The ESG And Sustainability Consulting Market: The Road Ahead

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The ESG And Sustainability Consulting Market: The Road Ahead

The demand for ESG and sustainability consulting services has grown substantially over the last two years. Standing at $14 billion in 2023, the market is expected to reach more than $48 billion by 2028 (see Verdantix Market Size And Forecast: ESG And Sustainability Consulting 2022-2028 (Global)). Our Green Quadrant: ESG And Sustainability Consulting 2024 – which evaluates 17 of the most prominent sustainability consulting providers – highlights a significant expansion in the scope and scale of consulting engagements.

Verdantix has noticed two new engagement patterns in this space, which were not evident in the 2022 iteration of our Green Quadrant. First, although most consulting firms have repeat buyers, many organizations now have one consulting partner throughout their overall sustainability journeys and hire more specialist sustainability firms for specific projects. Thus, organizations end up working with multiple sustainability consulting firms, as they traverse this landscape. Second, with businesses facing a constant threat of reputational damage and greenwashing litigation, they are recognizing the need to build cohesive sustainability narratives. As a response, consulting firms are foraying into integrated marketing strategies through brand and communications services for sustainability issues, as well as building their portfolios of anti-greenwashing services – positioning themselves as one-stop-shops for all sustainability concerns.

Challenges for ESG and sustainability consulting firms

As businesses increasingly rely on consulting firms to cut through the complications of the sustainability landscape, these firms must continue investing resources to meet demand and to differentiate their services in the market. Our competitive analysis and consumer insights (see Strategic Focus: Customer Insights Into ESG & Sustainability Consulting Services) indicate that consulting firms must navigate the following challenges to maintain leadership in this space:

  • Increasing customer demand for sustainability innovation.
    Corporates that are advanced in their sustainability journeys are encountering difficulties in finding consulting firms to partner with that can help them push the sustainability envelope further. Going forward, consulting firms will benefit from focusing on innovation as an investment priority and channelling resources to foster innovative thinking within their employee base. Being one step ahead of newer sustainability concerns and emerging ESG risks, opportunities and regulations will enable consulting firms to strategically scale up at speed. The consulting firm’s own sustainability journey can also substantiate its ability to be forward-looking and thinking, along with its commitment to the cause.

 

  • The bane (and boon) of established consulting expertise.
    Although the ESG consulting space is a diverse market with players from different heritages – and while buyers do ultimately benefit from such distinct perspectives – consulting firms need to work towards establishing themselves as experts on a range of sustainability consulting service lines. As consulting engagements begin to cut across sustainability issues, firms must prove their prowess with projects that do not necessarily leverage their heritage – if they want a larger share of the sustainability consulting pie.

 

  • Different organizational stakeholders with varying ESG priorities and vocabularies. 
    As ESG becomes increasingly embedded in organizations as a core business concern, and consequently, the owners of sustainability consulting engagements expand, the firms that will maintain leadership in this space will be those that can engage with diverse owners of sustainability engagements and speak the languages of different business functions.

 

  • Shortage of green skills in the market. 
    The most obvious problem for the sustainability market is a shortage of experts. Although this lack of sustainability skills increases the premium associated with consulting firms, it also causes a significant problem for these firms themselves. Consulting firms do not only need to recruit the best talent to serve clients effectively and efficiently – but must also retain such talent.

 

To learn more about the ESG and sustainability consulting market and the leading providers in this space, read the full report: Verdantix Green Quadrant: ESG And Sustainability Consulting 2024.

 

Priyanka Bawa

Senior Analyst

Priyanka is a Senior Analyst in the Verdantix ESG & Sustainability practice. Her current research focuses on ESG and sustainability consulting services and social aspects of ESG regulations, reporting and disclosures. Prior to joining Verdantix, Priyanka led diversity, equity and inclusion (DE&I) research in the legal and environment sectors. She holds a DPhil in Social Policy from the University of Oxford.