Verdantix Says Heads of Sustainability Will Spend Less on Consulting Engagements Over the Next 5 Years
New York, June 23, 2016. Spending by sustainability leaders on core areas of advice will shrink over the next 5 years according to a new market size and forecast study from independent analyst firm Verdantix. The model predicts that spending by heads of sustainability on consulting services will shrink by 2.4% a year over the next 5 years from $417 million in 2016 to $369 million in 2021. By contrast, other business functions such as finance, sourcing, and product design will spend more on sustainability projects resulting in compound annual growth for the entire market of 4% over the next 5 years.
“Heads of sustainability often say that if they successfully persuade executives to take responsibility for the sustainability agenda they will work themselves out of a job” commented Yaowen Ma, Verdantix Industry Analyst. “Over the last 18 months our research has identified a trend towards the head of sustainability role disappearing. Responsibilities are handed over to the VP of EH&S or to the director of corporate responsibility. The role is slowly becoming redundant as sustainability programs mature and other function heads take over.”
The Verdantix report ‘Sustainability Consulting: Global Market Forecast 2016-2021’ is the only market size and forecast model on sustainability consulting produced by an independent research firm. Key findings include:
- Across nine major economies, sustainability consulting spend will total $912 million in 2016 with the US accounting for $344 million (38%) of the total and Europe for $292 million (32%). In 2016, government and stock exchange initiatives will result in sustainability consulting spend of $78 million in Brazil and $38 million in India.
- Sustainable supply chain engagements will account for $227 million (25%) of the total market in 2016 reflecting the uptick in corporate risk management around supplier ethical performance and regulations on conflict minerals and slavery. Energy management will continue to be a focus for spend, representing $206 million (23%) of the 2016 total market.
- Rising interest from investors in environmental, social, and governance (ESG) issues, a continued focus on supply chain stewardship and growth in the application of analytics to EH&S data sets to inform sustainability strategies will be key growth drivers between 2016 and 2021.
- Supply chain and resource management engagements will see the fastest growth of 7% annually with strategy and innovation growing by 6% per annum. Consulting spend on climate risks, ESG, and social impact investing will grow by 5% each year over the next 5 years.
“Despite the best efforts of the management consulting profession, sustainability is still just a narrative about corporate performance not a clearly defined market” continued Ma. “With a forecasted value of less than $1 billion, small deal sizes, and competition from consultants at not for profits it is not a market that excites the top brass of consulting firms. That’s why the largest consulting firms have turned away from the sustainability market, defunded global practice groups, and folded sustainability experts into industry teams.”
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