety violations.
Globally the sector is attracting private equity investment which is also helping to expand the EHS software market, and the market is benefiting from increasing digitization in the aftermath of the COVID-19 pandemic. Procurement teams are increasingly looking to consolidate EHS solutions into a single management platform with the aim of centralising ESG and EHS data with larger deals likely to further expand the market, Verdantix says
Chris Sayers, Industry Analyst at Verdantix said: “EHS software is steadfast and even through recessions there is a low removal or replacement risk. The North American market will continue to dominate global EHS software spend in 2022.
“North America has long been one home to some of the most mature EHS software markets. EHS vendors are in a superb position to deliver on core ESG competencies. This signals the long-term growth opportunity available to a sector that has already leapt at the lucrative ESG market through brand repositioning, strategic acquisitions, and in-house product developments.”