Global sustainability consulting market tops $45 billion
A new study has uncovered that technology giants are gaining control of the thriving worldwide sustainability consulting sector, which saw an expansion of 9.8% in 2020 to surpass $45bn for the first time.
Global research firm Source revealed in a report last month that expenditure on sustainability advisory services experienced a significant rise in 2020, despite the economic turbulence all around the globe. The research also predicted that the sustainability consulting sector would have a compound annual growth rate of 8% up to 2026 as corporations are expected to comply with stricter environmental reporting rules, and investment in clean technologies is surging. The process of becoming a net zero emissions entity is gaining traction.
Joel Bradbury, an analyst from Source, expressed that tech consulting firms like IBM, Accenture, and Deloitte are seeing their market share rise, mainly because of the increasing significance of technology and associated services to monitor environmental performance and reduce emissions properly.
A source reports that in 2022 immense growth was seen in the clean technology and infrastructure services sectors, with the demand for technology transformation consultancy services rising to $7.8bn and infrastructure services increasing to $8.4bn, which represented an expansion of 10.5 percent and 10.3 percent respectively.
Bradbury remarked that organizations are allocating their funds towards green technology, reporting on emissions, and streamlining their supply chain. They likely believe tech consultation services have the necessary know-how.
The second point suggests a preference for bigger businesses, particularly ones that provide full-cycle services, combining sustainability knowledge with their business acumen.
Analysis showed that the finance and production industries were the primary sources of external sustainability assistance, spending $11.4 billion and $10.7 billion, respectively.
The report stated that both sectors are expected to experience a compound annual growth rate of between eight and nine percent up until 2026 as they work to adhere to new reporting regulations and bolster investments in clean technology.
Results from the study indicated that while North America and Europe remain the primary consumer markets for sustainability consulting, the Middle East market is increasing at the quickest rate - reaching a value of $1.37bn in 2022, an 11.7% jump.
Bradbury noted that numerous regulations, such as the EU's 2025 mandate for precise emissions documentation for organizations within Europe, are majorly contributing to the surge in the use of sustainability consultants.
He remarked that organizations have been motivated to follow and reduce emissions, leading to substantial investments in sustainability structures and technology solutions. He noted that the two fields expanded considerably in 2022 and are now the most requested advisory services.
The economic climate has affected the market, according to him. The research found that a third of organizations had their trust unaltered by the financial situation. For these organizations, sustainability was a top three priority for investing. On the other hand, those who needed more confidence thought of it as the least significant area for investing. This aligns with what we have been hearing: financial pressures push sustainability to the bottom of the list of priorities.
According to Bradbury, if the economy continues to improve, it should positively affect the investments made in sustainability consulting.
He reported that most of their consulting clients from the survey had noted an improvement in the economic climate over the last quarter, even with diminishing confidence in business. This implies that the market for sustainability consulting is likely to expand, especially with upcoming regulatory deadlines.
Today, The Financial Times reported that PitchBook data revealed venture capital funding of carbon accounting companies grew from $60 million in 2020 to $767 million in 2022.
The trend has continued to this day, and already in 2023, $333m has been put into carbon accounting experts.