ESG and tech sourcing teams must clarify: tech giants, specialists, or both?

Tech giants continue to consolidate ESG and sustainability capabilities—aiming to be the path of least resistance for corporate sustainability initiatives. Enterprise sustainability and technology sourcing teams, collaborating with their CFO and cross-organizational teams, must therefore decide and continuously assess: is there clear value on both the business and sustainability metrics from specialists? Or do they decide to go all-in with their largest corporate technology provider? In doing so, they bank on two benefits.

First, enterprise platforms can integrate the data needed for sustainability compliance and beyond to drive positive impacts across organizational silos. Second, leveraging existing platform providers’ new sustainability capabilities is a more efficient use of limited sustainability team time, energy, and finance. Tech firms, large and small, must clarify their value propositions, as consolidation also means new competitive fronts among the biggest existing players (not only a headache for new disruptors).

Few businesses will settle on a long-term strategy of a broad range of ESG and sustainability technology vendors

Microsoft tops the technology partner stack in leading sustainability consulting, technology, and business services firms as per our latest market analysis (see Exhibit 1). But all the largest firms—the usual suspects of enterprise technology—are unsurprisingly the most common partners in the top 10. This is not only because of their size but (this may be an obvious statement) their existence as both enterprise technology platforms and service provider partners—a clear route to expansion. Tech giants aim to be a convenient and ‘good enough’ option for typically overwhelmed and under-resourced sustainability teams; we will soon separately publish on Microsoft’s further consolidation of its ESG and sustainability solutions.

Exhibit 1: Tech giants consolidate ESG and sustainability capability, widening the path of least resistance for businesses

Source: HFS Research, 2025; the 25 leading sustainability services firms in our latest market analysis

Enterprise sustainability teams are not time-rich, and navigating the ESG and sustainability technology landscape doesn’t help

The specialist market is crowded—startups and SMEs cover everything from niche analytics and AI applications to all-encompassing ESG reporting solutions and tools to drive positive, sustainable impact and business value. Spare a thought for the LinkedIn inboxes of chief sustainability officers (CSO). Lack of time and often IT and technology expertise—not helped by the highly similar and vague marketing language used by many sustainability tech firms—increases the appeal of the convenient and competent offerings from big techs.

How many additional features will impress the CSO (and the CIO, CTO, CPO, and CFO making sustainability sourcing decisions alongside them)? Is it when an enterprise platform is already embedded? How many features will seem worthwhile using extra time, resources, and financial investments? 2025 is the year of the EU’s Corporate Sustainability Reporting Directive—it needs to go beyond reporting to impact, which we will cover separately soon. Alongside the need for systemic sustainability change is regulatory compliance—and technology will play a role.

Even if a decision maker finds that big techs’ sustainability and ESG capabilities are not the most technically competent compared with the vast swathes of specialists in the market, the more large tech firms consolidate these capabilities into their platforms, the easier it will be for enterprises to meet a high standard. This certainly includes the ‘bar for entry’ of reporting and data analytics, and with the right internal talent, to turn that into roadmaps and action.

The value of cross-enterprise platforms for sustainability meets a business need to break down organizational and ecosystem silos

Can specialists compete and plug into the parts of an enterprise necessary to report and fully address all sustainability goals? Consider these three enterprises we recently spoke to as examples:

• A British multinational consumer healthcare company walked us through its aim to elevate sustainability practices from compliance to ‘transformative value,’ including new packaging strategies and ‘strategic contributions to its sustainability agenda.’ Its challenges include siloed systems, limited resources, and insufficient internal sustainability expertise. High-quality, integrated data and processes are thus critical for mitigating reputation risks and ensuring effective reporting. By addressing these gaps, the company aspires to build trust among consumers and stakeholders, standardize systems, and enhance sustainability reporting to bolster its reputation and achieve meaningful business outcomes.
  
• A global biopharmaceutical company is transitioning toward new business models that emphasize sustainability beyond compliance. Over three years, it aims to integrate circular economy practices, reduce carbon and water usage, and improve waste management. Data accuracy and robust reporting are critical for complying with regulations and supporting sustainability goals (as is trust in the technology companies it works with). The company faces resource and time constraints, complex data challenges, and skill gaps but seeks to lead in sustainability while achieving long-term relevance and competitive differentiation.
  
• A financial services company seeks a leadership position by integrating sustainability into its business model and financial reporting. Its goals include improving retirement and financial security, advancing climate action, and offering innovative, transition-focused products. The challenge involves managing regulatory complexities, fragmented processes, and resource demands. By building transparent data systems and aligning stakeholders, the company aims to drive financial and environmental impact, ensuring robust compliance, informed decision-making, and differentiation in the marketplace.

The Bottom Line: Sourcing teams see tech giants consolidating their ESG and sustainability functionality, proving outcomes in customer stories, and connecting siloed functions. Can they also identify where and when specialists have a distinct value proposition?

The ESG tech market is brutal but has enough space for any firm, large or small, that can successfully articulate enterprise value and impact: the efficiency it brings to reporting and then the added value it layers on top for the environment, people, and the business.

However, there is limited enterprise sustainability mindshare available—disruptors have found out the hard way in other emerging technology waves, such as process and workflow automation, especially when big techs develop their own versions or acquire them.