Supply Chain Sustainability Software: The Answer to ESG Regulations and Shareholder Expectations

Sustainability has established a firm foothold in supply chain operations, driven by government regulations and external pressure from consumers and shareholders to demonstrate climate responsibility. Supply chain sustainability software has evolved from a “nice-to-have” technology to a must-have. In this resource, ABI Research analyzes the revenue generated from these compliance-enhancing software platforms, the key catalysts for adopting them, and strategic recommendations for technology vendors and supply chain stakeholders.

Market Overview

The global market for supply chain sustainability software is poised for robust growth. ABI Research projects the market to expand from a US$3.91 billion size in 2023 to US$10.52 billion in 2030, at a Compound Annual Growth Rate (CAGR) of 15.2%. Europe dominates the market, holding a 63% share in 2023, largely due to comprehensive regulations such as the Corporate Sustainability Reporting Directive (CSRD) and the Carbon Border Adjustment Mechanism (CBAM). These regulations require firms to comply with supply chain emissions disclosures and share the sustainability performance of imports.

While political challenges have complicated the Environmental, Social, and Governance (ESG) agenda in the United States, state-level actions—such as California’s 2023 climate disclosure law—are catalyzing supply chain sustainability software adoption. New York and Colorado have introduced similar legislation, reinforcing the momentum for Scope 1, 2, and 3 emissions reporting compliance.

Transparency Demands Reshape Supply Chain Software

Historically designed to streamline cost, quality, and efficiency, supply chain management platforms are undergoing a transformation. ESG compliance is now embedded as a core function, with tools offering features such as ESG compliance reporting, supplier risk management, and sustainable procurement. This evolution underscores the growing need for visibility and traceability across entire supply networks.

At the heart of the shift to supply chain sustainability software is due diligence. Regulations like the European Union’s (EU) forthcoming Corporate Sustainability Due Diligence Directive (CSDDD) require businesses to actively prevent and mitigate adverse environmental and human rights impacts. Doing so demands deep integration of ESG standards throughout the value chain.

Digital Technologies Augment Supply Chain Sustainability Software Platforms

To support these evolving supply chain compliance and operational demands, companies are turning to advanced digital technologies. Artificial Intelligence (AI) enhances software platforms designed for the collection and synthesis of supply chain sustainability-related data. It provides improved ESG analytics and emissions modeling. Meanwhile, blockchain offers immutable, real-time tracking capabilities, enabling companies to validate supply chain claims and ensure supplier accountability. These digital tools are instrumental in establishing the level of end-to-end supply chain transparency required under emerging climate disclosure frameworks.

Stakeholder Pressure Compels Proactive Adoption of Supply Chain Sustainability Software

Regulatory compliance is only one driver—growing stakeholder scrutiny is equally influential. Shareholders and consumers increasingly expect companies to back ESG claims with verifiable data. Failure to do so risks reputational damage and diminished brand equity. As a result, companies are proactively investing in software platforms that can capture, aggregate, and report accurate supply chain sustainability metrics. This approach not only fulfills external expectations, but also builds long-term value through improved operational resilience and stakeholder trust.

Strategic Recommendations

For Vendors:

• Innovate Responsively: The rapidly evolving ESG landscape demands agile product development. Supply chain sustainability software vendors must monitor regulatory trends and maintain close relationships with clients to ensure solutions remain relevant and meet the latest compliance.
• Support Beyond Software: Brand differentiation can be achieved by offering ESG strategy development, roadmap planning, and progress tracking as value-added services alongside software implementation.
• Expand Through Mergers and Acquisitions (M&A) and Partnerships: As the market becomes more competitive, supply chain sustainability software providers should consider strategic acquisitions and partnerships to broaden their ESG capabilities. Sphera’s acquisition of SupplyShift in January 2024 illustrates how added traceability features can enhance a platform’s value proposition.

For Supply Chain Stakeholders:

• Align Software Tools with Strategic ESG Goals: Software selection must be guided by a clear understanding of your sustainability priorities. Compliance tools should align with specific objectives, such as emissions reductions or supplier performance benchmarking.
• Prioritize End-to-End Supply Chain Visibility: Companies must ensure the sustainability software platform they choose provides holistic oversight across all tiers of the supply chain. This includes purchased materials, governance structures, supplier engagement, and effective use of integrated technology solutions.
• Embed Sustainability Across the Value Chain: Long-term competitiveness will depend on making sustainability software an intrinsic component of supply chain operations. This involves continuous investment in digital tools that support ESG performance and transparent communication of those efforts to stakeholders.

Key Companies Covered

• SAP
• Infor
• Oracle
• Blue Yonder
• Sphera
• Makersite
• IBM
• iPoint

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