Obama policies trigger climate change consulting gold rush

Obama’s policy team, including Nobel Prize winner Steven Chu as Energy Secretary, is deeply committed to putting the US in a leadership position on climate change as fast as possible. Building energy efficiency, renewable power generation, greenhouse gas (GHG) inventories and carbon management plans will become core business issues. Corporate America expects a federal cap-and-trade scheme by 2012/13, tax incentives for fuel efficient vehicles and billions of public spending on energy efficiency measures.

But dramatic policy change means few firms have the in-house expertise to respond to the new environment. Experienced energy efficiency engineers, knowledgeable carbon management strategy analysts, wind farm project managers, carbon emission reduction originators and cleantech product managers are scarce. Individuals responsible for climate change plans – like corporate responsibility directors, the VP sustainability or the chief operating officer – will find they need to turn to outside experts to get strategic advice and help with the design of change programmes.

To help individuals responsible for crafting their organisation’s climate change strategy, Verdantix analysed 19 leading consulting firms on 56 evaluation criteria. The report, “Green Quadrant: Climate Change Consulting USA", finds that climate change leaders should select a portfolio of consultants that can cover:

- Climate change strategy development. Many executives are just coming to the realisation that climate change will impact their markets. Firms like Blu Skye and AT Kearney are well positioned to engage with senior executives and kick-start strategic thinking through the lens of sustainability and climate change. Leading management consulting firms like McKinsey and Booz have the expertise to build future scenarios and strategies once executives have taken off the blinkers.

- Opportunity identification. Innovative firms will benefit from the market transition created by climate change. The thinking of consulting firms like PA Consulting Group and GreenOrder is best aligned with opportunity seeking projects. The war gaming methodology developed by Booz and the focus on business transformation at PA Consulting Group help execs to open their eyes to the growth markets of sustainable business.

- Regulatory compliance and financial performance. The US market is entering into a phase driven by GHG regulations, incentives for renewables and pro-green government expenditure. The advisory services of firms like Deloitte are ideally-suited to help multinationals ensure global regulatory compliance as well as seeking potential for financial performance improvements created by the new regulatory environment.

- Operational analysis. Firms in sectors like oil and gas, chemicals, power generation, logistics, food and beverages require consulting firms with in-depth knowledge of industrial processes to perform technically-accurate analysis that has credibility with operations directors and site managers. Providers like CH2M Hill and ENVIRON are ideally positioned to perform commercially valuable climate change consulting engagements.

A portfolio strategy ensures that buyers of climate change and sustainability consulting services match the right advisors to the right business challenges and keep day rates at the appropriate level. Our data suggest that buyers should turn to:

- AT Kearney for supply chain sustainability. This 2,500 employee strategy consulting firm has 800 individuals in its supply chain and procurement practice group. Sustainability leader Daniel Mahler has a long track record in delivering strategy assignments on sustainable supply chain.

- Booz & Company for energy sector climate change strategy. This firm, which is now legally separate from its parent Booz Allen Hamilton, has established a global network of partners focused on climate change. Its large energy practice provides the platform for emissions intensive advisory work.

- CH2M Hill for end-to-end carbon management programs. Building on its powerful GHG management systems capabilities, CH2M Hill has the complementary expertise to devise a carbon management plan. Industrial process knowledge is a crucial differentiator.

- Deloitte for financial performance improvement. For firms that have conducted a strategic review of climate change opportunities, Deloitte is a natural choice for in-depth, quantitative analysis designed to enhance financial performance around tax, subsidies and compliance credits.

- Ernst & Young for cleantech advisory. For several years Ernst & Young targeted the cleantech sector as a future growth opportunity. This commitment is now paying off as the firm has deep relationships with top tier investors and in-house knowledge of battery technology, hybrid drive trains, Kyoto projects and biofuels.

In selecting advisory partners a word of warning is required. Given the lack of expertise in the market, and low familiarity with the challenges among buyers, firms face increased risks of paying for sub-standard work. The evidence-based assessment conducted by Verdantix found that even the consultancies with the best credentials in this market, such as CH2M Hill, McKinsey & Company and PwC, are not perfectly suited for all types of projects.

David Metcalfe is a Director of Verdantix. The report “Green Quadrant: Climate Change Consulting USA” is available at www.verdantix.com