Global consultancies offering a range of environmental and engineering services grew in 2015 while those offering more specialist advice declined, according to market data.
In its annual report on the state of the environmental consultancy market, Environment Analyst found that large-scale integrated (defined as those with turnover of more than $3bn) and multi-disciplinary firms (with turnover of less than $3bn) grew year-on-year by 3.9% and 2.9% respectively. In contrast, specialist players (where turnover is under $3 but environmental consultancy comprises more than 50% of the business) declined by 5% in 2015.
Editor of Environment Analyst's global market intelligence service and co-author of the report Liz Trew said: ‘Our conclusion is that the playing field has really leveled out now between the various types of operator, and the specialists no longer seem quite so resilient. It remains to be seen whether firms that are still struggling can take the necessary steps to adapt, modify and innovate their offerings to the new paradigm of depressed resource markets and much more cost-conscious clients.’
The top ten players, in order of gross global revenues from environmental consultancy in 2015, were: AECOM, CH2M, Tetra Tech, Arcadis, Environmental Resources Management (ERM), Golder Associates, AMEC Foster Wheeler, RPS Group, Ramboll Environ and WSP|Parsons Brinckerhoff.
Environment Analyst said the main cause of growth was merger and acquisition activity and consolidation among the biggest consultancies over the past five years. The combined global market share of the top ten consultancies grew to 33% in 2015, up from 23.8% in 2010, the analysis found.
Contaminated land was the largest source of revenue in 2015, accounting for 31% of the income of the top 24 global consultancies. This is followed by water and waste management services, with a 22% share.
Environmental impact assessment and sustainable development accounted for a further 18% of the market, while 15% was from environmental management, compliance and due diligence services. Climate change and energy-related services generated 10% of the total, and was the fastest growing of all the major disciplines.
According to the study, the global market for environmental consultancy is forecast to reach $32.5bn by 2019, up 13.8% on 2015 and representing a five-year compound annual growth rate of 2.6%. The forecast has been projected upwards since the previous edition of the report due to the renewed strength of the European market and the economic turnaround in the North American region. However, Environment Analyst noted significant uncertainties around the global economic and geopolitical landscape, and commodity price trends.
Trew said: ‘The climate change and energy disciplines are expected to spearhead continued market recovery. This area alone is forecast to increase by almost 30% over the next five years, driven by strong underlying policy drivers and the global push for decarbonisation. The rise of infrastructure development is also evident in our forecast model, with this area expected to expand by almost 20% by 2020.’
Environment Analyst speculated that one or more of the largest firms could be bought by an IT giant, reflecting the growing importance of digital technologies, software applications and big data management and environmental analytics in shaping services offered by consultancies.
