Years of double-digit growth in global spending on ESG data is forecast to end in 2026, according to an annual market survey from Opimas.

The research provider attributed the slowdown to longer-term trends associated with market maturation where products such ESG ratings are becoming commoditised with vendors giving away ratings for free, as well as a slowdown in M&A activity, and predicted that it will be further enhanced by “regulatory backstepping in 2025”.

Opimas expects spending on ESG data to grow by 11 percent in 2025 to $2.2 billion, and is forecasting growth rates of 8 percent and 6 percent in 2026 and 2027 respectively.

The firm reported declining year-on-year growth rates of 28 percent, 20 percent and 16 percent between 2022 and 2024. The market hit an all-time-high of 43 percent in 2021, propelled by what the firm described as the “SFDR effect” or spending by asset managers to comply with the EU’s anti-greenwash rules for the financial sector.

Looking forward to the next two years, Opimas predicted that “legal and political battles against ESG regulation” in the US and the EU’s deregulation drive will continue to curtail momentum in the sector.

It noted that proposals to slash corporate reporting requirements in the EU by 80 percent will “evidently reduce future spending by corporates on ESG reporting”. Opimas said spending on data has historically slowed during periods of regulatory lulls.

The regional split in spending remained broadly stable with the bulk – around 68 percent – coming from European users, followed by 24 percent and 8 percent from the Americas and APAC respectively. The split in 2021 was 60 percent to Europe, 30 percent to the Americas and the remaining 10 percent to APAC.

Provider market share

MSCI remained the market leader for ESG data by some distance in 2024, though its market share declined marginally from 27 to 26 percent. S&P Global controlled the second-largest share of the market at 19 percent, up 1 percentage point from the previous year.

The joint third-largest provider was Moody’s at 11 percent, which lost only 2 percentage points market share despite shutting down its ESG ratings business and switching clients over to MSCI.

Opimas said the firm’s continued strength was due to its second-party opinion (SPO) service for green bonds and its climate risk business, comprising climate modelling firms RMS and Four Twenty Seven. Moody’s acquired the two firms in 2021 and 2019 respectively.

Moody’s reported $43 million in asset abandonment charges due to its decision to outsource ratings production to MSCI, according to annual filings. Around $12 million related to staff severance packages, and $31 million for amortisation expenses related to sustainability software and related assets.

Meanwhile, Morningstar Sustainalytics’s share of the ESG data market dropped by 1 percentage point to 6 percent last year.

According to Opimas, the provider experienced the largest decline in headcount among its peers over the past two years, dropping by 15 percent between February 2023 and February 2024 and falling by 11 percent the following year.

RI reported that Morningstar laid off 80 Sustainalytics employees in April, following a previous round of layoffs involving 200 employees.

According to Morningstar’s annual report, Sustainalytics saw the revenue renewal rate for its licensed products fall from 97 percent in 2023 to 89 percent last year. Revenue from the business unit dropped slightly from $118 million in 2023 to $117 million in 2024.

Opimas has forecast a 10-15 percent drop in ESG data revenues for Morningstar in 2025, driven by a 40 percent exposure to the US market.

EcoVadis advance

By contrast, value-chain data provider EcoVadis grew its market share from 7 percent to 11 percent, the most accumulated by a single provider in 2024.

Pierre-François Thaler, EcoVadis co-CEO and co-founder, told Responsible Investor that momentum behind corporate sustainability remained strong despite a slower growth outlook for ESG data.

“Greenhushing may be shaping market perceptions as many companies are speaking less publicly about their progress amid today’s regulatory and political climate.”

According to Thaler, EcoVadis research suggests that 87 percent of US companies have maintained or increased their sustainability investments this year.

Despite the lukewarm growth in ESG data spending, ESG indices grew by 34 and 18 percent in 2024 and 2025, driven by inflows into European ESG funds. Opimas said it expected demand to continue within the region.

According to Morningstar data cited by the report, European ESG funds recorded inflows of $51.5 billion between Q1 2024 and Q1 2025, while the US recorded outflows of $26.2 billion.

Another area flagged for growth by Opimas was SPOs. Analysts said the sector could be poised for a recovery, driven by a steady decline in interest rates from highs in 2022. A continuation of this trend would result in “healthy growth” for SPO providers, they added.

On the M&A side, buyouts of physical risk data providers made up two of the four deals reported in 2025 so far – Moody’s $211 million acquisition of Cape Analytics and ISS’s acquisition of Sust Global.

However, Opmias noted that M&A activity has dropped off following a peak of 16 deals in 2022, partially due to interest rates hikes.