U.S. Companies Invest in AI and Digital Solutions for ESG Goals

Companies implement industry-specific, AI-enabled solutions to achieve business benefits beyond compliance, ISG Provider Lens™ report says

A recent report from Information Services Group (ISG) III, a global technology research and advisory firm focused on AI, indicates that American companies intend to continue their investment in digital initiatives related to sustainability and ESG (Environmental, Social, Governance), despite political uncertainties.

Market Evolution and Regulatory Changes

The 2024 ISG Provider Lens™ Sustainability and ESG report highlights a rapidly evolving market for digital solutions that aim to enhance environmental and social sustainability as well as corporate governance. While some federal regulations may be relaxed under the current administration, many organizations believe that digital sustainability initiatives are crucial for maintaining brand value, minimizing risks, and cutting costs.

Growing Importance of ESG Reporting

“Companies in the U.S. recognize that mandatory ESG reporting is a matter of when, not if,” stated Matt Warburton, Digital Sustainability lead for ISG. “Achieving accurate reporting will require both investment and time.”

Investor interest has shifted, with a notable increase in demand for environmental solutions over social sustainability or corporate governance strategies. The report notes that the market for data platforms and managed services is expanding the fastest, propelled by intensifying global regulations.

Seeking Customized Solutions

More enterprises are discovering that sustainability solutions are not uniform, prompting them to seek tech partners with specific regulatory expertise relevant to their sectors. AI, machine learning (ML), and Internet of Things (IoT) applications are especially favored in asset-heavy industries such as power, utilities, manufacturing, and transportation.

AI’s Role in Sustainability Efforts

AI and ML have emerged as essential tools for fostering effective ESG solutions, with generative AI gaining traction in this domain over the past year. The initial GenAI-enabled offerings have created optimism regarding their ability to tackle sustainability challenges, particularly in reporting. For these tools to showcase a solid return on investment, they must be customized for specific scenarios.

Integration into Digital Transformations

Many U.S. firms are amalgamating sustainability initiatives into broader digital transformation projects. Typically, these projects account for 5 percent to 10 percent of total program costs, sharing implementation expenses for enhanced financial efficiency.

“Many sustainability initiatives lower costs and help companies retain customers and attract employees,” remarked Jan Erik Aase, partner and global leader at ISG Provider Lens Research. “These effects amplify the advantages of digital transformation.”

Key Findings and Trends in ESG

The report also examines notable trends in sustainability and ESG, including the influence of European ESG regulations and the potential regulation of AI’s social impacts.

For more insights into the challenges U.S. enterprises face regarding sustainability and ESG, such as a shortage of qualified experts and a lack of employee education on sustainability, see the ISG Provider Lens™ Focal Points briefing linked here.

Evaluating Provider Capabilities

The 2024 ISG Provider Lens™ Sustainability and ESG report analyzes the capabilities of 100 providers across four categories: Strategy and Enablement Services, OT & Industry Specific Solutions, IT Solutions, and Data Platforms and Managed Services.

Leaders recognized in all four sectors include Accenture, Capgemini, Cognizant, HCLTech, IBM, Infosys, TCS, and Wipro. Deloitte, EY, Microsoft, NTT DATA, and PwC are acknowledged as Leaders in two quadrants each, while BCG, CGI, Cority, EcoVadis, ERM, Kyndryl, LTIMindtree, McKinsey & Co., SAP, Schneider Electric, VelocityEHS, and Wolters Kluwer are named as Leaders in one quadrant.

Hitachi Digital Services is identified as a Rising Star, demonstrating “promising portfolio” and “high future potential” according to ISG’s criteria, in two quadrants. Schneider Electric and Sphera are also noted as Rising Stars in one quadrant each.

Customer Experience Recognition

In customer experience, PwC has been named the global ISG CX Star Performer for 2024 among sustainability and ESG providers due to achieving the highest satisfaction scores in ISG’s Voice of the Customer survey, an esteemed recognition in the technology and business services sector.

The 2024 ISG Provider Lens™ Sustainability and ESG report for the U.S. is accessible to subscribers or available for one-time purchase on the ISG website.

About ISG Provider Lens™ Research

The ISG Provider Lens™ Quadrant research series is unique in its approach, integrating empirical research and market analysis with practical insights from ISG’s advisory team. The reports offer substantial data for enterprises to inform their sourcing decisions, while ISG advisers utilize this research to enhance their market knowledge and provide recommendations to clients. The research encompasses global markets, including the U.S., Europe, Canada, and several other regions, with plans for further expansion.

About ISG

ISG III is a leading global AI-centric technology research and advisory firm. With over 900 clients, including 75 of the top 100 enterprises globally, ISG utilizes its proprietary market data and expertise of its professional team to assist organizations in achieving operational excellence and accelerated growth. Founded in 2006, ISG has established a reputation for excellence in both technology and business services.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250227679933/en/

Press Contacts:
Will Thoretz, ISG
+1 203 517 3119
[email protected]
Julianna Sheridan, Matter Communications for ISG
+1 978-518-4520
[email protected]