The skills sustainability consultants need to succeed
The last decade has seen an evolution of what has become known as sustainability consulting: Corporate demand for expert advice on social responsibility, environmental impact mitigation strategies, environmental or socially-minded re-branding efforts development of new product and marketing strategies to serve environmental markets and internal and supply-chain assessments that have led to improved efficiencies and regulatory risk mitigation.
Initially led by boutique firms (headed by professionals with personal passions for environmental or social causes and career histories to match), larger firms (accounting, legal and traditional corporate consulting) soon entered the market, redirecting existing personnel or acquiring new expertise and applying their traditional business models to market demand for sustainability services.
The question, however, is whether there will be continued demand in the future -- i.e., is sustainability consulting sustainable?
The Drivers of Change
Over the past decade, mega-trends like globalization, e-commerce and information technology have fundamentally impacted businesses and markets. Over the next decade these and an expanding number of powerful drivers of market change will place a higher priority on foresight, innovation and adaptation -- by both companies and the consultants that seek to serve them. Among the key issues:
• Planetary Constraints. Population growth, land and agricultural stresses, growing stresses on water quantities and quality, extreme weather -- and social and regulatory responses to all -- will challenge markets and businesses in the 21st Century. Threats to the economic and political stability of the markets for companies' goods and services.
• Energy Dynamics. Rising populations, expanding middle class populations and increased urbanization will increase demand for modern energy services and the resources upon which they rely. These demands will have consequences for national and world economies, geopolitical relations as well as the environment.
• Information Flows and Expectations for Radical Transparency. The combination of changing stakeholder expectations and the power of social media will have impacts on corporate governance and transparency.
• Social Megatrends. Changing demographics and consumption, urbanization, population aging, deteriorating air and water quality with resulting health impacts, the liberalization of autocratic economies -- and the social and political responses to all -- will change markets and demand new business strategies.
• Market Push: Governmental Response. Governments around the world will respond to these global changes. Environmental regulation, trade policies, incentive structures, performance standards and disclosure rules are already business-impacting; their business relevance will only increase.
• Market Pull: Response of Global 100. Many of the world's largest multinational corporations are putting new demands on the companies in their supply chains far faster than governments are able to craft regulations.
Some of these trends and forces are creating new markets and business opportunities; others present strategic risk to business models and markets. A successful global change advisory firm must stay ahead of current thinking and understand the forces that will fundamentally change the world in which business must operate over the next decade.
9 Key Skills for Consultants
Global change consulting firms need to provide a wider range of expertise and services to meet the demands of companies over the next five to ten years.
1. C-Level Access and Credibility: Firms must have senior members who have access to and credibility with C-level or even Board-level client decision-makers.
2. Energy Expertise: Consultants will need broad and deep energy expertise, including knowledge of technology, regulatory market structures, environmental footprints, environmental attribute markets, cost structures, supply-side constraints, energy commodity markets, and demand side management practices and incentives.
3. Land Use, Agriculture, Waste and Water Expertise: Firms must have relevant capabilities in market analysis, life-cycle analysis, substitution and efficiency options, technology development, waste minimization and end of life strategies.
4. Policy Expertise: Public policy globally impacts business strategy and execution. Energy and environmental policies in particular will evolve in reaction to global change and consultants must offer best-in-class policy insights, analysis and advocacy services.
5. Expertise in Performance Measurement and Reporting (Traditional Financial and Non-financial): Firms must be on the cutting edge of rapidly developing metrics to measure and report on today's sustainability key performance indicators and be ahead of the curve on integrating these and developing metrics into traditional financial reporting.
6. Leading Edge Knowledge of Technology. Clients will need access to and understanding of the availability and proven market use of the technologies needed to adapt to global change, including new IT tools.
7. Stakeholder Expertise and Credibility: The firm must have access to and credibility with key NGO/stakeholder groups in order to deliver competitively valuable information and/or coalition strategies to their clients.
8. Communications Skills: We have seen how technology and social media can bring down non-responsive governments; corporations too face new vulnerabilities -- as well as opportunities.
9. Understanding of Corporate Finance and Capital Markets: Few things threaten the long-term viability of a niche sustainability consulting firm than having less than a full understanding of corporate budgeting, capital deployment decision-making, financial performance measurement and reporting, and the role of equity analysts and capital markets.
Evolving Market Strategies for Consultancies
Global change consultants will need to move beyond today's current core offerings and client development strategies to be successful in an evolving and increasingly competitive market.
• Expand Market Beyond Sustainability Leaders. Going forward, the successful consultancy should not just sell green or even just sustainability; they must sell strategic value creation consulting services over a more broadly defined set of non-traditional factors to a much broader set of companies -- including those that today might be considered the laggards in terms of embracing today's sustainability agenda.
• Lead the Collaboration Movement. Consulting firms must be deeply connected within and between organizations, serving as a compass in a rapidly shifting landscape to help clients navigate decisions on when to collaborate, how to leverage key forums without compromising competitive advantage, and why such collaboration is beneficial.
• Help Companies Demonstrate Value of Risk Mitigation and Long-term Value Creation Strategies to Analysts, Ratings Agencies and Underwriters. Leading companies have derived new revenue or market share through greener product offerings and they have reduced costs through efficiency investments. While such progress is usually touted in a CSR or sustainability reports, the bottom line contributions to company performance were reported on traditional financial reports using traditional financial metrics. Quarterly earnings calls will not become a thing of the past, but analysts will increasingly ask questions about strategic risk and use new metrics and integrated reporting tools to evaluate company value. Consultancies must be prepared to assist in this change.
• Offer Strategy, Market Analysis and Deal Diligence Services to Asset Managers, Private Equity and Strategic Investors. Many of the same forecasting, risk assessments, energy market insights, technology expertise and understanding of non-traditional value measurements that will benefit corporate planning and resource allocation are also skills that will be needed by investors considering transactions impacted by energy, environmental and social drivers.
Sustainable business evangelists have long argued that sustainability should be a core business strategy for brand differentiation and value creation. Sustainability consultants have helped achieve great progress toward proving this point with leading companies around the world. But arguably, the consulting business model is self-limiting.
But we are not at the end of history for sustainability. To the contrary, the global change forces that will shape the next decade of business will require more than ever the foresight and insights of the type of innovative thinkers and practitioners who have put sustainability on the map.
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