Beware Of The Nonsense In Climate Change Business Consulting
So you run a business serious about reducing your carbon footprint and, having done everything that you can do by yourself, you’re now ready to seek the help of an outside consultant to make some operational changes. What should you be on the lookout for? And which consultancy is best suited to match your needs?
In looking to find external experts who will be able to educate you on the business of climate change, you should be aware of what classifies as quality advice and what is just hot air. The climate change consulting branch is itself still in its infancy, so even the big names should be subjected to the utmost scrutiny before you take them seriously.
Verdantix, a London based consultancy recently published 74 evaluation criteria for carbon footprints, carbon management strategy in general, corporate climate change strategies, global carbon markets advisory and cleantech consulting. “The embryonic climate change business consulting market is set to boom but buyers must beware of untested offerings and gaps in consulting firms’ expertise”, Verdantix writes in a report entitled Verdantix Green Quadrant: Climate Change Business Consulting.
The firm’s researchers compared climate change consulting practices of 16 global consulting firms. One main finding was that during this year these firms believe demand for consulting services on carbon markets and renewable energy to grow by 200%. Straight out consulting on climate change is expected to grow by 25%. David Metcalfe, who heads up Verdantix, says that this growth rate is also very healthy. What buyers are looking for is proven environmental expertise with a business analysis edge. “This combination poses a challenge for new players entering the climate change consulting market,” Metcalfe says.
Hence it’s the expensive business consultants who are set to benefit the most from the new demand. “Firms can pick from a multitude of different consultancies attacking the market with different types of expertise and wide variations in consulting day rates”, says Metcalfe, adding that companies hiring a consultant could overpay or select a provider with skills that do not match the challenge. “Confusion will increase as more players are poised to launch services,” Metcalfe warns. “Climate change is changing from an environmental issue into an economic issue. As a result, managers responsible for implementing climate change programmes seek advisers who combine technical expertise with business advice and financial analysis skills,” according to the report.
Verdantix interviewed practice leaders of business consultancies and a focus group composed of 15 buyers of climate change services. The interviews revealed that the people that buy consulting services within a corporation tend to be climate change experts, not executives. Another finding was that IT and strategy consultants lack credibility with buyers. “Despite the backing of strong brand names and investment in new climate change consulting capabilities, IT and strategy consulting firms have a long way to go to convince sceptical buyers that they are the right partner”, the report indicates.
Companies are most prepared to spend their environment budget on carbon management and compliance. Most companies already had invested in carbon measurement and management advice and were planning to spend on compliance in the next 12 months. Opportunity analysis, carbon offsetting advice and strategy development are not priorities for 2009, according to the report.
The report’s critical analysis of consultancies concluded that ICF International is the best consultancy around. “IFC International leads the pack”, the report indicates, citing the consultancy’s long track record in climate change advisory, deep environmental expertise, business analysis skills and the capability to deliver engagements in energy intensive sectors and service sectors. “These elements put ICF International at the forefront of climate change business consulting”, according to Verdantix.
Verdantix also found that specialist teams build momentum. “Firms that launched or significantly enhanced their climate change offerings in the last 2 years now have evidence of customer wins.” By contrast, recent arrivals need to build mindshare, says Verdantix. Consultants that launched in the last 18 months and target specific industries or functions such as IBM Global Business Services, BT Global Services and L.E.K. Consulting fall in this category. IBM Global Business Services has an innovative offering for data centre and facilities energy efficiency. BT Global Services launched a sustainability offering in late 2007. L.E.K. Consulting focuses on strategic analysis of climate change challenges.
Meanwhile, pure strategy consultants were found to take a passive approach. Verdantix groups firms like Boston Consulting Group, Bain & Company and Strategy& in this category and says they have not marketed their climate change consulting capabilities to the same extent as their competitors.