Consultancy market to reach £1.5 billion

Environmental consultancies are continuing to thrive despite a general downturn in the market, says a new report. The industry is growing annually by 10%, with a turnover of £900 million this year. Expanding niche markets include renewable energy and greenhouse gas management, while contaminated land earned companies £133 million last year.

According to the latest market analysis by Environmental Data Services (ENDS), the UK’s environmental consultancy sector is still expanding because of new EU legislation and corporate concerns over companies’ reputations. Larger consultancies such as KPMG are also renewing their investments in environmental services.

Contaminated land investigation and remediation have brought in the most money, earning consultancies £133 million last year, with environmental impact assessment the second major earner at £118 million. Foot-and-mouth has also commandeered a substantial amount of work, along with government and NGO policy work generating £87 million last year.

Over seven hundred firms achieved an average of 8.8% profitability, up by 1.7% from last year. RPS Group plc achieved the highest profit margin of 16.7%. The sector’s turnover is £917 million – up from £150 million in 1988 – and is expected to reach £1.5 billion within the next five years.

But the study’s editor Liz Trew warns that predictions may be over-optimistic. “It may be little more than wishful thinking that environmental consultants will be cushioned from any economic slowdown – especially since the UK government appears intent on avoiding new environmental legislation as part of its drive to minimise regulatory burden on business.”

Trew points to US trends where a boom in consultancies between the late 1980s and mid 1990s – fuelled by new environmental regulations – has now slowed because of legislation rolled back by President George W Bush. UK salary trends are also likely to be unsustainable, warns the report, where high salaries fuelled by the current shortage in skilled workers may not be matched by future fee rates.

Nevertheless the water sector, currently experiencing a lack of demand, is expected to pick up again with the implementation of the Water Framework Directive, says the report, while the rise of corporate social responsibility is expected to prompt more corporate environmental strategy services.

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