Environmental consultancy market shrinks for second consecutive year

27 October 2011, source edie newsroom

The UK environmental consultancy market is continuing to decline as new research shows the sector contracted by 8.4% in 2010, losing £113m in value to now stand at £1,230m.

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This is the market's second consecutive decline after more than two decades of unbroken growth, according to a report from Environment Analyst. The decline was chiefly due to government austerity and the curtailing of local authority expenditure.

As a result of this, the top 32 firms in the sector have collectively shedded just under 1,000 jobs - and the prospect of future growth looks uncertain as the market is predicted to flatlin.

According to the report, between 2009 and 2010, £79m in public spend was lost from the environmental consulting market equating to 70% of the overall decline. The private sector declined less sharply in 2010, losing £34m. Despite this, sales to the regulated industries increased by £14m.

In terms of service areas, environmental impact assessment and sustainable development remains the top income generator, despite a 12% contraction in revenue in 2010 to £168m.

Contaminated land contracted by only 3.4% to £159m, much less than the previous year when revenue shrank by more than a fifth as a result of the decimation of the house-building sector.

Turnover from climate change and energy services, at £136m, superseded that from waste management services for the first time after the latter underwent double-digit contraction in 2010 to stand at £121m.

The only service offering which substantially grew during 2010 was environmental/sustainability policy and strategy which grew by 14.7%. This is an indicator, perhaps, of increased CSR activities and investor pressure on multinational firms.

The report's co-author Stuart Foxon said: "The depth of the recession surprised many environmental consultancy managers. Unlike 2009, in 2010 it became apparent that a reliance on public sector projects would hit the sector hard."

Looking ahead, the report predicts that the market will grow slightly by 0.5% in 2011, compared with the projected GDP increase of 1.1%. Ecological/landscape services, climate change and energy, EIA and sustainable development, and environmental/sustainability policy and strategy services are expected to be the strongest growth areas.

Maxine Perella