The excitement surrounding sustainability software for carbon accounting in the United States appears to be cooling. After experiencing booming sales and seeing numerous acquisitions and investments over the last four years, industry's appetite is starting to level off. Now, software providers are evolving in new directions.
According to a recent report from consulting firm Groom Energy, investments in these software vendors have fallen by almost 75 percent over the last three years, to $15 million from $58 million. Acquisitions have mostly disappeared after a spurt of large corporations bought up software vendors from 2008 to 2011. The report -- the 2013 Buyers Guide for Enterprise Carbon Accounting and Sustainability Software -- also downgrades the expected growth rate for software sales and tops it off at 20 percent for the next year.
The slowdown in the U.S. is due to “the lack of pressing legislative changes, flat energy prices and absence of public pressure about climate change,” read the Groom report. As it has become clear that the country's carbon tax scheme isn’t going anywhere, some companies have lost the momentum to track their carbon footprints with sustainability software.
“There’s a lot of shakeout with companies going away and vendors changing their roadmaps,” said Paul Baier, Groom's vice president of sustainability consulting and research. “We’ve already seen 10 close in the last 24 months and will probably see another 10 to 15 either close or significantly move away from this space.”
Baier predicts that as things evolve, the larger companies will continue to take control of a greater share of the space and push out many of the smaller players in the already overcrowded industry.
With the lack of legislative push for corporations to decrease their carbon footprint, the 75-plus sustainability software vendors discussed in the Groom report are having to get serious about the value they're bringing to the table. Many of these companies are expanding into the lucrative field of energy management and into more data-heavy analysis.
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