EdTech Industry ESG Thematic Report, 2023

Environmental, Social, and Governance (ESG) in the EdTech industry

The integration of Environmental, Social, and Governance (ESG) within the investment and decision-making processes contributes to responsible investing. Investment into ESG has skyrocketed since 2013; equally, Education Technology (EdTech), seen as a powerful tool for achieving certain ESG goals across the globe, has witnessed a large infusion of investment capital since 2020.

Industry leaders in the EdTech sector are aware that education plays a fundamental role in developing a sustainable society. It teaches, engages, and motivates people to promote a community-based, environmental-friendly way of living, by educating them on issues such as inequality and the reason behind climate change.

In 2020, the global, Covid-19 pandemic made way for online and digital learning tools to expand, thereby helping companies operating in the EdTech space to create a positive socio-economic impact globally.  In 2021, EdTech has gone mainstream through AI-based, online, and digital tools, enabling companies to explore countless possibilities in this theme. Since then, digital inclusion has been declared as a critical factor in growth strategies by governments worldwide and the EdTech industry has received increased attention from investors interested in ESG impact investing.

Key EdTech companies researched in this theme have built on this market position to develop several sustainable strategies aiming to create a positive ESG impact within this sector.

ESG Trends

The ‘S’ in the ESG – the social criteria, is a key factor that makes investment in this sector uniquely attractive to investors. Companies in this industry promote digital learning, which offers increased access to education, promotes diversity and inclusion, and offers equal opportunities for women and girls at workplace and at schools. More importantly, this focuses on making learning inclusive.

Top companies and start-ups in the EdTech space are helping university students engage in immersive education and educating women through online mentoring and training programs. Further, digital learning courses help upskill employees to remain competitive in the ever-changing business landscape. 

The EdTech sector is exclusive, as it provides far-reaching benefits in attaining the United Nations - Sustainable Development Goals (UN – SDGs). Some of the major SDG’s that come into focus are Quality Education, Gender Equality, Decent Work and Economic Growth, and Reduced inequalities. Digital technologies have helped ensure business continuity through policies such as Work-From-Home to help employees have quality time with their family, thereby promoting good health and well-being.

By promoting online learning and use of digital or electronic documents, companies in the EdTech sector promise environmental benefits - reduced CO₂ emissions, decreased energy consumption, and conservation of natural resources. One of the industry leaders in this EdTech theme has enabled government agencies to adopt creative solutions to conserve natural resources.

ESG Challenges

According to research by the UN, around half of the people in the world do not have access to the internet, causing a digital divide that affects major aspects of life including job opportunities and education. This is prevalent in well-developed countries, such as the US, where around 30% of Hispanic students enrolled in K-12 schools in the US missed online instruction during the pandemic due to inaccessibility. This is 20% more than the number of white students who lacked opportunities to access the internet. To close this digital divide, investors are looking for investment opportunities to build digital infrastructures to promote quality education and financial inclusion. To this, major EdTech companies, part of this thematic report have initiatives aimed at improving access to digital equity and affordable access to internet infrastructures which are further discussed in detail within the EdTech thematic report. 

Growth of The EdTech Market

In 2021, the global EdTech market size was valued at USD 106.46 billion and is expected to expand at a compound annual growth rate (CAGR) of 16.5% from 2022 to 2030. In India, the EdTech sector is expected to reach a market size of USD 5 Billion by 2025, which is 10 times the market size in 2020.  While there is no regulation for the EdTech market in India, the Indian government’s National Education Policy (NEP) launched in 2020 aims to encourage quality education and inclusive learning for developing the education sector in the country and offers a promising framework for EdTech companies to build upon their strategies.  

Key Companies in this theme

    • Fujitsu Limited

    • Adobe Inc.

    • Alphabet Inc.

    • Microsoft Corporation

    • Cisco Systems

    • Samsung Electronics

    • Pearson PLC

Scope of the EdTech Industry ESG Thematic Report:

    • Macro-economic and ESG-variable analysis of the industry, including regulatory, policy, and innovation landscape

    • Key insights on infrastructure developments and ESG issues affecting the theme

    • Identify key initiatives and challenges within the industry

    • Identify ESG leaders within the industry

    • Understand key initiatives and the impact of companies within the sector to fuel an informed decision-making process

    • Analysis of industry activities based on multi-media sources, including significant controversies and market sentiment

Key Benefits of EdTech Industry ESG Thematic Report:

    • Developing a comprehensive understanding of macro-economic, Policies & Regulations and innovations affecting the EdTech Sector, globally

    • Key insights into Infrastructure developments and ESG issues affecting the theme

    • Identifying ESG risks and opportunities to business among leading players in the industry

    • Obtaining a clear and relevant understanding of company actions, progress, and impact and find opportunities for investment