Private equity investor interest ramps up as EHS software market surges

Chris Sayers, Industry Analyst at Verdantix

Private equity investor interest is building in the fast-growing Environment, Health and Safety (EHS) software market with more than 50 transactions in the past two years, a new research report from the independent research and advisory firm Verdantix shows. The market for EHS software is expected to grow from $1.6 billion in 2022 to around $2.7 billion by 2027 as the sector proves resilient in the face of the global economic downturn.

Verdantix highlights training and e-learning specialists as likely acquisition targets, alongside supply chain and contractor management specialists. Key differentiators in the sector include the use of AI and automation, with ESG and sustainability seen as major areas for expansion in what is a mature EHS software market. The past 24 months have seen a tsunami of ESG-aligned product releases, acquisitions and partnerships, driven by huge revenue potential.

What is the global market landscape of EHS software?

The Green Quadrant: EHS Software 2023 report outlines how buyers seek integrated solutions, like EHS, ESG and operational risk management. It lists seven firms – Benchmark ESG, Cority, Enablon, Intelex, SAI360, Sphera and VelocityEHS –  as offering all-round EHS management capabilities, making them ideally placed to react to change in buyer demand.

The report benchmarks 23 of the most prominent EHS platform vendors. Companies performing well in the sector include Cority, which is private equity backed and is expanding its ESG and sustainability functionality, and Enablon, which focuses on offering EHS and operational risk solutions for large enterprises in asset-intensive and high-risk industries.

Others include DevonWay, which combines EHS with enterprise asset management and has deep expertise in the energy and nuclear industry. Alcumus, which was acquired by Apax Partners for over $800m in March 20222, with deep expertise in contractor management.

Benchmark ESG is strongly focused on emerging technologies including artificial intelligence (AI) while Origami Risk is integrating EHS and Risk Management across a unified platform and is seen as innovator in the market. Whereas HSI’s expanding EHS management platform is focused on training and engagement and Quentic’s localized presence across Europe means they are adept at meeting the country-specific requirements of European customers.

What do the findings mean for stakeholders?

Commenting on the research findings, Chris Sayers, Industry Analyst at Verdantix said: “Over the past two years, the global market landscape for EHS software has undergone a paradigm shift, as EHS providers have expanded their product offerings to meet the ravenous appetite for robust environmental management solutions brought on by the ESG megatrend.”

“As EHS functions seek to interlink with other operations, providers are turning to emerging tech as a point of differentiation and redefining the functional possibilities of EHS software.”