Read our report for more insight
Download our report for a complete picture of the ESG and sustainability consulting landscape, and to see where the opportunities for investment lie.
Environmental, social and governance (ESG) and sustainability are no longer buzzwords; they have become integral to corporate profitability – and the proof is in the growth of the sustainability consulting industry.
Sustainability and ESG consulting has been born out of companies’ need for guidance on how to address concerns that are outside their usual scope of work, around climate change, diversity, governance, and human rights. In recent years, it has taken off, with the market ranging from large generalist consultancies with sustainability departments to specialist firms with expertise in a sector, region or element of sustainability.
According to our latest report on the development of the sustainability consulting market, it is poised to grow at 17% CAGR over the next five years, reaching $16bn as awareness continues to grow on all ESG fronts. In the report, we look at the drivers powering demand across different sectors and regions, and how this is impacting the makeup of the sector.
What is driving this impressive growth?
As each generation becomes more engaged with the issues that will determine the future of the planet, companies are facing growing pressure to address these topics from a range of stakeholders – including employees, consumers and investors. Regulation is also catching up, requiring increasing levels of cooperation and disclosure from businesses.
In particular, government and public services organisations are feeling the heat, with 89% of these expressing concern over climate change. Indeed, with manifestations of climate change increasingly being felt, some companies suffering from adverse weather events or scarce natural resources are being urged to act in order to ensure their survival.
In return, 46% of businesses that have implemented ESG initiatives or sustainable practices have noticed improved profitability and revenue growth – alongside other benefits such as better brand recognition and enhanced customer satisfaction.
Who is coming out on top?
As the number of sectors and geographies adopting sustainability consulting services grows, the landscape is becoming more complex and we are seeing expansion in all categories – from management consultancies and large professional services firms to global engineering/infrastructure consultancies, as well as ESG and sustainability consultancies.
Our report identifies a noticeable trend towards consolidation. Specialised firms are piquing the interest of larger consultancies wishing to broaden their coverage of ESG and sustainability issues and grow market share.
Meanwhile, private equity buyers are also seeing compelling opportunities in high value specialist providers, in the aim of constructing global platform businesses through buy-and-build strategies.
William Godfrey, Executive Director M&A Advisory at Investec, explained: “The demand for Sustainability & ESG consultancy and solutions is growing rapidly as these topics are prioritised by both corporates and investors with a focus on driving sustainable performance, delivering against reportable goals and metrics. Even against a more challenging economic backdrop, we continue to see significant market opportunity and increasing consolidation as firms look to meet this client demand and fast-track their development. In what remains a fragmented market with limited players of true scale, new entrants with a market leading niche, or international platforms with a differentiated and broad service proposition, leveraging data and analytics, are attracting particularly strong interest – from both private equity and strategic trade.”
These trends have been evidenced by recent transactions, in which Investec has been involved on the M&A advisory, PLC advisory and growth and leveraged finance side, helping sellers and buyers realise trade deals, IPOs and provide funding for growth.
Download our report for a complete picture of the ESG and sustainability consulting landscape, and to see where the opportunities for investment lie.
Read our report for more insight
Download our report for a complete picture of the ESG and sustainability consulting landscape, and to see where the opportunities for investment lie.
