2026.09.29 | TB | Software | Sustainability Software Market Expert

Client-led • 29 Apr 2026

Companies: WK US, WKL NL

Expert Former C-level Executive at Position Green Group Holding AS

Agenda

• Over five years' experience in the European sustainability software space, driving commercial strategy and client engagement across regulated markets
• Well-placed to discuss competitive dynamics, M&A vs partnership expansion strategies, AI integration and shifting regional market attractiveness
• Comprehensive knowledge of vendor differentiation, with deep insights into regulatory impacts, market recovery timelines and climate risk solutions
• Disclaimer: This transcript has been translated from the language in which the interview was conducted. The translation process included the use of artificial intelligence. This translation may contain errors or omissions and may alter the nuance, emphasis, or meaning of the original statements. Third Bridge does not guarantee the accuracy or completeness of the translation. Only the translated version is published; the original-language transcript is not made available.

Introduction

Client [00:01:15]: I am currently doing some research on sustainability software space in Europe and looking a bit at the North American space. I’m trying to understand the latest market trends, where consolidation is happening. I’m not looking at any specific company but rather the competitive landscape.

Questions

00:03:46] I am aware of what happened with Omnibus and my impression is that all European players have been impacted by this regulatory change. It seemed to me this would have an impact lasting a few months or even 18 months at most. I had the impression that there has not really been a recovery, but I would really value your view on this. Do you think the market will recover in the coming months or later?

Expert [00:04:33]: It is interesting. Omnibus, I think it has reduced the market by 90%, so it is now a much smaller market size. As a result, there are certainly fewer clients to target. At the time, there were roughly 40,000-45,000 companies in Europe that were impacted. Today, we are talking about around 10,000, or even fewer, given the new standards that have been adopted, the new thresholds that have been adopted by the European Parliament, and which validated the proposal from the European Commission. As a result, we are now mainly talking about large companies which have often already purchased solutions in the past. So they are already equipped. This makes prospecting this segment of the market more difficult, and it may already be saturated. What I think that also needs to be considered, beyond Omnibus are all these developments in artificial intelligence. We all see it in our work. Tools like Claude, Coworker and others that have emerged.

I also think that even for ESG reporting, there is almost no longer a need to equip oneself with software tools. It is enough to upload the legislation into an artificial intelligence interface, then upload all the company’s internal documents, and it generates the reporting automatically. So, this is not just for the ESG sector, but also for SaaS in general. These tasks are now centralised through standard subscriptions with ChatGPT, Claude and others. So this is also perhaps one of the reasons that is cannibalising the current ESG market. Certainly, Omnibus has had a major impact. There was a year and a half of uncertainty in 2024-2025. Today, that likely continues, and it is a much smaller sector. As a result, it no longer has the same potential as before for entering this market.

00:07:18] Do you see any players who are at different stages of development in these areas, whether in terms of AI offerings or adoption?

Expert [00:07:50]: What is certain is that all players are now integrating AI features into their platforms. These are AI wrappers, so essentially APIs from OpenAI or Anthropic Claude in the backend, with a simple interface and a few additional features built into the frontend.

I think that what will differentiate players in the sector, even in terms of features, is how they customise the AI database so that it truly becomes a tool tailored to the needs of the sector. To give an example, you have startups like Harvey and Legora in the legal sector. They also use Anthropic and OpenAI APIs in the backend, but they have configured databases of legislation, case law, and other sources to provide much more precise answers that better meet the needs of their clients, who are lawyers. If I draw a parallel with the ESG sector and sustainability leaders, the idea is not only to take the latest legislation, but also to collect a wide range of sustainability reports, whether published or not, and use all this information as a foundation so that the AI tool can provide better recommendations to the user. So, if we are talking about reporting as such, these features are useful, but you can achieve the same thing with Claude or ChatGPT.

However, if an ESG player, a software provider, works with a much broader database, including a wide range of reports and industry data, as well as other useful sources of information to generate recommendations, then it becomes possible to create features that truly differentiate that player from others. We can clearly see that the market is shifting, with providers moving from reporting tools to recommendation tools, return on investment analysis, or actions aimed at improving a company’s sustainability, with a direct impact on financial performance. This is where it becomes possible to offer features with much greater added value for corporate clients today. It is no longer just about reporting. You can see what the rest of the market is doing, here are the recommendations generated based on my use case, in which sector do I operate, and here is how I can link the recommended sustainability actions to my financial plan. I think that this is really the key in the market today.

To come back to your question about the leading players in the market, certainly Position Green, is one of the key players. There are also a number of mid-sized and smaller players that are gradually either disappearing or being consolidated by larger players. The largest players include Position Green and Workiva. Then you also have more established players such as Enablon and Wolters Kluwer, among others, that dominate. Then there is a wide range of smaller players. To be honest, from an investment perspective, I think it is quite a difficult market.

Consolidation is really the norm and the main way to build a player that can win in the long term. I think that beyond software, the entire advisory and consulting side is also important. Clients are somewhat lost when it comes to software, so they often look for human guidance as well. A hybrid model combining software and consulting is also gaining traction when we look at the market. When we look at which players are offering this hybrid approach, they are often the ones leading the pack.

Client [00:12:40]: I had the impression that the consulting side was managed by the Big Four, who now all have Envisio, a specialised ESG consulting division.

Expert [00:12:56]: That is true, but they tend to remain generalist consultants. They will address sustainability, but they will not have deep expertise in specific areas. So there will always be more boutiques or specialised consulting firms that can provide much more tailored answers. Even more so if it is a hybrid model where these consultants are linked to AI software tools, which makes it possible to offer a much more attractive service at a lower cost.

That said, Big Four players also have their own tools. Sometimes, they use the tools we mentioned. For example, Deloitte and PwC use Workiva. They have partnerships with them. So it remains true that Big Four firms are more likely to be engaged by large companies, also for liability reasons. For example, if a report is poorly prepared, the company bears responsibility, and therefore that responsibility can be shifted to the Big Four. This is not necessarily the case with a software provider used for reporting or with a smaller consulting firm. So that is something to consider.

Now, if you can give me a bit more clarity on your target, I can provide a more detailed analysis based on my experience of the market in terms of features and offerings.

00:14:49] Are there any European markets that are more or less competitive, more or less developed or more or less penetrated than others? Which regions are the most or least attractive?

Expert [00:15:25]: Naturally, the Nordic and Scandinavian countries are both the most advanced in terms of sustainability. In terms of maturity and leading players in the region, you have Position Green, which is the number one player. I think there are others that are slightly smaller in Finland and Norway, but Position Green is still the leading provider of solutions in the space for Nordic companies. In the United Kingdom as well. In Germany, there are some more recognised name — Verso or Plan A. In France, there is a wide range of players operating locally, both large and small. For example, I know that Schneider Electric offers its own solution. There are also mid-sized players such as Zei and others. In Southern Europe, there is a Spanish player, whose name escaped me for a moment, Plan A, I think, which is more dominant in Italy and in Germany.

Client [00:16:47]: Plan A has been acquired.

Expert [00:16:50]: It was acquired by Diginex. So yes, there are more dominant players in different geographies. Now, this needs to be qualified. When we talk about tier one clients of companies, they will systematically go to players such as Workiva, Enablon, and Wolters Kluwer. When we talk about mid-sized companies, they will often go to these dominant local players, for example German ones. That said, some of these players also have tier one clients, but we do see a distinction. Why do they go to Workiva? Because Workiva already manages financial reporting, so it allows them to combine both. At the time, there were also SAP, which had its own ESG solution, Microsoft, and others, but they never really took off in the same way. So yes, the market has evolved.

In terms of consolidation, there have certainly been several transactions. Plan A was acquired by Diginex. There have been a series of other acquisitions in France as well. A private equity firm acquired a stake of one player — what was its name again, the one starting with K? Remind me of the main French players you have been tracking.

Client [00:18:30]: You mentioned Zei, kShuttle and Tennaxia.

Expert [00:18:35]: kShuttle was taken over by a PE firm that now holds a majority stake. What was the first one you mentioned?

Client [00:18:51]: Sweep.

Expert [00:18:53]: Sweep as well, which is one of the major French players, probably the leading one in France. Sweep is quite interesting. It started with carbon accounting, then expanded into ESG reporting. So it remains one of the key references in France. I remember that among various clients, Sweep was often mentioned among the top names, along with Workiva, in the French market. Now, Sweep, I know they have raised significant funding for API. I think it is an interesting target in terms of revenue, but I do not know the details. It is true, it is also one of the top five players in Europe.

00:19:51] In light of these market changes, some players have been the most successful in adopting AI. Beyond AI, what strengths or strategies have some of these players been able to implement to successfully weather these changes? Have they turned to new, related markets or launched new products? Have they expanded internationally? Have they entered into partnerships? What has enabled them to hold their ground?

Expert [00:20:27]: On the product side, the main categories are carbon accounting, which is still performing well. You also have US players entering Europe, such as Persefoni, which is increasingly targeting European clients. So carbon accounting is the first product. The second is ESG reporting based on regulation, voluntary standards such as GRI and others. Then you have all the solutions related to recommendations, how to improve sustainability, return on investment, and so on.Then there is the entire consulting offering, which covers all three but also goes beyond. So when you build your analysis framework, each player will cover one of these four offerings and will be stronger in one than the others. Either they cover all of them, or they focus on a specific segment and become a leading player, for example in carbon accounting with some reporting capabilities alongside.

Now, everyone is implementing AI because it has become something clients expect. They want to save time. So it is almost the first item on the roadmap for all these players. However, we are now in a smaller market with many competitors, so there is saturation. So, which players will emerge as winners in this market? Certainly those that have already reached revenues of EUR 10m-20m or more. These are among the few that can raise larger amounts of capital to sustain themselves or become targets for private equity. As a result, they are the primary targets for consolidation, either they will drive consolidation themselves by acquiring smaller companies with revenues of EUR 1m-5m, or they will later be consolidated and become private equity targets.

Consolidation happens either in terms of product offering or geography. For example, a carbon accounting player may acquire a reporting company or a supply chain assessment provider. Or a player may aim to build a European platform by acquiring companies across Southern, Central, or Northern Europe. We have also seen US players acquiring European companies to build cross-Atlantic solutions, as well as players choosing to focus on a single geography. So we have seen a bit of everything. I think that the strategy that works is clearly to reach a minimum scale of EUR 10m-20m and then have the resources to acquire mid-sized players in other geographies, and to consolidate geographically, because product consolidation is less attractive today knowing that with AI, it is possible to build features much faster and at a lower cost. So, the consolidation that works best is primarily geographic where you acquire the client base of a local player, which makes it easier to enter new markets than starting from scratch.

00:24:44] There are some players managing to enter international markets even without making acquisitions. I still find it quite difficult, because even if we have a product that sells relatively easily, a carbon product or an ESG reporting product is fairly similar across European geographies. Local presence is still very important to be able to sell effectively on the ground. I would really value your perspective. Do you think M&A is still the best route, or are there other ways — through partnerships or other approaches — to enter these geographies?

Expert [00:25:50]: For a new geography, you need to hire a strong local profile who already has the expertise and the local network to open doors. It is also possible to build partnerships, for example with local ESG consulting firms that would then offer a software solution. This is the most efficient and cost-effective way to establish a presence in a local market.

However, if you have the resources, and if there is a local software player that already has an established client base, you might as well acquire it and, as a group, become much stronger in the long term. So I think this is the most straightforward approach with a long-term return on investment. That said, it is still possible to enter a market from scratch, build an initial client base, and then develop local partnerships to distribute a software solution.

You do not necessarily need to acquire a local software player. You could instead acquire a local consulting firm, add a technology layer, and optimise margins. Because, of course, consulting businesses have lower multiples than software. So this allows you to acquire at a lower cost and then add the existing technology layer from your core platform.

If I had to do it myself, that is how I would approach it. I would probably start with local sell-through, build partnerships with local consulting firms. But the most effective approach remains acquiring local consulting firms and adding this technology layer so they can deliver their services much more efficiently.

The largest global consulting firms, the Big Four, but there are also boutique firms that have been quite successful. I am searching to recall the name online. There was this global player that conducted significant consolidation, acquiring many ESG consulting firms to build a global boutique ESG player. At some point, these players also became interested in acquiring software companies to add that technology layer. The name will come back to me.

ERM, so ERM.com. It is the number one global ESG consulting firm. It is really focused on advisory. They have acquired a whole series of consulting firms across different geographies to build a global leader. They do not necessarily offer technology. I think they have made a few acquisitions here and there. Personally, I believe that software on its own is becoming a commodity, because with AI, everyone can configure their own solutions. So SaaS is somewhat fading. AI-driven solutions are taking over.

On the other hand, I strongly believe in the augmented services approach, where you consolidate a range of services, meaning ESG consulting firms, and then add a technology layer. So, if as a company, you have a software solution and you have the means to acquire local consulting firms, consolidate them, and add a technology layer to optimise margins and drive growth, I think that is what will enable the creation of a European and global leader in the medium to long term. So it is really this augmented services approach that will work, not pure technology, because AI is cannibalising it. I use Claude daily and I can see that I need fewer and fewer SaaS solutions, not only in ESG but more broadly. So an augmented services approach is the winning strategy for the future.

00:31:00] Do you see any regions in Europe where you feel competitive intensity is particularly high compared to others?

Expert [00:31:31]: Yes, certainly. There are some geographies where a wide range of different players are proliferating. There is no single dominant player, so in Europe, there are clearly multiple players in each country. As a result, it becomes difficult to enter the market. In France, for example, with Sweep, Zei, kShuttle and others, it becomes difficult for one player to dominate the others. So consolidation will very likely be needed to create a French champion. It is the same situation in Germany. You have Plan A, Verso, and other names competing against each other. In the US, the main players are Sphera, Workiva, and Cority. Cority has also conducted significant consolidation. More recently, Watershed and Persefoni have emerged in carbon, slightly later than Sphera or Workiva.

I think that with Omnibus, over time, more companies will either shut down or be consolidated. At some point, dominant players will emerge in certain geographies, and competitive intensity will decrease over time.

00:33:28] It is mainly the large players in Europe and the US that will consolidate the market. Do you also see a scenario where several mid-sized players such as Plan A or players similar to Verso decide to join forces and grow together? Do you really see the existing large incumbent players continuing to dominate the market?

Expert [00:34:19]: I think that large incumbent players, such as Wolters Kluwer, Workiva, and others, will continue to dominate. However, the idea of mid-sized players joining forces is desirable, but there is always a business ego factor. These are former competitors, and it is difficult to bring them together.

I think that the only way to make this work is for one of these mid-sized players to be backed by private equity. Private equity would then give them the means to acquire and merge with other players, and to convince them. The idea would be to unite, create economies of scale, and rely on private equity support to drive growth, survive the impact of Omnibus, and go further. Today, I think it is almost a mistake to continue operating on a standalone basis without considering consolidation. The market is much more challenging. It is smaller, with competition from AI and too many players.

So consolidation is essential. I do not think we will see two, three, or four players naturally coming together to form a single entity. It will almost always be one player, backed by capital, proposing consolidation to others in order to sustain long-term growth.

00:35:59] I understand that you do not see a rebound or a return to market growth in the coming months, even with a new wave that has been postponed but is expected to come. Is that correct?

Expert [00:36:34]: No, I think that if we look at the new CSRD, it is limited to these tier one large companies, and most of them are already equipped. So if the focus is purely on reporting, this is a market that has already been cannibalised. The focus needs to shift to other features, more linked to return on investment. There are actions that need to be connected to financial performance. Carbon accounting is still working well, it remains the number one KPI for a range of companies.

We are also seeing that investors are paying less attention to ESG aspects. There has been a shift following Trump, and we can see it starting in the United States and spreading to other regions. So everything related to sustainable finance is losing momentum. So I think that unfortunately, today, and probably for the next two to three years, this sector will remain somewhat subdued. Perhaps with climate change, it will regain momentum later. There may be a turning point. Perhaps the European Commission will decide to relaunch the CSRD and expand its scope. I do not think this can be expected any time soon. I think it will take at least three to five years.

We are in a phase of deregulation, and in ESG, what matters most is the carbon footprint. The rest, all the details, the 2,500 data points in the CSRD, are less important. It is really carbon accounting that matters most. These are the players that will endure. I think that it is a difficult market, and companies need to think beyond reporting and focus on financial returns and on implementing sustainability measures. For example, how much your margins and profits can improve if you become more sustainable. Also everything related to climate risk, how you enable a company to adapt to climate change and protect its profits and operations. So climate risk assessment is something companies will continue to need. Players that offer these types of solutions will be able to monetise in the short to medium term. So overall, I think that pure CSRD reporting remains a difficult market. It is necessary to move beyond simple reporting.

00:39:35] I had been thinking about the climate risk side and I know there are software solutions that allow companies to review portfolio allocation and assets based on climate change. To what extent are insurance companies already doing this climate risk part?

Expert [00:40:17]: I think insurance companies use these tools and already take these risks into account, but they still require the company to provide the data and conduct the analysis. So the company performs the analysis first and then shares it with the insurer to structure the contract based on that climate risk. Investors also take climate risk into account in the same way. It originates with the company itself.

So companies will need tools to conduct this climate risk assessment. To summarise, for me, the three most important capabilities today for a company are as follows. First, the classic one, carbon accounting. Second, climate risk assessment, to anticipate risks and put in place the necessary measures to protect future profits. Third, everything related to sustainability optimisation and its impact on the financial plan, for example, switching to renewable energy, reducing water consumption, and implementing different types of sustainability improvements, what is the impact in terms of cost for the company, or even in terms of revenue and margin optimisation.

So to summarise, these are the three key capabilities. Everything related to reporting falls into another category that is less important today, unless you are a CSRD company. As we said, they can often do it with the Big Four, or directly using Claude, ChatGPT, and similar tools. I think that this is important to consider. To come back to insurance companies, the data must come from the client, from the company itself. So the company needs to be able to collect the data in order to generate the initial assessment.

It is quite an interesting market. It is true that there has been a downside for the past one and a half to two years, and this will show who will survive in this downturn, and those who already have sufficient revenue, strong features, and a stable client base, who can limit losses in ARR and churn, will be able, with private equity backing, to consolidate geographically. In terms of products, it is perhaps less important, especially if acquisitions can be made under conditions where acquiring a product is cheaper than building it from scratch. But honestly, with AI today, the cost of developing additional features is quite low.

So for me, I would focus M&A primarily on a geographic basis to build a European, transatlantic, or even global leader. I would acquire consulting firms to enter new geographies, access their client base, and add a technology layer. I would wait three to five years for a new shift in mindset driven by policy, with renewed momentum from the European Commission, and possibly from a new US administration that could revive the topic. So I do not think this is a lost market. I would invest, but I would invest in the right player, one that is already consolidated and has strong long-term potential.