Trend Watch: Corporate Climate Disclosures in 2026—Fastest-Moving Subsegments

The global carbon accounting software market reached $18.5 billion in 2024 and is projected to grow at 23.9% CAGR through 2032, according to Fortune Business Insights. This explosive growth reflects a fundamental shift in how companies approach climate disclosure—from voluntary annual reports to continuous, audit-grade emissions tracking embedded in enterprise systems. For engineers building sustainability infrastructure in the EU, understanding which subsegments are accelerating fastest reveals where technical investments will deliver the greatest compliance and competitive returns.

The EU's Corporate Sustainability Reporting Directive (CSRD) expanded mandatory sustainability reporting from approximately 11,000 companies under the previous Non-Financial Reporting Directive to nearly 50,000 companies across the bloc. Wave 1 companies—large EU-listed entities—began reporting on fiscal year 2024 data in early 2025 under the European Sustainability Reporting Standards (ESRS). The regulatory pressure is real and imminent, yet the technology landscape remains fragmented and rapidly evolving.

Why It Matters

The stakes for corporate climate disclosure have fundamentally changed. Under CSRD, companies must conduct "double materiality" assessments examining both how sustainability issues affect their business and how their operations impact the environment and society. Third-party auditing of disclosures is mandatory, elevating data quality requirements from marketing-grade to audit-grade precision.

For EU-focused engineering teams, this creates both obligation and opportunity. The European carbon accounting software market alone was valued at €5.62 billion in 2024 and is projected to reach €36.08 billion by 2033, representing a 22.95% CAGR according to Market Data Forecast analysis. Companies that build robust disclosure infrastructure early will avoid costly remediation; those that integrate carbon accounting into existing ERP and operational systems will capture efficiency gains unavailable to late adopters.

The MIT Sloan 2025 State of Supply Chain Sustainability Report found that 83% of companies struggle to access accurate emissions data, while 66% still rely on spreadsheets for tracking—creating significant accuracy and scalability risks. This gap between regulatory requirements and operational capability defines the addressable market for disclosure technology and services.

Key Concepts

Scope 3 Emissions and the Supply Chain Data Challenge

Scope 3 emissions—those occurring in a company's value chain rather than direct operations—typically represent 75-99% of total corporate carbon footprints. Schneider Electric's 2024 sustainability disclosure revealed that Scope 3 accounted for 99.04% of its total emissions at 55.6 million tonnes CO₂e, with Category 11 (use of sold products) alone contributing 76.55%.

The technical challenge is profound: measuring Scope 3 requires data from thousands of suppliers, across multiple tiers, using inconsistent methodologies and formats. The GHG Protocol estimates that less than 10% of companies accurately measure Scope 3 comprehensively. For engineers, this translates to building systems that can ingest heterogeneous data sources—utility bills, procurement records, logistics systems, supplier estimates—and normalize them into comparable emissions calculations.

Double Materiality and Data Architecture

ESRS requires companies to report on both impact materiality (how the company affects climate) and financial materiality (how climate affects the company). This dual lens demands data architectures capable of linking operational emissions data to financial risk models and scenario analysis.

Implementing double materiality requires integrating carbon accounting with enterprise risk management, financial planning, and strategic scenario modeling. Engineering teams must design systems that connect physical emissions measurements to financial valuation impacts—a capability that most legacy ERP systems lack natively.

Assurance Requirements and Audit Trails

CSRD mandates third-party assurance of sustainability disclosures, with ISSA 5000 standards published in November 2024 guiding auditor practices. This shifts disclosure from "trust us" marketing claims to "prove it" evidentiary standards.

For engineers, assurance requirements mean implementing comprehensive audit trails, version control for calculation methodologies, and immutable data storage for source records. Systems must support traceability from final disclosures back to raw data sources with complete chain of custody documentation.

What's Working

Automated Data Ingestion Pipelines

Companies achieving top-quartile disclosure accuracy share a common technical approach: automated data ingestion from primary sources rather than manual collection and aggregation. Direct API integrations with utility providers, logistics platforms, and supplier systems reduce transcription errors and enable near-real-time emissions tracking.

Persefoni, valued at $300 million after its 2023 Series C-1 funding round, provides automated utility data extraction and machine learning-powered anomaly detection specifically designed for PCAF-aligned carbon accounting in financial services. Their approach—treating emissions data with the same rigor as financial data—has attracted clients including Citi, Dropbox, and Burlington.

Enterprise ERP Integration

Rather than building standalone sustainability platforms, leading companies are integrating carbon accounting directly into existing enterprise systems. SAP's sustainability management modules within S/4HANA enable emissions tracking embedded in procurement, production, and logistics workflows—eliminating the reconciliation burden of parallel systems.

This integration approach addresses a fundamental scaling challenge: sustainability teams cannot manually process data at enterprise transaction volumes. When emissions calculations execute automatically on each purchase order or production run, accuracy improves and reporting latency drops from quarters to days.

Supplier Collaboration Platforms

Given that 80% of supply chain emissions typically come from 20% of purchases, focused supplier engagement delivers disproportionate measurement accuracy. Schneider Electric's Zero Carbon Project achieved a 40% emissions reduction from its top 1,000 suppliers by 2024 through structured collaboration and data sharing.

Technology platforms enabling supplier data exchange—including standardized APIs for emissions factor sharing and product carbon footprint documentation—represent a fastest-growing subsegment. Companies implementing these platforms move from industry-average estimates to supplier-specific primary data, dramatically improving Scope 3 accuracy.

What's Not Working

Spreadsheet-Based Workflows

Despite regulatory pressure, 66% of companies still rely on spreadsheets for emissions tracking according to the MIT Sloan survey. This approach fails at scale: data aggregation errors compound across business units, version control breaks down during reporting cycles, and audit trails become untraceable.

Organizations that attempted CSRD compliance using enhanced spreadsheet processes found remediation costs 3-5x higher than those implementing purpose-built systems from the start. The lesson for engineering teams is clear: manual processes that worked for voluntary reporting cannot meet mandatory disclosure requirements.

Vanity Metrics Over Verified Data

Many organizations report impressive task completion rates that collapse under audit scrutiny. Common failures include counting estimates as measurements, using outdated emissions factors, and aggregating incompatible data sources without methodology documentation.

The 2024 State of AI Agents report found that 67% of scaled deployments underperformed their pilots by at least 20% on key metrics—a pattern that applies equally to disclosure systems. Proof-of-concept success with curated data does not guarantee production reliability across messy operational realities.

Ignoring Tail Cases

Disclosure systems often achieve 95%+ accuracy on common categories but fail catastrophically on edge cases—unusual suppliers, non-standard products, cross-border transactions. These tail failures, comprising 2-5% of activities, can represent significant emissions volumes and audit findings.

Robust disclosure systems require specific attention to exception handling and edge case documentation, not just aggregate accuracy metrics.

Key Players

Established Leaders

SAP — Integrated sustainability management within S/4HANA, enabling emissions tracking embedded in enterprise workflows for EU multinationals. Strong CSRD/ESRS compliance capabilities with native double materiality support.

Microsoft — Sustainability Cloud and Azure-based carbon accounting tools, with Copilot AI agents for sustainability workflow automation. Deep integration with Office 365 enables embedded disclosure collaboration.

Salesforce — Net Zero Cloud providing emissions tracking with Einstein GPT for sustainability reporting automation. Strong in Scope 3 supplier engagement and supply chain decarbonization.

IBM — Envizi ESG Suite combining carbon accounting with environmental intelligence and scenario modeling. Enterprise-grade assurance capabilities and audit trail documentation.

Emerging Startups

Persefoni — AI-powered carbon accounting platform valued at $300 million, specializing in PCAF-aligned financed emissions for financial services. XBRL tagging for regulatory filings and anomaly detection via Persefoni Copilot.

Watershed — Enterprise carbon management platform valued at $1.8 billion after February 2024 Series C. Clients include Walmart, Stripe, BlackRock, and Spotify. Focus on speed-to-reporting with one-click disclosure workflows and deep CSRD policy guidance.

Sweep — European-headquartered platform focusing on EU regulatory compliance with strong ESRS alignment. Emphasis on supplier data collection and Scope 3 accuracy.

Normative — AI-powered emissions calculation automation with science-based methodology. Strong in mid-market enterprise adoption across Nordic and Western European markets.

Plan A — Automated sustainability reporting and analytics platform with EU regulatory specialization. Carbon accounting integrated with decarbonization action planning.

Key Investors & Funders

TPG Rise — Lead investor in Persefoni's Series C, focusing on climate technology at scale.

Sequoia Capital — Watershed investor, backing enterprise sustainability platforms globally.

Salesforce Ventures — Active in sustainability automation startups, strategic investment aligned with Net Zero Cloud ecosystem.

NGP Energy Capital — Climate tech investor supporting carbon accounting infrastructure.

EU Innovation Fund — Public funding supporting climate disclosure technology development across member states.

Examples

Siemens CSRD Implementation: Siemens AG published its first full CSRD Sustainability Statement under ESRS for fiscal 2025, demonstrating enterprise-scale disclosure transformation. The company achieved CDP Climate Change A-list placement in 2024 and SBTi validation for 2030 and 2050 emissions targets. Key technical capabilities included double materiality assessment across the entire value chain, AI governance frameworks for sustainability data management, and the DEGREE sustainability framework integrating decarbonization, resource efficiency, people centricity, and ethics into measurable KPIs. Products sold in fiscal 2024 projected customer emissions avoidance of 144 million tonnes CO₂e. Siemens Energy achieved reasonable assurance for Scope 1 and 2 emissions—moving beyond limited assurance toward audit-grade verification.

Schneider Electric Scope 3 Leadership: Schneider Electric disclosed 55.6 million tonnes of Scope 3 emissions in 2024, representing 99.04% of total footprint. Rather than treating this as an insurmountable measurement challenge, Schneider implemented systematic supplier engagement through its Zero Carbon Project, achieving 40% emissions reduction from top 1,000 suppliers by end of 2024. Since 2018, Schneider's products and services enabled customers to save and avoid 679 million tonnes of CO₂—demonstrating the "handprint" opportunity alongside footprint reduction. The company achieved SBTi validation for a 1.5°C pathway with targets of 25% Scope 3 reduction by 2030 and 90% by 2050.

Klarna Integration Approach: The Swedish fintech deployed AI agents handling 2.3 million customer service conversations in January 2024 alone, demonstrating enterprise-scale automation capabilities applicable to disclosure workflows. Key metrics included 82% task completion rate, 25% reduction in repeat contacts, and 2-minute average resolution versus 11 minutes for human agents. While focused on customer service, Klarna's approach—tight integration with existing workflows, hybrid human-AI architectures, and observability-first design—provides a template for sustainability teams automating disclosure processes.

Action Checklist

• Audit current emissions data sources and document coverage gaps by Scope category, prioritizing Scope 3 categories with highest materiality
• Implement automated data ingestion from primary sources (utilities, logistics, procurement) to eliminate manual transcription errors
• Design audit trail architecture meeting ISSA 5000 assurance requirements before building reporting capabilities
• Establish supplier collaboration protocols for top 20% of supply chain spend representing 80% of Scope 3 emissions
• Integrate carbon accounting with existing ERP workflows rather than building parallel sustainability systems
• Deploy anomaly detection for emissions data to catch calculation errors before disclosure
• Create methodology documentation traceable from final disclosures to raw data sources

FAQ

Q: What is the timeline for CSRD compliance, and which companies are affected first? A: Wave 1 companies—large EU-listed entities previously subject to the Non-Financial Reporting Directive—began reporting on fiscal year 2024 data in 2025. Wave 2, covering other large EU companies with more than 250 employees and €50 million revenue, was originally scheduled for fiscal 2025 but has been delayed by the "Stop-the-Clock" Directive. The proposed Omnibus Simplification Package would limit CSRD to companies with more than 1,000 employees, with final adoption expected December 2025 and effective date January 2027 post-transposition.

Q: How should engineering teams prioritize Scope 3 categories for measurement investment? A: Focus on the categories with highest emissions materiality for your sector. For manufacturers, Category 1 (purchased goods and services) and Category 11 (use of sold products) typically dominate. For financial services, Category 15 (investments) is often largest. The 80/20 rule applies: concentrate measurement precision on the top 20% of spend or activities driving 80% of emissions, while using industry averages for tail categories.

Q: What data architecture patterns best support CSRD double materiality requirements? A: Implement a data lake architecture that connects operational emissions data (impact materiality) with financial risk models (financial materiality). Carbon accounting systems must integrate with enterprise risk management and financial planning tools to enable scenario analysis showing how different climate pathways affect both emissions trajectories and business valuations. Event-driven architectures enable real-time updates as operational data changes.

Q: How do we achieve audit-grade accuracy when supplier data quality is poor? A: Adopt a tiered approach: use primary data from suppliers with mature reporting capabilities, activity-based calculations for suppliers providing operational data, and spend-based estimates only as fallback. Document methodology clearly for each supplier category. Implement systematic supplier engagement programs targeting data quality improvements for highest-emitting partners. Build in sampling-based verification to validate estimates against primary data where available.

Q: What role does AI play in disclosure automation, and what are the limitations? A: AI excels at data extraction from unstructured sources, anomaly detection in emissions calculations, and automated report generation. Persefoni and Watershed both deploy AI copilots for carbon accounting workflows. However, AI cannot substitute for primary data collection, methodology judgment, or materiality assessment. Treat AI as acceleration technology for well-defined processes rather than replacement for disclosure expertise.

Sources

• Fortune Business Insights. "Carbon Accounting Software Market Size, Share & COVID-19 Impact Analysis." 2024.
• European Commission. "Corporate Sustainability Reporting Directive (CSRD)." Official Journal of the European Union. 2022.
• MIT Sloan Management Review. "2025 State of Supply Chain Sustainability Report." 2025.
• Market Data Forecast. "Europe Carbon Accounting Software Market Report." 2024.
• Schneider Electric. "2024 Sustainability Report and CDP Climate Disclosure." 2024.
• Siemens AG. "Sustainability Statement for Fiscal 2025." 2025.
• Contrary Research. "Persefoni Business Breakdown & Founding Story." 2024.
• GHG Protocol. "Corporate Value Chain (Scope 3) Standard." World Resources Institute. 2024 update.