Growing awareness of sustainability and the threat of a worldwide 1.5°C temperature increase is prompting strategic shifts in government and organizations.
Companies are adopting carbon management tools to address the potential 18% GDP loss from climate change by 2050. These tools, used to calculate, manage, monitor, and report emissions, help measure operational emissions throughout the supply chain.
ABI Research projects the carbon management software market to grow at a CAGR of 19.7%, reaching US$5.5 billion by 2032.
Scope 3 emissions, which can be 5 to 25 times higher than Scope 1 and Scope 2 emissions, constitute up to 90% of the overall environmental impact, according to the Carbon Disclosure Project (CDP).
Accurate measurement of Scope 3 emissions is crucial for businesses to enhance resilience and efficiency throughout the supply chain.
Rithika Thomas, sustainable technology analyst at ABI Research says only what is measured can be managed. She added that taking responsibility for carbon emissions is the first step to mitigating catastrophic climate-related disasters.
“Accurately measuring Scope 3 emissions provides invaluable insights which will equip organizations to increase resilience and efficiency over the entire supply chain, future-proofing the company, and de-risking value chain from climate-related financial threats.” Rithika Thomas
The carbon management market is shifting from voluntary to mandatory reporting due to regulations, heightened climate change awareness, digitization of production, customer and investor pressure, and the pursuit of transparency for a competitive advantage.
Currently, the sustainability software market is a mixed bag with overlapping features and functionality with ESG, carbon management, smart building management, lifecycle analysis, and allied sustainability features.
According to Thomas, “As international and country-specific policies stabilize, there will be a significant growth shift post-2026 in the software suppliers and user base in Asia-Pacific and emerging markets.”
A robust ecosystem will develop around carbon software tools with dedicated expert solutions for each reporting aspect to address credibility, accuracy, and auditability.
Software developers should focus efforts on automating calculations, building industry-specific solutions with data assurances, and integrating AI and predictive capabilities to create value with actionable insights for end users to truly thrive in the current fragmented landscape. “As forward-looking companies and larger corporations are applying carbon management tools at scale, long-term strategic goals on sustainability become more evident with tangible short-term metrics,” Thomas concludes.