Should Consultants Divorce Sustainability?

IS SUSTAINABLE CONSULTING – AN INDUSTRY THAT HAS EXISTED FOR LESS THAN A DECADEALREADY SLOWING?

Could the days of bubble charts and high-paid management sustainability consulting really be over?

“Over” might be an exaggeration, but one thing is clear: the bubble charts are going out of style.

As buzz words like “green”, “fiduciary duty”, “stakeholders”, and “sustainability” circle the atmosphere, sustainability is on the mind of most C-level executives today. Albeit many business leaders have yet to fully integrate sustainability into business models, senior managements’ desks have been inundated over the past few years with fancy multi-color reports.

Today we bear witness to an entirely new ballgame.

sustainableconTen years ago, the phrase “sustainability consulting” was unheard of.

Yet, over the past decade, countless consultants have entered the now-crowded space attempting to be first-movers – tossing around advice on energy efficiency, climate change adaption, sustainable supply chain management, and a plethora of marketing techniques.

Successful consultants have assisted companies in eliciting a positive emotional response (from all stakeholders) to various sustainable initiatives. The less successful have narrowly focused on lending advice at the expense of actual implementation.

VERDANTIX FORECASTS THE GLOBAL SUSTAINABILITY CONSULTING MARKET WILL EXCEED $1 BILLION IN 2019, FAR BELOW EXPECTATIONS OF THE CONSULTING INDUSTRY – Yahoo Finance

Verdantix, an independent research firm, recently conducted a study that lead to the following conclusion: the global sustainability consulting market is expected to grow from $877 million in 2015 to $1,087 million in 2020, at a CAGR of 4%, a figure that far underwhelmed analysts’ expectations.

Subsequent to collecting data from 5,662 firms (comprised of interviews with 260 heads of sustainability in thirteen countries across twenty-one industries), Verdantix forecasted corporate spending on sustainability consulting engagements to grow at the somewhat surprisingly slow pace of 4% per annum.

WHY VS. HOW

Logically, it makes sense that front-end consulting is expected to grow at a slow pace. A few reasons.

Where does sustainability fit into the corporate budget?

As sustainable consulting is somewhat novel, some firms have not yet incorporated this expense into budgets. According to Verdantix, annual “spend per firm” is about 150,000 – 200,000, significantly lower than that spent on general management consulting.

The Global Economy

Fast growing nations such as China and India are slightly slower to the punch and have not yet amped expenditure on sustainability consulting. The two economies, as concluded by Verdantix, only account for 19% of the total.

Hiring a sustainable expert is old news.

Convincing companies to hire a sustainable expert and/or originate a sustainable division is old news. It’s been done; and for the more conventional “old schoolers”, its happening now. It is fairly well understood and accepted that a growing ensemble of consumers and investors are beginning to care, and even demand, corporate commitment to society and the environment. “Why?” has been answered. Leaders are now faced with tackling “what?” and “how?”.

trust_data

Front-end Advice –> Implementation –> Back-end Measurement

The opportunity for sustainable consulting thus lies in the implementation and the back-end. Most of the low-hanging fruit (i.e. low effort, high-return projects) have already been cherry picked. However, as the Sustainability Accounting Standards Board (SASB) gains steam and the newly created Corporate Sustainable Reports begin to compare companies on an apples-to-apples basis, a median will form. The law of statistics tells us that given the presence of a median, half the evaluated companies must perform below the average. There will be winners and there will be losers. But the high bar can only truly be set if companies are mandated to internalize their negative externalities. Transparency becomes essential.

Subsequent to the Dodd Frank legislation, a flurry of financial services firms frantically changed practices in order to comply. Similarly, it seems reasonable to conclude that an increased level of scrutiny around sustainable transparency would lead to an urgency for compliant reporting and, thus, greater implementation of sustainable initiatives.

Consultants should, therefore, not divorce sustainability

The consultants are not doomed, but rather faced with an imminent opportunity.

Measurement and quantification become paramount. Think about it. If a sustainability consultant is to convince a business leader to alter practices, said business leader must be convinced of the outcomes. One cannot impact what one cannot measure.

Enter Mission Measurement, a Chicago-based consulting firm that has recognized the need.

As proclaimed on its website, attempting to revolutionize the business of social change, Mission Measurement operates with a succinct objective: “To predict, measure, and improve the return on social investments.”

Mission Measurement brings the power of data science to social impact, enabling decision makers to maximize their return on investments in government programs, charitable grants, social programs, sustainability efforts and corporate social responsibility initiatives. 

Optimistically, the slowing of front-end consulting could be a necessary call for action: a signal that it is time for companies to enter the next phase. The easy stuff has been taken care of; the bubble reports have been created at nauseam. It is now time for companies to fully implement real change.

alternative-energy

Someday soon, despite the naysayers, a global fortune 500 company will fully embrace sustainability. The Board of Directors and senior management will together conclude that sustainability must be fully integrated into the company. Sustainability consulting will become vital to success. Conventional metrics will be pushed aside, replaced with measurement that accounts for company impact on financials, society, and the environment. A triple bottom line will become the norm. Shareholders and stakeholders alike will jump on board. Heads will turn. Others will imitate.

Then, and only then, we will have a sustainable way forward.

6 thoughts on “Should Consultants Divorce Sustainability?

Leave a Comment

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s