The market for environmental services is changing, shifting from responding to existing regulations to anticipating what's coming up next on the legislative agenda. That's a good thing, but it makes the process more complicated.
Regulations, regulations, regulations ... ever since the creation of the U.S. Environmental Protection Agency in 1970, businesses have been bombarded with rules, guidelines, legislation and regulations that aim to minimize their impact on the environment. And as these legal obligations multiplied, environmental service providers were quick to step in, offering businesses specialist solutions to problems such as land remediation or natural resource management.
But the market is changing -- at Verdantix we've spotted a shift in supply and demand trends over the past four years. Today, selecting an environmental services provider has become a much trickier -- and riskier -- task than when firms took a compliance-only approach.
What's happened to the market? It's changing because customers are changing their requirements for environmental projects. It's not so much about responding to existing environmental rules and regulations, but more about anticipating what's coming up next on the legislative agenda. No business wants to be the next BP, who paid an estimated $37.2 billion in charges and compensation following the Deepwater oil spill in April 2010, so firms are putting their environmental, health and safety (EH&S) procedures under the spotlight. Suddenly EH&S isn't viewed as a painful "cost of doing business;" now firms are building bridges between EH&S and their sustainability processes as part of an enterprise-wide strategy to keep ahead of the curve.
And suppliers are changing too. Market consolidation has seen many of the smaller players swallowed up by bigger competitors -- like CH2M HILL acquiring Halcrow, or AMEC's acquisition of MACTEC. And the gains made in expertise, say in engineering, construction or consulting, mean that these larger end-to-end suppliers can now bid for more complex projects.
Speaking to 15 buyers of environmental services from top-tier private firms and the public sector, Verdantix heard that customers want technology and regulatory expertise, cost efficiency, a verifiable track record and local knowledge and presence. On the other side of the equation, we analysed 20 environmental service providers in the US on 50 criteria, taking a close look at their performance in eight service lines and at their internal sustainability achievements. Pieced together in the Verdantix report, "Green Quadrant Environmental Service Provides (US)", we pick out four recommendations for buyers, so that they get the most out of their environmental service providers:
- Seek a life cycle approach to remediation projects. Managing scores of environmental projects and providers is tedious, making end-to-end project delivery much more attractive in both financial and administrative terms. It's wiser to work with providers such as ARCADIS and CH2M HILL that can develop a long-term land and asset management strategy rather than dealing with remediation projects one by one.
- Target in-house experts for multimedia compliance. Picking a supplier with the appropriate technology and regulatory expertise is obvious, especially for compliance, impact assessment and permitting projects. But just make sure the resources you ask for are in-house rather than subcontracted, to guarantee that showcased skills will be put on the project. Target providers such as AMEC and Shaw Group that have a wide range of multi-disciplinary experts to hand.
- Find providers that speak board language to integrate EH&S and sustainability. When dovetailing sustainability and EH&S processes, firms need providers that can engage in these strategic discussions at the board level. Environmental consultants ERM and WSP Environment & Energy fit the bill well by showing a track record of C-level exec interaction that, for example, help turn product EH&S compliance programmes into sustainable design and supply chain strategies.
- Scrutinize internal performance when optimizing EH&S processes. Demand for optimizing and standardizing EH&S systems to gain efficiencies and save costs will rise over the next two years. Buyers should assess providers' own EH&S programmes as proof of an ability to deliver what's promised. Strong internal performances by the likes of AECOM and CDM Smith demonstrate commitment to performance and indicate they can replicate these projects with clients.
Our research pinpointed seven providers, including AECOM, CH2M HILL, ERM and URS, as US market leaders in environmental services provision. These leaders have in-house multi-disciplinary teams across services lines, a countrywide presence, cutting-edge technological R&D capabilities and solid internal sustainability programmes and performance. That said, specialist providers might top a buyer's shortlist for some niche assignments.
Matching the right providers to the right firms requires some homework, but following these recommendations will help buyers save time and money, reduce partnership risks and secure a long-term relationship with trusted partners.
To access the full report, "Green Quadrant Environmental Service Provides (US)" visit the Verdantix website at www.verdantix.com
Photo CC-licensed by Nic McPhee.