
As we embark on a new year, our team of analysts working within the Experience, Sustainability & Trust service line looks at the 5 key themes and trends that we can expect to drive the sustainability technology and IT Services market in 2025.
Reach out to discuss this topic in depth.
1.Green computing will become integral to decarbonization strategies
As national and local decarbonization strategies move towards implementation, green and sustainable computing, as well as energy efficient hardware and software, will become integral to achieving those objectives. Enterprises will include green computing initiatives and transition to energy-efficient equipment as part of their broader decarbonization commitments. We expect green data centers that consume less electricity and edge computing models to become more pervasive, as decarbonization approaches embed green computing.
Aiming to reduce 50% of its Scope 1, 2, and 3 emissions by 2030, Google has already taken measures to reduce emissions across its operations and power some of its offices and data centers using carbon-free energy*.
Unilever, in its Climate Transition Action Plan, has also committed EUR150 million to decarbonize its manufacturing program, which includes improving its electrical efficiency by installing more efficient equipment and controls, and transitioning to sustainably sourced biofuels.
2.Circular economy practices of waste reduction and reuse & recycle will become mainstream
In an effort to reduce costs, appease scrutinizing investors and comply with local regulations, companies will increasingly adopt circular economy practices, emphasizing resource efficiency optimization and waste reduction through better management.
Increased attention on designing and producing sustainable products with longer lifecycles, coupled with measures to reuse and recycle materials and components, will also reduce the environmental impact of products and services.
Microsoft, for example, achieved 89.4% reuse and recycle rates of servers and components across all cloud hardware in FY2023.
Adopting packaging innovation, Unilever has designed 72% of its plastic packaging portfolio to be easily recycled, such that it avoids emissions at end-of-life incineration. Furthermore, it is collaborating with the World Economic Forum and the Ellen MacArthur Foundation to identify refill-reuse solutions for consumers.
3.Emerging technologies such as Artificial Intelligence (AI) will create new use cases for sustainability and climate action
Much has already been written and said about the potential of artificial intelligence (AI) across industries. It is, however, interesting to observe the emergence and adoption of AI across sustainability.
From monitoring and identifying ways to reduce a company’s carbon footprint to optimizing energy consumption in smart cities, from enabling precision agriculture to increase yield to predicting climate disasters, AI is playing an instrumental role in advancing sustainability use cases.
As an example, Sipremo, a Brazilian startup, has used AI to predict the location and timing of climate disasters, along with the type of disaster that will occur. This helps businesses, governments, and communities better prepare for impending adverse climate events.
Another AI-led startup, Eugenie.ai, has embedded AI in its emissions-tracking platform that combines satellite imagery with data from machines and processes and helps companies track, trace, and reduce their emissions by 20-30%.
In addition to these environmental use cases, we expect social ones to emerge as well. Unbiased Generative AI (gen AI) can promote diversity in hiring, reduce biases from seeping through, create more equitable workplace, and improve social outcomes. Key stakeholders in the gen AI ecosystem – technology providers, service providers, and enterprises – have a crucial role to play in influencing sustainability outcomes.
4.The “skills gap” will drive demand for ESG professionals, particularly for regulatory compliance
We predict that the social impact of sustainability will be visible through the pronounced ‘skills gap’. As more regulators tighten the grip on companies to demonstrate their sustainability commitments, the talent gap for professionals with background and experience across these evolving frameworks will widen.
This is already witnessed globally – the 11.6% growth in global demand for green talent is almost twice the 5.6% growth in talent supply. This trend is expected to continue until at least 2030, when one in five jobs is expected to lack the required talent.
Current demand for ‘green’ skills is high in areas of pollution and waste prevention, renewable energy generation, sustainable finance, environmental audits, environmental policy, and sustainable procurement. Particularly in Europe, the changing regulations and the ongoing energy transition are driving up the demand for such professionals with skills pertaining to climate change and/or sustainability, notably in the UK, Ireland, Norway, and Switzerland.
Diversity, Equity, Inclusion, and Belonging (DEIB) is another area that warrants more attention. This year, inclusive recruitment will be crucial, from a social standpoint, to address commonly observed biases in technology (gen AI) adoption. We expect increased regulatory interventions through policies and consultation papers to help stakeholders navigate the uncertainties currently engulfing this space.
5.Climate tech investments will create financial asset classes and broaden capital allocation opportunities
Driven by regulatory pressures and consumer demand for sustainable products and services, companies are investing in climate technologies. This is leading to the development of innovative solutions to tackle climate-related challenges and is also opening investment opportunities for sustainable finance.
Continued investments in green hydrogen, battery technology, sustainable fuels, green built environments, and nature conservation, to name a few, are expected to push forward technology innovations and create opportunities for environmentally sustainable financial investments.
IBM, for instance, uses AI-driven material discovery to identify molecular structures for carbon dioxide (CO2) separation membranes, leading to cost-effective CO2 emissions capture and storage.
From an investment perspective, climate bonds** surpassed a cumulative volume of US$5.1 trillion in the first half of the year (H1) of 2024, suggesting growing volumes of capital allocated to climate technologies and environment-friendly objectives.
This is already evident in the social impact sector – the orange asset class has emerged to advance gender equity for prosperity, peace, and planetary resilience. We expect this trend to become more pronounced, particularly as global events in 2024 such as COP16 (biodiversity) in Colombia and COP29 (climate change) in UAE emphasized the importance of climate finance and ‘finance for good’.
What does this mean for us?
What do these trends and predictions mean for you as a stakeholder in this space? What are the implications for enterprises and service providers? How can we be better prepared for 2025?
As an enterprise:
- Invest in building capabilities internally or hiring skilled professionals to help with accurate reporting on sustainability initiatives for regulatory compliance
- Identify opportunities across your supply chain for emissions reduction, waste and pollution prevention, reuse and recycling, and technology adoption
- Conduct competitive benchmarking exercises to map yourself against industry peers and identify opportunities for improvement
- Collaborate with industry associations, development organizations, and government agencies on industry-level initiatives
As a service provider, software/technology provider, or consulting/advisory firm:
- Bridge the skills gap by providing enterprises with qualified skilled professionals with strong domain knowledge of evolving regulations (e.g., the Corporate Sustainability Reporting Directive (CSRD) in Europe) to help them report accurately on their sustainability initiatives.
- Build competencies for internal initiatives and conduct pilots and Proofs of Concept (PoCs) within the organization. Leverage successful initiatives as case studies to demonstrate expertise to clients on specific sustainability programs.
- Conduct research on sustainable Information Technology (IT) and energy efficiency initiatives to identify investment opportunities that cut across multiple facets of sustainability (e.g., circular economy principles to reduce e-waste)
If you found this blog interesting, check out our blog focusing on Boosting Project Readiness In Technology Talent: A Comprehensive Framework For Developing Project-Ready Workforce | Blog – Everest Group, which delves deeper into another topic relating to this service line.
To discuss these 2025 predictions and other insights from our research on current and future STS trends and evolutions, please reach out to Siddharth Muzumdar ([email protected]) and Arpita Dwivedi ([email protected])
Key:
* Google’s definition of renewable energy sources, which includes carbon capture and storage technologies
** Include green, social, sustainability, and sustainability-linked bonds