EHS Consulting: 7 Things You Should KnowJun 15th, 2013 | By Robert Kloepfer | Category: Featured Articles
The marketplace for environmental, health, and safety (EHS) consulting services has changed dramatically in recent years. Highlighted below are seven post-recession game changers that have re-shaped the playing field for the EHS market.
1. Recovering Markets are Different
Encouraged as we are by every sign of improving economic news, we are kidding ourselves if we expect things will pick up to where they left off in 2007. The global recession has left deep changes in its wake, many of which are structural and game changing, not just cyclical.
Many global clients now project a much lower tolerance for risk and greater cost sensitivity than they did before. They face lower trust from the public, regulators, and investors. They are confronted by tremendous pressures on cost and availability of resources such as energy, water, and raw materials. Supply chains continue to extend in some industries while others face the challenges of reshoring as global cost differentials begin to compress.
Pressure from the public and regulators on things such as carbon and resource management (largely missing during the recession) will likely return but will focus more on efficiency then altruism. Consultants that don’t actively consider their clients’ business goals in light of new and changing realities will find themselves out of sync and at a competitive disadvantage for all but the most commoditized service lines.
2. Follow the Money
To paraphrase an old line about the weather, “everyone talks about the environment, but not that many people do anything about it.” Most clients understand the challenges of running more sustainable businesses on an intellectual level. They get that they should consider life cycle impacts in the design of their products. They recognize the connection between their brand reputation and a sustainable business posture, and in their hearts they know that high efficiency, low waste, and low carbon operations are the path to long term success. However, that doesn’t always mean clients are ready to spend money on it.
While there are clearly some companies that have invested heavily in a green image or even green products, many more find moving from “talking about” EHS performance and sustainability to actually “doing something” about it depends on a clear and short term link to enhanced corporate revenue and profit. Gaining or maintaining a strategic involvement with clients will depend much more on the ability to contribute to their achievement of favorable business outcomes linked to revenue improvement and cost reduction.
3. Business Organization
Simply put, clients don’t care about your internal business organization unless it’s annoying them. Clients want you to provide them with seamless, consistent, best-in-class services anywhere you work with them. If you’re a regional firm, they want it regionally. If you’re a global firm, they expect it globally. They want your service to be user friendly. They don’t want to worry about getting the best or most appropriate person in your organization, resolving issues around contracting or invoicing, or educating every consultant working on their projects about their way of working, tolerance for risk, deliverable formats, and all the rest.
If they can’t get that from you, they can and will go somewhere else. They don’t care about your internal divisions, profit center structure, sales or revenue tracking methodologies, or any of the other conventions by which you manage your business.
But good consultants know that their internal metrics and management and reward schemes do have the potential to negatively impact the way even their best people interact with clients and each other. To effectively deliver to clients across geographic boundaries, organizational structures and business management systems need to account and respond to client relationship and service delivery needs, but in a way that is transparent to the client.
4. Sustainability is Not a “Service Line”
Sustainability is not a service line or a “thing” that consultants can sell. It can be part of a client’s vision for their business, a philosophy, a posture, a strategic underpinning…call it what you want. For consultants to succeed in selling into a client’s view of sustainability requires an individualized understanding of that client’s markets, products, business goals and stakeholder relationships.
If you ask well-informed corporate managers what their biggest challenges are, they will seldom say “sustainability.” They will say things like product development and introduction, product take back, new market entry and geographic expansion, asset and liability management, supply chain and business continuity, or reputational protection and enhancement.
Challenges like these (if managed wisely) will support your client’s success and allow them to make contributions to a sustainable business. These are the types of assistance we can focus on and sell services into. Selling sustainability itself is like selling success – every client wants it but they are not likely to believe that they can get it out of your briefcase.
5. Traditional Services are Still Critical
To be the kind of company that clients value, consultants need to be able to provide several kinds of support and service at the same time.
On the one hand, we are expected to be innovators and advisors as to “what’s next.” These are exciting times to be working with clients on product strategies, energy challenges, green buildings, supply chain management or digital applications to data and knowledge management. On a percentage basis, these are and will be fast growing parts of our businesses.
But they are not the entirety or even the biggest part of what most EHS and sustainability firms do. Service lines such as investigation and remediation, due diligence for transaction support, compliance assurance and auditing, impact assessment, and waste management still make up the lion’s share of most companies’ revenue streams and profits.
This was never as starkly visible as during the recent global recession when many clients cut back significantly on elective spending while continuing ongoing projects or regulatory-driven commitments. So while EHS firms continue to move towards the introduction of exciting new service areas to respond to market changes and shifting client needs, well managed consulting firms recognize the need to tend, update, and invest in the bread and butter service lines that built the industry.
6. Implementation Matters
Today’s firms increasingly need to be implementers. The kind of firm that leaves a report and says “good luck with that” as they depart the client’s office really doesn’t have that much of a play in today’s market. Clients need to show that they have received quantifiable value for consulting services, and that generally means that we as consultants need to actually help them do something to achieve a successful result rather than just tell them what they should do.
This requires pairing the strategic with the scientific, engineering, operational, and business disciplines that are critical to the implementation of our most responsive and innovative approaches to client success. Take a look at who is hiring who today and you will see this philosophy reflected in many firms from the global management consultants to regional players.
7. Your Customer is Changing
Over the past 25 or so years most client organizations of any size developed a management function containing some combination of the letters E, H, and S, often with an executive or a number of executives who controlled their spending and contracting. Getting to the decision makers in those departments and maintaining those relationships was a key to our success as consultants. In some client organizations that is starting to change. Perhaps it’s a case of be careful what you wish for, but EHS and sustainability issues are increasingly becoming integrated into many different entities within our clients’ organizations.
Engineering and product development people are savvy about product stewardship issues — operational leaders understand that permitting is key to facility expansion, procurement is getting smarter about supply chain liabilities, and marketing executives get that “green” matters to some stakeholders. In some client organizations this is resulting in contraction of both the size and influence of the EHS function.
The bottom line is that clients still need us, but our buyers are a dynamic and more diverse audience than in the past.
About the Author
Robert Kloepfer serves as a Director with 2020 Environmental Group, advising U.S. and international EHS and sustainability consulting firms on strategic growth, new market entry and expansion, operational and organizational restructuring, and mergers and acquisitions. Bob also brings expertise in international markets for EHS, product stewardship, supply chain management, and corporate sustainability practices in the UK, Europe, and Asia.
About 2020 Environmental Group
2020 Environmental Group brings together a new perspective in management consulting aimed at helping environmental businesses open new paths to success. Focus areas include helping consulting companies expand into new markets, grow through mergers and acquisitions, build brand name visibility, sustain growth, and maximize shareholder value.
Photograph: Harbour by Phillip Collier, Sydney, NSW, Australia