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Segmenting the S2P market for ESG and sustainability technology: 5 key solution types to know and their vendors

07/19/2021 By

Sustainability is a vital but difficult topic to discuss fluently. Many issues that fall under the remit of ESG have relevance to procurement, yet they also have relevance to other business functions, creating an overlap that can muddle one’s understanding of the market boundaries by which we include or exclude certain vendors from being classified as a provider of ESG technology in procurement.

Looking at the broad range of solutions available to tackle the glut of ESG challenges that organizations are facing, one may be tempted to deem this a distinct category or market. Yet as we conducted our initial research into this area, we have found a surprising degree of technology capability, current or emerging, even with “standard” providers in the S2P and supplier management categories.

Indeed, sustainability and ESG requirements are no longer “niche.” Rather, they are beginning to permeate everything procurement does, whether at simple maturity levels like integrating basic ratings into supplier profiles to more complex challenges like bottoms-up modeling of carbon emissions from bills of materials throughout a supply base.

Because of this, it is almost more accurate to describe sustainability in procurement technology as a meta-market — a new lens through which to view not only the common categories but also specialists and upstarts that procurement may not yet have on its radar, but perhaps should. In short, sustainability is not a siloed activity but part of a shift in how procurement thinks about its processes.

To help organizations understand this view of the technology options, we segment providers into five broad categories:

  • Source-to-pay suites
  • Supplier management specialists
  • Risk management specialists
  • Supply chain visibility specialists
  • ESG specialists

For each category, we list a sample of providers, and future PRO coverage will focus on some of the vendors.

Now let’s dig into how the market is taking shape.

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ESG (Environmental, Social and Governance)