The latest market research report published by Environment Analyst (https://environment-analyst.com/) shows that the UK environmental consulting (EC) market grew by 5.1% during 2017 to reach a total turnover of £1.74bn. Continued growth for the UK environment sector is expected to be around 4.8% for 2018 when all the figures become available.
Large infrastructure projects, increased public sector spend and streamlined management structures are helping consultancies to achieve continued healthy growth, so there is no evidence of Brexit blues at the current time.
The report is based on the financial statistics and detailed company profiles of the leading 28 environmental consultancy practices based in the UK. The Environment Analyst finds that the ‘Top 28’ grouped together account for as much as 71% share of the total EC market. Of the Top 28, five companies recorded substantial growth (>20%) in their EC revenue during this period while a further three saw growth in the region of 10-20%. Only six firms saw revenue decline during the period.
Environmental Impact Assessment & sustainable development work remains the highest earning service area in the EC market accounting for 16.2% of revenue while ecological/landscape services now represent 13.4% of the EC total value. Ecological and landscape services have increased in value by 9.2% on the previous year.
Infrastructure & development clients make up nearly 29% of the total market, with the next largest sector being the regulated industries (27.4%) and then government bodies (20.1%).
The top five environmental consulting firms – RPS, Jacobs, WSP, AECOM and Arcadis now hold a combined 31% share of the market – up from 29% the previous year thanks to Jacobs’ purchase of rival CH2M for $2.9bn which created a 74,000-strong global engineering and professional services giant. The acquisition also pushed Jacobs’ into second position, up from fifth place in last year’s report.
It’s worth noting that in 2008 the Top 5 only accounted for approximately 17% of the total market which shows that these firms have more than doubled their market share largely through company amalgamation during the last 10 years. Of the top 5 firms in 2008, only RPS has the same structure and ownership. In 2017 alone, no less than four of the Top 28 changed hands. Last year Stantec’s purchased Peter Brett Associates (PBA), and both Temple and RSK bought firms during 2018 to enhance and broaden their capabilities, notably in the area of ecology. Big firms continue to put the squeeze on SME’s who struggle to maintain their share of EC opportunities.
There are genuine reasons to be optimistic about the future of the environmental services sector at large. The pipeline of infrastructure projects continues to be strong. The recent actions by the government in releasing its Clean Air Strategy, Resources and Waste Strategy for England and the tabling of the draft Environmental Principles and Governance Bill during 2018/19 have also helped allay any fears of a bonfire of red-tape post-Brexit. Indeed Brexit itself is likely to fuel demand from both central and local governments for outsourced services.
The national infrastructure and construction pipeline remains at an astronomical value of £413bn and with the government’s promise that “austerity is coming to an end” it would seem that it intends to spend its way out of Brexit troubles. But the Brexit scene is changing so rapidly, from day to day and week to week, you never know how quickly this may be overtaken by events.
However, the environment will always be there, Brexit or no Brexit, and the government is planning to maintain environmental standards in a post Brexit world. Indeed the intentions are laid out in the 25 year Environment Plan which we reviewed last year in our June blog. We expect the environment to remain high on the political and development agenda for many years to come.