ESG Rating Service Market – Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Service Type (ESG Assessment and Ratings, ESG Data Verification, ESG Reporting and Disclosure, ESG Strategy Consulting, Assurance and Compliance Services, Other Customized ESG Solutions), By Application (Investment and Asset Management, Corporate Governance and Risk Management, Sustainability and Supply Chain Management, Climate Change and Resource Management, Other Sector-Specific Application), By Region & Competition, 2020-2030F

Market Overview

The global ESG Rating Service Market was valued at USD 12.32 Billion in 2024 and is expected to reach USD 16.69 Billion by 2030 with a CAGR of 5.25% during the forecast period. ESG ratings have gained significant importance as stakeholders investors, customers, employees, and regulators demand greater transparency and accountability from companies. The future of the ESG rating services market looks very promising. Increasing awareness of sustainability, responsible investment, and corporate governance practices is fueling the demand for ESG reporting. Companies are recognizing the necessity of incorporating ESG factors into their business strategies to mitigate risks, enhance operational efficiency, and build trust with stakeholders. Consequently, the demand for ESG reporting services is anticipated to experience substantial growth.

Market Drivers

Rising Demand for Sustainable Investment

The increasing global focus on sustainability has significantly driven the ESG (Environmental, Social, and Governance) Rating Service Market. Investors and businesses are becoming more attuned to the importance of integrating sustainability into their decision-making processes. As environmental concerns, social equity, and corporate governance issues gain traction, there is a growing need for reliable and comprehensive ESG ratings that assess the sustainability of investments. Institutional investors, pension funds, and asset managers are increasingly prioritizing ESG factors when selecting companies for investment. This shift is being fueled by the growing awareness among investors of the risks associated with poor environmental practices, social inequalities, and weak governance structures. Additionally, numerous financial regulations are encouraging companies to disclose ESG metrics, further pushing the need for ESG ratings. This increasing demand for sustainable investments and the associated regulatory pressure are creating opportunities for ESG rating services, as companies and investors alike seek data-driven insights to make informed choices.

Government Regulations and Corporate Disclosure Requirements

Another major driver of the ESG Rating Service Market is the tightening of government regulations and corporate disclosure requirements related to environmental, social, and governance practices. Governments worldwide are implementing policies that require businesses to disclose their ESG performance, with many introducing laws and frameworks to hold companies accountable for their sustainability initiatives. Notable examples include the European Union’s Corporate Sustainability Reporting Directive (CSRD) and the U.S. Securities and Exchange Commission’s (SEC) proposed climate disclosures. These regulations aim to provide more transparency and standardization in ESG reporting, making it easier for investors and other stakeholders to assess a company’s ESG performance. As regulatory pressure increases, businesses are turning to third-party ESG rating services to ensure they comply with reporting requirements and to gain credibility in the eyes of investors, customers, and regulators. This growing need for reliable ESG data and transparent reporting has led to a surge in demand for ESG rating services, fueling market expansion.

Consumer and Stakeholder Pressure for Accountability

In addition to investor and regulatory drivers, consumer and stakeholder pressure is playing an increasingly significant role in the growth of the ESG Rating Service Market. Consumers, employees, and other stakeholders are becoming more conscious of companies’ social and environmental impacts, and they are demanding greater corporate accountability. Social media and public advocacy campaigns have amplified this pressure, with businesses under scrutiny for their environmental footprint, labor practices, and governance policies. Companies that fail to meet the expectations of consumers and other stakeholders risk facing reputational damage, decreased customer loyalty, and potential boycotts. As a result, businesses are increasingly seeking ESG ratings to showcase their commitment to sustainability and to ensure they align with the values of their stakeholders. Additionally, customers are more inclined to support companies that demonstrate responsible practices, and employees are seeking employers with strong ESG policies. The growing importance of ESG factors in purchasing and employment decisions is driving companies to adopt ESG frameworks and ratings, making them essential for improving reputation, attracting talent, and securing consumer trust. This societal shift towards holding companies accountable for their ESG performance is a major contributor to the expansion of the ESG Rating Service Market. 

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Key Market Challenges

Lack of Standardization in ESG Metrics

A major challenge in the ESG Rating Service Market is the absence of standardized metrics and reporting guidelines. ESG ratings are based on various criteria, including environmental impact, social responsibility, and governance practices, but different rating agencies may use different methodologies, leading to inconsistencies. This lack of uniformity makes it difficult for investors and companies to compare ratings and assess true ESG performance. Without universally accepted standards, companies can interpret ESG factors in varying ways, which complicates the ability of stakeholders to make well-informed decisions. Furthermore, the lack of standardization leaves room for confusion and increases the risk of greenwashing, where companies may inflate their sustainability claims to gain higher ratings. This challenge calls for the establishment of universal ESG reporting frameworks to improve consistency, transparency, and reliability in ESG assessments across industries.

Limited Availability and Quality of Data

The availability and quality of data pose another significant challenge for the ESG Rating Service Market. Many companies, especially in emerging markets or small industries, struggle to provide comprehensive and accurate ESG data. Some companies may not have robust systems in place to track and report their ESG performance, leading to gaps or discrepancies in the information provided. Additionally, some ESG metrics, particularly those related to social and governance factors, are inherently difficult to measure, making data collection more challenging. Poor data quality can lead to inaccurate or incomplete ratings, affecting investors’ ability to assess a company's sustainability efforts accurately. There is a growing need for better data collection systems and corporate transparency to improve the accuracy and reliability of ESG ratings.

Key Market Trends

Increased Demand for Data-Driven and AI-Powered ESG Ratings

One of the most significant trends in the ESG Rating Service Market is the increasing use of data-driven and AI-powered solutions to assess ESG performance. As the need for accurate, consistent, and real-time ESG data grows, companies and investors are turning to advanced technologies like artificial intelligence and machine learning to automate data collection, analysis, and rating processes. AI can help ESG rating agencies analyze large volumes of data from diverse sources, including financial statements, news articles, social media, and government reports, to identify trends and assess a company's ESG performance more effectively. This technology can also enhance predictive capabilities, helping to forecast potential risks related to environmental impact, social policies, and governance practices. The integration of AI allows for more efficient and transparent ESG assessments, enabling businesses and investors to make better-informed decisions.

Growing Focus on Social and Governance Factors

In the past, ESG ratings have often been heavily weighted toward environmental factors, such as carbon emissions and sustainability efforts. However, there is an increasing trend toward a more balanced focus on social and governance factors. Stakeholders, including investors, consumers, and regulators, are recognizing the importance of assessing how companies treat their employees, manage their supply chains, and govern their operations. Issues like labor practices, diversity and inclusion, data privacy, board composition, and anti-corruption policies are becoming central to ESG assessments. Companies are now expected to demonstrate strong social responsibility, fair treatment of workers, and robust governance structures that prioritize ethics and transparency. The shift toward a more comprehensive evaluation that includes social and governance criteria ensures a holistic view of a company's sustainability efforts. Investors, in particular, are seeking more detailed insights into these non-environmental factors, as they increasingly recognize that poor governance or social practices can lead to financial risks or reputational damage.

Integration of ESG Ratings into Investment and Corporate Strategy

A growing trend in the ESG Rating Service Market is the integration of ESG ratings into both investment decisions and corporate strategies. As sustainability becomes a critical factor in financial performance, investors are incorporating ESG ratings into their portfolio management processes. This trend is particularly evident among institutional investors, such as pension funds, insurance companies, and sovereign wealth funds, who are increasingly using ESG ratings to align their investments with responsible business practices. Many are adopting ESG criteria as part of their risk management frameworks to ensure that their portfolios are not exposed to companies with poor sustainability practices that may face regulatory fines, reputational risks, or long-term financial instability. Additionally, companies are now using ESG ratings to inform their own strategies, recognizing that strong ESG performance can improve market access, attract top talent, and enhance customer loyalty. As the demand for sustainable investments rises, businesses are increasingly aligning their corporate strategies with ESG principles to create long-term value and differentiate themselves in a competitive marketplace.

Segmental Insights

Service Type Insights

Among the service types in the ESG Rating Service Market, ESG Assessment and Ratings was dominating the market. This service focuses on evaluating a company’s environmental, social, and governance practices and assigning a rating based on its sustainability efforts. Investors, financial institutions, and stakeholders rely heavily on ESG ratings to assess the sustainability and long-term viability of companies. ESG Assessment and Ratings have become integral to decision-making processes in investment portfolios, mergers and acquisitions, and corporate governance strategies. This service offers an overall snapshot of a company’s ESG performance, which is crucial for both regulatory compliance and aligning with growing consumer and investor demands for ethical business practices. It helps businesses demonstrate transparency, attract ethical investors, and mitigate ESG-related risks. ESG ratings also serve as a valuable tool for comparing different companies' sustainability practices across sectors. As sustainability becomes a major factor influencing financial markets and public perception, the demand for reliable and comprehensive ESG assessments and ratings is increasing. This has resulted in ESG Assessment and Ratings taking a dominant position in the market, leading the way in driving the adoption of ESG-related services across industries.

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Regional Insights

North America hold the largest market share in the ESG Rating Service Market due to several key factors. The region is home to some of the world’s largest financial institutions, investment firms, and corporations, all of which increasingly integrate ESG factors into their investment and operational strategies. In particular, the United States has seen growing regulatory pressure for companies to adopt sustainable practices and disclose ESG-related information. This has spurred demand for reliable ESG ratings, driving market growth in the region. Furthermore, North America is known for its strong regulatory environment, which encourages greater transparency and accountability in corporate governance. Government initiatives, such as the Securities and Exchange Commission’s (SEC) focus on ESG disclosure requirements, are further accelerating the demand for ESG ratings and assessments. The region’s well-established financial market infrastructure, combined with an increasing number of socially conscious investors, is propelling the need for ESG ratings as a crucial element in making informed investment decisions. Additionally, a growing number of consumers in North America are prioritizing sustainability, which has influenced companies to align their practices with ESG standards. As a result, businesses are increasingly turning to ESG rating services to demonstrate their commitment to responsible corporate governance. These factors, along with the rising demand for responsible investing, contribute to North America's dominance in the ESG Rating Service Market.

Recent Developments

• In 2023, Asia-Pacific has been added to Intercontinental Exchange Inc.'s ESG Company Data offering. The company now provides information on 16,000 businesses across 105 countries. This expansion covers over 1.4 million corporate equities and fixed-income securities, with comprehensive and high-quality data linked to each.
• In 2022, Morningstar Sustainalytics revealed an expansion of its ESG risk ratings coverage to enhance the assessment of substantial ESG risks across a broader range of asset classes and regions. The company's coverage now includes over 16,300 analyst-driven ESG risk ratings for public stocks, fixed-income assets, and privately held companies, marking a nearly 30% increase in comprehensive issuer ratings.
• Crisil’s ESG ratings unit has received approval from the Securities and Exchange Board of India (Sebi) to provide ESG scoring. This approval allows Crisil ESG Ratings & Analytics to operate as a Category 1 ESG rating provider, following Sebi's 2023 amendment to its regulations. The company, which began its ESG scoring business in 2021, now monitors over 1,000 companies across 65 sectors.

Key Market Players

• Sustainalytics
• LSEG Data and Analytics
• MSCI Inc.
• Iris Carbon
• S&P Global
• ISS Governance
• Bloomberg
• Arabseque
• PricewaterhouseCoopers (PwC)
• Carbon Disclosure Project (CDP)

Report Scope:

In this report, the global ESG Rating Service Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

·         ESG Rating Service Market, By Service Type:

o   ESG Assessment and Ratings

o   ESG Data Verification

o   ESG Reporting and Disclosure

o   ESG Strategy Consulting

o   Assurance and Compliance Services

o   Other Customized ESG Solutions      

·         ESG Rating Service Market, By Application:

o   Investment and Asset Management

o   Corporate Governance and Risk Management

o   Sustainability and Supply Chain Management

o   Climate Change and Resource Management

o   Other Sector-Specific Application

·         ESG Rating Service Market, By Region:

o   North America

§  United States

§  Canada

§  Mexico

o   Europe

§  France

§  Germany

§  Spain

§  Italy

§  United Kingdom

o   Asia-Pacific

§  China

§  Japan

§  India

§  Vietnam

§  South Korea

o   Middle East & Africa

§  South Africa

§  Saudi Arabia

§  UAE

§  Turkey

§  Kuwait

§  Egypt

o   South America

§  Brazil

§  Argentina

§  Colombia

Competitive Landscape

Company Profiles: Detailed analysis of the major companies presents in the global ESG Rating Service Market.

Available Customizations:

Global ESG Rating Service Market report with the given market data, TechSci Research offers customizations according to a company's specific needs. The following customization options are available for the report:

Company Information

• Detailed analysis and profiling of additional market players (up to five).