The sustainability consulting industry is rapidly evolving in response to the growing demand for sustainable business practices. Sustainability consultants serve as valuable partners, offering expertise and guidance to navigate the complexities of sustainability challenges and opportunities.
At Carbon+Alt+Delete, we work together with those sustainability consultants to measure and reduce the climate impact of businesses. In this blog, we outline four noteworthy trends in the sustainability consulting industry.
1 – Go niche or go big
With climate change becoming a central concern for businesses, sustainability consulting firms are faced with a competitive market. A lot of new players enter the sustainability consulting market, going from small boutique firms in adjacent sectors, such as engineering consultancies or environmental consultancies, up to large big-4 consultancies.
To differentiate themselves, consultants are increasingly focusing on niche areas of expertise. Such focus can be on a certain industry such as the agricultural sector, on a certain function such as project management, or on a certain topic such as low-carbon freight transport. As such, consultants can develop specialized knowledge and offer tailored solutions to clients. This approach allows consultants to become recognized experts in their chosen field, providing in-depth insights and targeted recommendations.
On the other hand, some firms opt for a broader approach, providing comprehensive services to clients across industries, including services beyond sustainability such as regular business consulting. By offering a wide range of services, these firms cater to organizations that require holistic business strategies. Whether choosing a niche or comprehensive strategy, consultants must establish themselves as trusted advisors with deep expertise to stand out in a crowded market.
2 – Split reporting from advisory
As the demand for sustainability information grows, consulting firms are recognizing the need to separate reporting and advisory services. Reporting involves collecting, analyzing, and disclosing data on environmental impacts, carbon emissions, and sustainability performance. It requires expertise in data management, metrics, and reporting frameworks. Advisory services, on the other hand, focus on guiding clients through the development and implementation of climate change strategies and initiatives. Consultants in this role provide insights into policy and regulatory landscapes, identify risks and opportunities, and offer recommendations for sustainable practices.
Reporting and advisory services require also a different business approach. Reporting is typically more recurring in nature than advisory services, offering the possibility for recurring revenue (see the third trend). Reporting services are also easier to automate by software technology, compared to advisory services (see the fourth trend).
Finally, reporting and advisory services can be performed by different employee profiles. Advisory typically require specific and in-depth knowledge and experience, while reporting can be performed by more generalist and junior profiles. In short, reporting services are a commodity, advisory services not. By distinguishing between reporting and advisory functions, consulting firms can provide specialized expertise in each area, ensuring accurate and reliable sustainability reporting while delivering strategic guidance for climate action.
3 – Evolve from one-off projects to recurring support
Traditionally, sustainability consulting engagements have been one-off projects, where consultants are brought in to address specific sustainability challenges or initiatives. However, there is a growing shift towards establishing long-term partnerships with clients to provide ongoing support.
Reporting services are very suited for recurring engagement with businesses, as they are repetitive in nature and have a predictable work load. This offers an opportunity for sustainability consultancies to engage with their clients in a subscription model and ensure recurring revenue from their reporting services. This is very similar to how financial service providers market financial reporting services.
Besides, as business are recognizing that climate change is a complex and evolving challenge, advisory services from consultants are required on an almost regular basis as well. This allows to set up new and flexible types of engagement with business, such as a budget-based engagement where a client can request advisory services within the agreed budget or result-linked engagements where the advisory services are renumerated based on the reduced carbon emissions.
4 – Digitalize the standardized and repetitive work
The advent of digital technology has revolutionized sustainability reporting, making it more efficient, accurate, and accessible. Consulting firms are embracing digital solutions to streamline the collection, management, and analysis of sustainability data. By leveraging automation, data visualization, and cloud-based platforms, consultants can enhance the speed and accuracy of reporting processes, freeing up time for more strategic analysis and advisory work.
Digital tools also enable consultants to analyze large datasets, identify trends, and provide data-driven insights to clients. Furthermore, standardizing reporting frameworks and adopting common industry standards enable comparability and consistency, facilitating benchmarking and evaluation of sustainability performance. Digitalization and standardization not only improve efficiency but also enhance transparency and credibility in sustainability reporting.
Finally, digital tools enable consultants to work in a standardized and auditable way. Still, sustainability reporting is too much a world where consultants run around with their own version of what used to be a master excel spreadsheet. This is prone to error and introduces liability risks for the consultancies. Therefore it’s instrumental for sustainability consultancies to ensure that all their consultants work in a compliant and auditable way with validated digital tools.
The sustainability consulting landscape is rapidly evolving, driven by the urgent need to address sustainability challenges, in particular climate change. By embracing trends such as niche expertise, separating reporting and advisory services, transitioning to recurring support models, and digitalizing reporting work, consultants can deliver tailored and effective solutions. Through these evolving trends, sustainability consultants contribute to a more sustainable future by supporting organizations in their quest to mitigate and adapt to the impacts of climate change. These trends will continue to shape the consulting industry, enabling consultants to provide invaluable expertise and guidance for a more sustainable and resilient world.