ESG Advisory Market

The ESG advisory market size is expected to grow from USD 14,200.5 million in 2023 to USD 59,587.9 million by 2030, at a CAGR of 25.0% from 2024 to 2030. ESG stands for Environmental, Social, and Governance. It is a framework used to assess an organization's business practices and performance on various sustainability and ethical issues. It also offers a way to measure business risks and opportunities in those areas. ESG criteria is now used by some investors in capital markets to evaluate companies and then plan investments. The practice is known as ESG investing. Organizations are now more inclined to engage multiple consulting partners in their sustainability journeys. In this respect, organizations may use specialized expertise for specific projects while still relying on primary consulting firms for overarching strategies. This trend underlines the complexity of navigating the sustainability landscape, where businesses must contend with issues such as reputational risk and coherence in sustainability narratives to avoid greenwashing concerns.

According to the by type segment, the ESG advisory market has been categorized as strategy & planning, testing, auditing & verification, sustainability marketing, and technical support. The strategy & planning market is the base of the ESG Advisory market as well as it acts as the base for an entire company's journey regarding ESG. This is an ESG Advisory segment that holds the highest market share because it has the core nature of it and is in a direction that leads to all the ESG activities. This segment holds a high growth rate based on the increasing number of companies starting their ESG ventures. Most companies do not have sufficient internal resources to create a strong ESG strategy and therefore rely mostly on external advisors to help. ESG considerations are usually complex and include a broad mix of environmental, social, and governance issues that require professional advisory expertise to help understand and prioritize these issues. Companies must also ensure that their ESG strategies are in line with overall business goals and risk management frameworks, making strategy and planning important. In this process, stakeholder engagement, industry analysis, and life cycle assessment determine the critical areas of focus. Another crucial service is ESG goal setting, including the development of SMART goals specific to ESG performance, that are Specific, Measurable, Achievable, Relevant, and Time-bound. These goals need to be ambitious yet achievable as compared to the company's baseline and industry benchmarks to make sure they are both challenging and realistic.

The ESG advisory market has been segmented into by sector segments such as energy & utility, BFSI, healthcare, manufacturing, pharmaceutical & biotechnology, retail, and others. Energy & utility is a sector of tremendous change due to very ambitious decarbonization targets coupled with the increasing adoption of sources of renewable energy and the gradual evolution of customer expectations, thereby offering a considerable prospect for ESG advisory within the sector. The challenge of transforming towards cleaner sources of energy while trying to reduce climate risks for energy companies is very fundamental. ESG advisors could aid in strategies for minimizing greenhouse gas emissions and preparing them to face the physical impacts of climate change, including extreme weather patterns. Integration of renewable energy, such as solar and wind, into the present grid infrastructure requires technical advice. They guide the transition into grid modernization, providing the best solutions in terms of storage and in dealing with variability. Advisors could help enable companies to achieve affordable and reliable renewable integration. The energy & utility industry is in a major period of transformation based on reaching net zero. While 2023 indicates a promising trend of modest 1.3% growth in global energy consumption, most likely due to an economic slowdown, the road to a sustainable future is far from straightforward. Even with ambitious decarbonization targets to combat climate change, there are challenges to be met. Coal use is expected to rise slightly, largely to replace lost natural gas supplies. Additionally, extreme weather events, becoming more frequent and intense, might force some countries to rely more heavily on fossil fuels, temporarily delaying the transition to cleaner energy.

A few of the players operating in the ESG advisory market include McKinsey & Company (US), KPMG (Netherlands), EY (Ernst & Young) (UK), Deloitte (UK), and Boston Consulting Group (US) among others.