ENDS Consultancy Market Guide 2008

ENDS Consultancy Market Review cover

It’s a question at the forefront of the minds of environmental consulting executives and business managers: how will the sector stand up to the credit crunch and recession that appears to loom ever closer?

The ENDS Consultancy Market Guide 2008, our annual review and analysis of client demand trends and growth in environmental advisory services (see pp 5-17), reports an area of the UK economy that is still in great shape. Environmental consultants’ fee income has grown by more than 10% per annum, continuing the sector’s strong growth trajectory. There is so much work many are desperate to recruit to swell their capacity. But how long will this continue?

Consultancy stands as a barometer of the broader environmental sector’s health, intrinsically linked to the fortunes of the waste management, remediation and renewable energy industries, and underpinned by investment in clean technologies, regeneration and sustainable development – as well as legislation of course. Demand for consulting services is also an indicator of spending on environmental protection measures by industry as a whole.

In recent years, there has been a great deal of ‘discretionary’ spend on environmental management and strategy – going beyond what is required for regulatory compliance alone. As such, there is suggestion that the ‘insulating’ effect of environmental legislation against economic cycles as a core driver for the overall sector is plateauing.

Now that the impact of liquidity problems in the housing and financial markets are becoming all too evident, boardroom priorities are set to change and non-statutory environmental projects put on the back burner. Ultimately, this will be a test of how deeply embedded the sustainability agenda has become within the larger client corporations.

Yet the overwhelming message from environmental consultants in this year’s ENDS survey of the market leaders is that the credit crunch will be little more than a short-term blip, with only a minority – 16% – expecting demand to fall as a result. Firms deriving a significant proportion of income from the house building sector and related industries will be at higher risk than those with a more diversified client base. Contaminated land specialists may be particularly vulnerable.

But there are many reasons to stay positive. Investors are becomingly increasingly attracted to the green industries, viewing them as a ‘safe’ option with long-term drivers. This is particularly evident in the waste sector, where finance firms are looking to invest in waste infrastructure and management companies. Consultants are involved at every step of the way in supporting the planning and financing of new waste facilities and technologies to address landfill diversion (see pp 24-28).

It is interesting to note that only ten or fifteen years ago advice on landfill construction and permitting formed the ‘bread and butter’ work for waste consultants, but they have successfully adapted to the new challenges laid down by the EU landfill Directive.

Environmental consultancies are also benefiting from the huge investment in renewable energy projects, as oil prices continue to skyrocket and governments have policy targets to meet. There is good reason to believe that some parts of the remediation sector may prove resilient to the economic downturn. This is due to the growing sophistication in the market as it moves from a dig-and-dump approach to more environmentally friendly – and often technologically complex – solutions. Carbon calculators are the latest tool on offer from consultants to assist clients in assessing the most appropriate, and sustainable, strategy for site clean up (see pp 18-22).

Liz Trew, editor, Consultancy Market Guide