Regulation, climate events spur companies’ environmental efforts, raising demand for services to improve performance, reporting, ISG Provider Lens™ report says
“With the help of service providers, they are developing strategies that can be measured on the basis of rigorous methodologies.”
The 2024 ISG Provider Lens Sustainability and ESG report for Brazil finds that the adoption of environmental, social and governance (ESG) sustainability practices has advanced in the last year, though some companies still have not taken meaningful action. Climate change is in the spotlight after recent severe storms and forest fires, and organizations are becoming more aware of possible cost increases and supply chain disruptions triggered by such events.
“Brazilian companies with sustainability commitments are recognizing that long-term initiatives must have business benefits that outweigh the costs,” said Bob Krohn, ISG partner and industry lead for manufacturing in the Americas. “With the help of service providers, they are developing strategies that can be measured on the basis of rigorous methodologies.”
Many companies have poured resources into renewable energy systems, energy efficiency, electric mobility and sustainable building technologies, the report says. However, effectively integrating these practices into their operating models requires major investments in research, infrastructure and training. Enterprises are working closely with service providers that offer the tools to make a smooth transition to sustainable practices.
Though service providers in Brazil are launching new sustainability offerings more slowly this year, the use of advanced technologies to increase sustainability and meet ESG demands has intensified, the report says. Providers are using AI and ML to help clients improve the collection, validation, standardization and analysis of data, while generative AI is being applied to the design of more sustainable products. Automation has increased efficiency, and IoT has revolutionized the management of water and energy.
Sustainability initiatives and requirements are driving up demand for data platforms to gain insight into ESG performance, ISG says. Organizations are adopting AI and advanced analytics to improve data transparency and traceability. Starting in 2027, the national government’s Resolution 193 will require companies to assess their social and environmental risks and how those may affect their finances. This is expected to expand the market for ESG data platforms and services in Brazil.
The market for operational technology associated with sustainability is also growing, the report says. More enterprises are using automation to reduce waste and emissions from their infrastructure and deploying IoT systems for real-time data collection and asset management. Some companies have adopted digital twins and blockchain to record and control emissions.
“A growing number of Brazilian enterprises are seeking strategic partners to help them embed sustainable practices in their operations,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “Service providers are crucial to planning these initiatives and monitoring and reporting ESG performance.”
