Verdantix research shows that regulatory focus on forced labour in Europe will drive a $7B market in supply chain software

New research from Verdantix, a research firm, has found that recent EU supply chain due diligence regulations and social-related disclosures to improve supply chain transparency, including crackdowns on human rights violations, will drive a $7 billion market in supply chain sustainability software by 2029, with European firms set to be the biggest spenders.

The report found that the regulatory shift towards human rights in supply chains, such as the EU Forced Labour Ban prohibiting goods made with forced labour, will help spur over $2 billion annual spending on supply chain sustainability data collection and reporting across the EU by 2029. Overall, supply chain sustainability software spending in Europe will rise at a Compound Annual Growth Rate of 34% until 2029.

Manufacturing and retail will be the biggest-spending sectors, driven by supply chain sustainability regulations targeting these sectors such as the EU Conflict Minerals Regulation and the EU Strategy for Sustainable and Circular Textiles. Risk management use cases will accelerate global spending to $2.8 billion by 2029, driven by supply chain disruption from geopolitical conflicts such as recent Red Sea attacks.

This combination of rising regulations and geopolitical conflict will see firms turning to hi-tech solutions with 76% aiming to use Artificial Intelligence (AI) to boost sustainability performance in the next two years.

Jessie Wilson, Analyst, ESG & Sustainability at Verdantix, comments:

“Europe leads the world on sustainability regulations, and this is reflected in its projected spending on supply chain sustainability software. However, the extraterritorial reach of regulations such as CSRD means we expect spending in other regions such as North America to catch up. There’s also rising scrutiny over human rights abuses like forced labour. This is incentivising firms to invest in software to help monitor and demonstrate their commitments to human rights.”

“We expect future supply chains to be smart and resilient, leveraging AI to enhance data quality and predictive risk management. These advancements will provide deeper insights, helping companies identify and mitigate risks such as forced labour and sourcing from conflict-affected areas or sanctioned regions. Blockchain-based track-and-trace solutions will offer visibility beyond tier 1 suppliers, streamlining processes and ensuring compliance. Integrating these technologies will transform supply chains, making them efficient, ethical, and sustainable.”