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INTERVIEW page 6 RSK’s response to Energy from waste recession hits the mainstream NEWS summary page 10 Round-up of latest A diversifying energy-from-waste using an array of technologies including environmental market is expected to see healthy anaerobic digestion (AD), gasification and consultancy news growth in coming years. However, plasma, Kidney said “we have to... build a series of planning, financial and more plants like this”. Global Markets page 11 technical complexities continue to Meanwhile, five of the country’s first Demand remains strong create challenges for consultancies mechanical/biological treatment (MBT) in Australia and clients alike. Geraint facilities boasting AD technology are being Roberts reports built in Greater Manchester as part of the Market Analysis page 14 Big changes are afoot in the world of biggest municipal waste contract in western Results of environmental energy from waste (EfW) in the UK. This Europe. Refuse-derived fuel (RDF) from autumn, energy and climate change the plants will be burned in a combined job market salary survey minister David Kidney gave a ringing heat and power (CHP) incinerator at the Consultancy endorsement to the deployment of EfW Runcorn site of chemicals giant Ineos. technologies. Announcing that the UK After two years of negotiation, the £3.8 p 17 suppliers billion contract was concluded after it Trucost’s focus on became the first private-finance initiative corporate green data (PFI) project to receive a loan from the UK Treasury’s new infrastructure finance unit, UK market page 21 established “to ensure vital PFI Advising the nuclear infrastructure projects go forward as planned, despite the current financial sector market conditions”. Market data page 25 Changing waste sector Share price activity & These two examples illustrate a number of market valuations trends within the UK waste management sector. First, that EfW technologies are Next issue finally being embraced because they offer  Investors grapple The rapid pace of regulatory change means the possibility of step changes in disposal EfW developers need to accept that authorities’ waste management with carbon risks business models constantly need updating, performance, potentially allowing more  Sustainability reporting says Atkins’ Jon Swan than 75% of municipal waste to be diverted by environmental from landfill. Second, disposal authorities consultancies government had granted planning consent are now willing to commit to emerging for an “energy-from-waste and biomass- EfW technologies such as AD. Third, it is  Bristol-based Sustain fuelled power station” at Peterborough that sometimes necessary to involve major  Advising on marine will produce 80MW of electricity from companies outside the waste management environment issues 650,000 tonnes of commercial waste and sector in order to secure finance for EfW wood from the construction industry and projects. And fourth, that the merging of environment-analyst.com ISSUE NO. 5, DECEMBER 2009  PAGE 1 Consulting market

waste and energy policy agendas has raised is needed. “Our experience is of a growing advantage, with the avoidance of landfill the profile of landfill diversion in Whitehall. market, but we believe this is likely to gate fees accounting for the remaining two Until recently EfW was synonymous decline after 2015 if other waste thirds. with mass-burn incineration, a waste infrastructure is delivered in the meantime. Atkins’ waste business manager, Jon management option deeply unpopular with The opportunity is now,” he says. Swan, believes there is currently more EfW the public, environmental NGOs and some As one of the UK’s largest players in work for consultancies in the public than in local authority leaders. While many waste and recycling consultancy, according the private sector, particularly in providing environmental groups and local residents to Environment Analyst’s 2009 assessment of technical advice to support the business case continue to restrict their support to schemes the UK environmental consultancy market, on financial, deliverability and greenhouse aimed at increasing recycling and estimated to have earned £9 million in gas emissions grounds. composting, the trend towards more serious waste-related revenue in 2008, SLR works Overall, the EfW market has grown consideration being given to smaller-scale on a wide range of EfW projects, from “slightly”, acknowledges Swan, and EfW incinerators designed to burn residual process design and technical advice to comprises a mixture of PFI contracts and municipal waste and/or plants that produce planning, permitting and architectural interim contracts involving authorities electricity or a fuel, such as RDF or biogas, design. Currently, the firm is involved in concerned they may be in danger of missing for burning elsewhere, has dampened the nearly 20 EfW projects. These include the their LATS 2013 target or those that had concerns of many councillors and authority provision of planning and permitting been relying on buying allowances to officials about EfW’s environmental comply. However, because of planning credentials. sensitivities and the credit crunch, “there are A reflection of the fact that EfW not necessarily any more EfW projects incineration is alive and well in the UK is getting off the ground than five years ago,” Biffa’s recent move to join other major argues Swan. waste management companies as a provider of the technology. In the last few months it Risky business has unveiled proposals to build plants at The key risks facing clients, say landfill sites in Leicestershire and consultancies, are securing planning consent Hertfordshire. and funding as well as the pace of change in the waste industry and in waste policy Regulatory drivers development. Securing planning consent is Greater interest in and diversification of “without doubt” the biggest risk, although EfW technologies has been propelled by a campaign groups “are increasingly targeting number of powerful regulatory drivers, with environmental permit applications” as well energy policy proving the most effective. Recently, developers have been looking at as the planning process, says RPS’ business The main drivers behind the UK’s EfW as an alternative to housing, says information manager Douglas Lamont. strengthening EfW market relate to: energy Entec’s Dave Auty The consultancy cites recent successes by security; climate policies aimed at cutting campaign groups in obtaining planning methane and carbon dioxide emissions; services for Viridor’s Trident Park scheme in refusals in Cornwall, overturning planning landfill diversion targets set by the EU Cardiff and design, planning, permitting, consent in Surrey and obtaining an landfill directive; and the EU renewables procurement and management for Biffa’s adjournment at the public inquiry into directive’s requirement that the UK generate proposed incinerator in Leicestershire. Veolia’s proposed incinerator at Rufford in 15% of its energy from renewables by 2020 A significant growth area in EfW has Nottinghamshire, as well as recent decisions (8 Environment Analyst 16-July-09 ). been the recent trend for developers to look by Oxfordshire’s planning committee to These drivers have, in turn, led to UK at EfW as an alternative to housing, says refuse planning applications from Viridor policy instruments such as the landfill Entec associate director Dave Auty. Most and Waste Recycling Group for incinerators allowances trading scheme (LATS), the £8/ are considering AD, with a couple at landfill sites. tonne landfill tax escalator and the decision considering gasification. Entec has “It remains difficult to communicate in 2006 to freeze local authority recycling conducted feasibility studies for two such complex issues to planning committees and targets. The government is also consulting sites in Norfolk. this is not expected to improve under the on plans to revise the renewables obligation Councils’ interest in emerging planned changes to the UK planning (RO), to introduce EfW feed-in tariffs, and technologies is driven by the fact that these system,” says Lamont. “Many of the sites to establish a renewable heat incentive. are becoming a less costly alternative to that authorities put forward as reference SLR technical director Alban Forster says mass burn incineration, rather than any sites are simply inadequate or poorly the increasing number of EfW projects his analysis of the global warming contribution researched and therefore wide open to company has been involved with of different waste management challenge. Site selection needs much greater demonstrates that the market has changed technologies, suggests Auty. “If you produce consideration.” significantly. Looking forward, the increased renewable electricity – and soon, renewable RPS’ share of the waste market is need to divert waste from landfill “will only gas – you get financial assistance.” The value “certainly growing”, says Lamont. However, continue this trend”, predicts Forster. The of the renewable obligation certificates RPS is concerned that some waste next three to five years will be crucial, as (ROCs) earned by these projects accounts this is when additional non-landfill capacity for around a third of the financial Continued on page 4 environment-analyst.com ISSUE NO. 5, DECEMBER 2009  PAGE 2 Comment

A subscription to Environment Analyst Market Briefing comprises the following package of services: Recession requires  This bi-monthly Market Briefing to download and print in your office  Full access to the online news at Environment-Analyst.com (see page ingenuity and effort 10 for headlines and web links) Environment Analyst membership – offering discounts on market analysis Is there anyone who has not come to dislike the products phrase “green shoots of recovery” over the past year,  Weekly email alerts with links to as it has been bandied about by the press and by documents and full articles politicians every time there is news that a single Publisher Julian Rose company – somewhere in the country – has expanded 8 [email protected] its team by, say, one or two. Editor - Market Intelligence Service Similarly, I assume that most managers within Liz Trew 8 [email protected] environmental consultancies are mildly annoyed Editor - Market Briefing & online whenever they hear political leaders and their news advisers talk reassuringly, once again, about how the Erin Gill 8 [email protected] ‘green’ jobs market is a recession-proof industry. Erin Gill, editor Policy Editor Geraint Roberts The environmental goods and services sector is 8 [email protected] highly diverse and, as the results of Environment Analyst’s and Allen & York’s first salary and careers survey indicate (see8 page 14 ), staff numbers at Researcher: Gina Nason environmental consultancies have fallen more markedly in the last year than Contributors: Rob Bell they have in other areas of the ‘green’ jobs market. Sales & Marketing June Meagher Clearly, clients cut their consultancy spend before reducing their own staffing 8 [email protected] Lorna Madeley levels, which meant consultancies experienced the pain of recession early. It is possible that consultancies will also experience the up-turn earlier than many 8 [email protected] other sectors of the economy, as organisations with depleted human resource Layout Nick Hazlewood Design Peter Smith capabilities hire consultants to help them move ahead with postponed projects. Proof reading Martina Chamberlain Subscription enquiries: Some consultancies have reported an increase in client demand in recent months, page 6 8 www.environment-analyst.com/subscribe including RSK (see 8 ). However, others have not yet experienced an Tel: +44(0)1743 818 008. Email: improvement in fortunes. As Environment Analyst’s reporting of consultancies’ [email protected] financial results suggests (see 8 Environment Analyst News ), the road out of © 2009 Environment Analyst Publishing recession could prove bumpy for many consultancies. The extent of individual & Research. All rights reserved consultancies’ debt loads, the effectiveness of their business development teams, Distribution policy and the skill with which they manage the challenges posed by uneven staff Environment Analyst Market Briefing is utilisation will be of enormous importance over the coming year or two. licensed on a “per user” basis, and this publication and other content on Environment-Analyst.com are sold on the For the latest share price data and market valuations for the major, publicly- basis that subscribers may not redistribute quoted consultancies please see 8 page 25 . content to colleagues or anyone else without explicit consent from the publisher Demand for environmental consultancy remains strong in Australia Disclaimer (see 8 page 11 ) and within the UK energy-from-waste sector (see 8 page 1 ), While Environment Analyst takes every effort to ensure the accuracy of articles, while those serving the UK nuclear sector await greater clarity on we cannot take responsibility for any decommissioning budgets and look forward to the moment when nuclear new adverse consequences arising from build clients begin to steam ahead (see 8 page 21 ). actions taken in response to our content and we recommend that readers take appropriate professional advice As 2009 comes to a close, let us hope that 2010 is a year marked by recovery for the environmental consultancy sector. As everyone seems to agree, the Environment Analyst Publishing & Research, London House, Town Walls, long-term prospects for the sector are very good, but that doesn’t mean success Shrewsbury, SY1 1TX, UK will come without considerable effort, ingenuity and dogged persistence. Tel: +44 (0)1743 818 008 Fax: +44 (0)1743 818 121 email: [email protected] Erin Gill, [email protected] environment-analyst.com ISSUE NO. 5, DECEMBER 2009  PAGE 3 Consulting market

Continued from page 2 entrants. Clients are looking for consultant plan to build old-school waste incinerators. input into developing viable business plans Buckinghamshire, for example, recently management companies may be taking to secure funding, and SLR “is one of the chose US company Covanta Energy, which undue risks. “Some big EfW companies, few consultancies established in providing plans to build an incinerator to burn capable of funding facilities from their strategic market analysis”, carrying out such residual household waste at a site just over balance sheets, are bidding for municipal work for banks, waste management the county boundary in Bedfordshire. contracts and then oversizing the plant to companies and other potential investors, But public unease about conventional take in commercial and industrial waste, says Forster. mass-burn waste incineration and the hoping to achieve economies of scale. The financial incentives available to processes risk these companies face is that C&I waste classed as a form of renewable energy have management contracts can be relatively significantly increased interest in emerging short and there is therefore less certainty technologies. Most consultancies that are about the future.” major players in the waste market have received enquiries about emerging EfW Projects in the pipeline technologies. Mott MacDonald, for The consultancy has gained planning example, has received “many requests from consents for incinerators proposed by WRG lenders to investigate the emerging at Salt End near Hull, by Viridor at Exeter advanced conversion technologies such as and for Ineos Chlor’s massive Runcorn plasma, gasification, pyrolysis, MBT incinerator, and is “either still working on processes and AD, and has undertaken due or has just obtained environmental permit diligence for local authority clients looking applications for these projects,” states to take on some emerging technologies Lamont. RPS is also currently working on Scott Wilson’s Niels Christiansen is not including MBT, AD, gasification and bids for several EfW and MBT plants under convinced that AD is the best technology pyrolysis of municipal waste,” according to the PFI process, providing services that for residual municipal waste, arguing it is a spokesperson for the consultancy. include planning, expert witness, better suited to more homogeneous Mott MacDonald has advised authorities permitting, technology advice and facility feedstock, like green or food waste including Swindon, Surrey and West Sussex design. These include projects planned for and has worked with companies such as Merseyside, south Tyneside, Barnsley/ He also warns that “securing waste Sita, Veolia, Greenstar Wheelabrator and Doncaster/Rotherham, Surrey, Milton contracts will become more of an issue on CNIM. Keynes and Hertfordshire. It is also helping the client side as we enter the next decade. clients with bids for MBT and gasification Traditionally, merchant construction and Commercial waste facilities at Derby, Cheshire, Leeds and industrial waste market contracts are short- There is also strong interest in using AD to Gloucestershire. term and after 2014, if the delivery of new treat commercial organic wastes, with firms Other big risk factors facing EfW non-landfill disposal infrastructure has been such as Bioganix, Shanks, Monsal and development in the UK are the volatility of secured, competition will become more PDM announcing plans to build plants to electricity prices, the complicated route that intense, meaning secure, long-term contracts treat such wastes. AgriVert in Oxfordshire companies are forced to go down to acquire will become more difficult to find.” looks set to become the first company to ROCs, and changes to the rules of the RO, treat household food and green waste in a says Atkins’ Jon Swan. “Companies are Burgeoning interest large-scale AD plant purpose built for a worried that RO rules are changing quickly There are still local authorities selecting local authority. and project development moves relatively preferred waste management bidders that Longer term, there is also enormous slowly. Thus, they can get caught out at the potential for producing “renewable gas” or funding stage. Business models constantly “green gas” from industrial, commercial and need updating. With the exception of household food waste. Biffa, which has conventional incineration, much of the announced plans to build a major AD plant emerging waste technology sector is still in Staffordshire for household and dominated by research and development. commercial food waste, has argued that if There are also a lot of changes in waste the government were able to introduce the composition and the way waste is collected, renewable heat incentive more quickly, something that can radically affect the way enabling AD-generated biomethane to be a process works.” injected into the national gas grid for heating As well as the risks thrown up by the homes and businesses, it would improve the planning process, the number of banks technology’s competitiveness greatly lending to the waste market has declined (8 Environment Analyst 21-May-09 ). and securing finance has become “The EfW market is growing “increasingly difficult”, says SLR’s Forster. The next three to five years will be crucial for tremendously, and is being led by AD by a However, a few smaller banks have entered the UK EfW market, as this is when additional long, long way,” says Entec’s Auty. “There is the market and there are now five big non-landfill waste management capacity is a lot of interest from the commercial side. players supplemented by recent, smaller needed, argues SLR’s Alban Forster Large developers are happy to take the risks environment-analyst.com ISSUE NO. 5, DECEMBER 2009  PAGE 4 consulting market

of planning and permitting, but smaller The two partners, which have worked companies are finding it more difficult.” RPS argues that many together for several years in the construction Entec has 20-25 staff dedicated to EfW and of water and wastewater treatment facilities, is a founder member of the recently potential EfW sites hope to build a similar plant to treat launched Anaerobic Digestion and Biogas residual household waste generated in Association, which argues that as well as proposed by councils Cheshire. being burned in industrial boilers and in homes, biomethane could be used by gas are inadequate or Financial clout powered vehicles. Utility companies like United Utilities are poorly researched also entering the EfW market because “to Ensuring finances stack up improve shareholder value, utilities are There is also great interest from farmers and therefore open looking to expand their non-regulated hoping to generate income by producing to challenge. Site businesses,” says Atkins’ Swan. biomethane from manure or poultry litter, “Traditionally, these companies have been says Entec’s Auty. However, because farmers selection needs much able to supply equity to enable consortia to are producing the waste themselves instead go through the bidding process. PFIs also of receiving a gate fee from other waste- greater consideration tend to go to diverse consortia. The producing businesses, there is no gate fee partnership that won the Greater and the finances do not yet stack up. Manchester contract, for example, includes However, the government’s plans for a infrastructure investor John Laing.” Such renewable electricity feed-in tariff should UK waste management scene. In companies bring financial muscle to EfW help, if its proposals to raise the price for September, Sita and fellow waste bids. renewable electricity to 30-40p/kWh management company Cyclamax Energy utilities are also beginning to compared to the current 4.5p/kWh ROC announced a partnership to develop six show an interest in EfW, according to Swan, price go ahead. “gasification and recycling-led resource “but currently seem to be more interested in Niels Christiansen, technical director at parks” to treat more than 600,000 tonnes of large-scale biomass, which in practice can Scott Wilson, which has 50-60 full-time commercial and industrial waste and to be little different from EfW but uses a staff in its EfW team, says he is not produce renewable electricity for local different fuel source.” convinced that AD is the best technology homes using technology provided by Ascot There is little doubt that the UK market for residual municipal waste, arguing that it Environmental subsidiary Planet for EfW has grown recently, thanks to a is better suited to a more homogeneous Advantage. Four of the sites – Dagenham, combination of energy, climate change and feedstock like green waste and food waste. Avonmouth, Chesterfield and Derby have waste regulatory drivers and incentives. “Countries like Germany moved towards either received planning permission or are These have strengthened considerably the AD about ten years ago, then had some not in the planning process. business case for EfW and, as a very well-publicised problems and are now Meanwhile, a partnership between consequence, interest is being shown by a switching back to incineration,” says Interserve, the services, maintenance and much broader range of potential developers. Christiansen. “In the UK, local authorities building group, and United Utilities will Nevertheless, there remain planning have become keener on incineration, build a gasification plant in Derby to treat obstacles, financial risks and technical particularly when it comes with combined municipal waste using technology provided complexities that those wishing to build heat and power, because it is tried and by Energos, subject to planning approval. EfW facilities should take care to negotiate. tested. Banks are more comfortable with it than AD, for which it can be hard to get MBT facility in Tel-Aviv, Israel hold of real performance data.” The UK PFI market is “probably at its peak”, says Christiansen. Signs of increased activity in the commercial and industrial waste market are emerging, despite the difficulties in securing finance, and “will become the next major growth market”.

Powering vehicles

The potential to produce vehicle fuels from Wikimedia Commons: Alex Marshall waste is also being pursued by Ineos, which recently announced a feasibility study for a plant at its Seal Sands site on Teesside that would produce a bioethanol road transport fuel from biodegradable household and commercial wastes, using its own “anaerobic fermentation” technology. Gasification is also emerging onto the environment-analyst.com ISSUE NO. 5, DECEMBER 2009  PAGE 5 executive interview

RSK tackles recession with fair play and sound quality

RSK is a long-established name in Morecambe Bay and Liverpool Bay,” says how RSK will change in the next five years, UK environmental consultancy. Ryder. that’s where I see us growing, in terms of Erin Gill speaks with chairman Ryder’s colleague, RSK deputy chairman having more people with expertise in how Alan Ryder and deputy chairman Peter Witherington, believes the energy is used within buildings, how to Peter Witherington about focusing consultancy’s success in attracting wind reduce energy wastage and how to provide on core strengths and treating staff energy clients is down to its track record in alternative sources of energy.” respectfully during recession securing consents: “Unless you can show RSK’s building sciences division focuses For some environmental consultancies, experience in securing permits, a client is on this field and has been largely untouched economic recession has prompted a not going to take you on. You have to be by recession. One reason for the division’s fundamental re-think of business able to offer the client confidence that you resilience in the face of recession is its development strategies. As demand from can do it.” involvement in revision of Part L of the their traditional client base has fallen, many While RSK has not responded to building regulations. This has brought some consultancies have had no choice but to recession by rethinking the fundamentals of work to the consultancy, acknowledges re-orient themselves, seeking to attract new its business development strategy, neither is Witherington, as developers have sought to types of clients and to enter markets barely it standing still. A quick look at its corporate understand the implications of changes to on their radars just a year or two ago. Part L. That said, Witherington believes This is not RSK’s response to recession. residential developers have yet to begin “We haven’t changed hugely the focus of commissioning environmental consultancies our business development. Our energy RSK’s building on anything like the scale and frequency sector practice has always been a major part sciences division they will eventually need to in order to of our work, generating more than half of meet the government’s vision for slashing our revenue,” says chairman and majority has been largely carbon emissions emitted by the country’s shareholder Alan Ryder. “In response to housing stock. recession, we have put even more emphasis untouched by “The housing sector will have one of the on building it.” biggest demands for energy conservation If anything, recession has encouraged recession. Its expertise, but at the moment its concern is RSK to prioritise its traditional role of that meeting the government’s target for the serving large energy sector clients – its first involvement in construction of zero carbon homes by 2016 three clients were Shell, BP and National will destroy the sector’s financial viability,” Grid and all three remain important clients revision of Part L of says Witherington. “Most of the major to this day. Other energy sector clients have the building regs has housing companies have looked at what it included RWE, EOn, GDF and Peel will cost to build a level 6 house – or zero Energy. attracted clients carbon house - under the terms of the code “Previously, our strategy had been to try for sustainable homes, and they don’t to reduce our exposure to the energy sector believe there is the value in property to do and to increase our activities in the property history (see box, 8 page 9 ) confirms this it. So there is a lot of lobbying going on.” sector. Now, we’re thinking that perhaps we is a company willing to change with the It will only be once housebuilders can should stay as we were,” says Ryder with a times. For instance, in 2007, it launched envisage a way forward that they will hire wry smile. RSK Radiological, which has been successful consultancies such as RSK to develop in winning work from UK nuclear sector low-carbon solutions, believes Major energy clients clients (8 page 21 ), and like many of its Witherington. In addition to serving oil and gas competitors it has earmarked climate change Another priority for RSK, and one multinationals and the fossil fuel-based consultancy and buildings-related energy shared by many of its competitors, has been electricity supply sector, RSK has won work efficiency as an area for growth. increasing the amount of work it does providing environmental consultancy to the internationally. “We grew our international wind energy industry and, more recently, Waiting for low-carbon growth sales by 100% between the end of March the nascent tidal power sector. “We have “The climate change work is yet to come on 2008 and the end of March 2009, and done the environmental and landscape a large scale, but it will come,” says Ryder. international revenue will be greater again work on many wind farm developments, “It’s inevitable that businesses are going to this financial year,” says Ryder. International onshore and offshore. I think we’ve done have to act to work at a lower cost and that growth has focused on serving its traditional the environmental consenting work for energy conservation will drive that. client base of large energy companies and almost all the wind farm developments off However, that hasn’t yet translated into a has included contaminated land the west of England, such as those in massive amount of work. If we think about remediation work in Romania and Turkey. environment-analyst.com ISSUE NO. 5, DECEMBER 2009  PAGE 6 executive interview

Empowering employees The respect and care RSK shows its staff One of the most distinctive qualities of Minimising means that the consultancy sought to RSK’s company culture, and one that Ryder minimise the number of redundancies it has is proud to discuss, is the respect afforded redundancies has had to make to survive recession. Ryder and staff and the enthusiasm with which RSK Witherington acknowledge that RSK’s senior management are willing to respond been possible workload has reduced by about 15-20%, to individual employees’ ideas and with a recent pick-up in demand beginning aspirations. “It’s really important that thanks to RSK staff’s in late September/ early October. With people are involved in building the business, property development clients having that they are not frustrated employees,” willingness to accept represented about 25% of RSK’s revenue in explains Ryder. “At many companies people the run-up to recession, but with their are kept in their boxes. You don’t get that a 5% pay cut, and its spending having dropped to about 10-15% at RSK.” 100-odd employee of the consultancy’s current turnover, the The openness and responsiveness of need to reduce staff numbers was RSK’s company culture has meant that shareholders unavoidable. more than one new business has been “We decided in December last year that launched on the back of an individual agreeing to a larger we had to make redundancies and we had employee’s vision. “We have set up new our first round of job cuts at the very business streams around individuals. reduction in income beginning of January this year. Over the Someone said to me ‘Alan, why don’t we year we’ve been vigilant, looking at each bit have an asbestos business?’ So we set one up of the business and trying to react quickly if with that person leading it. You want to has generally worked well from both a we saw deteriorating performance,” explains give people the opportunity to pursue their commercial perspective and as a method of Ryder. “In total, we have made 50-60 own ideas, not to force them to go retaining ambitious, capable staff. Ryder is redundancies, which is about 5-6% of our somewhere else to prove they are useful and proud to claim that RSK has had one of the total number of employees, so not very have something to offer,” says Ryder simply. highest staff retention rates in the sector, substantial numbers compared to some One outcome to such openness to new even during the boom years earlier this other companies.” ideas has been a corporate structure that can decade when consultancies were poaching Indeed, RSK’s history of good employee look, to an outsider, like a rather odd each other’s staff in a desperate attempt to relations has been a significant factor in combination of business activities. But this meet ballooning client demand. minimising redundancies. “We talked to all Alan Ryder, RSK Chairman

Following a degree in geography at the seconded by Cemp to act as his research with New Scientist magazine, the day the University of Hull (1980-1983) and an assistant,” recalls Ryder. “I learned so radionuclide-contaminated rain cloud unsuccessful attempt to be taken on as a much. I had to write a briefing note to the passed over. “There was Roger writing a consultant by Travers Morgan, Ryder three councils every week to let them know feature on Dounreay and I was playing undertook a doctorate at the University of what had gone on in the inquiry, so I had golf with him, in the rain,” says Ryder with Aberdeen. His dissertation focused on the a smile. environmental impact of cross-country Once his PhD was complete, Ryder pipelines. While pursuing his PhD, Ryder became one of three founders of RSK. He worked part time at the university’s Centre does not view his career as an for Environment Management and environmental consultant as an accident. Planning (Cemp), one of the first academic “I was always interested in environmental institutes focusing on environmental issues, so I guess I was heading in that impact assessment. direction,” he says. One of the favourite During Ryder’s time at Cemp, the projects of his career was RSK’s first, the centre won a contract with Orkney, EIA for the 411km North West Ethylene Shetland and Western Isles to review the pipeline, built in the early 1990s between environment-related work and plans Grangemouth and Stanlow. “We prepared earmarked for the ill-fated Dounreay a detailed environmental impact study that nuclear site by the Atomic Energy became the benchmark for many years to Authority (AEA) and British Nuclear Fuels to pay attention to all the evidence and come. The pipeline was built within the Ltd (BNFL). “The three councils decided understand the arguments.” jurisdiction of more than thirty local they would reject to what AEA and BNFL This was 1986, the same year as the authorities and there was barely an were planning, so they appointed barrister Chernobyl reactor accident. Ryder played objection on environmental grounds”, Brian Gill to work on the case. I was golf with Roger Milne, then a journalist recalls Ryder with pride. environment-analyst.com ISSUE NO. 5, DECEMBER 2009  PAGE 7 executive interview

our staff about the economic situation we states Witherington emphatically, What’s more, RSK is not simply a classic were facing and asked if they would be acknowledging that some consultancies are consultancy whose staff write reports but do willing to take a pay cut in order to reduce doing just that. But for how long? Surely, not involve themselves in solving clients’ the number of staff we might have to lose. pricing work at below the cost of delivery is problems. Although much of RSK’s work is They were willing,” says Ryder. The result not a tactic RSK’s competitors can maintain consultancy, some of it strays into the field was a 5% pay cut for all staff, with full pay for any length of time. of contracting. This is deliberate and a point to be reinstated as soon as possible. While a return to the boom years when of pride. “We try to provide clients with the UK’s leading environmental answers, rather than just a report telling Staff shareholders consultancies struggled – and often failed them what the problems are,” says In addition, one hundred-odd associates – to meet client demand does not look Witherington. “That has driven and directors who are shareholders in RSK imminent, Ryder and Witherington have development of the business. For example, took a further financial hit, sharing amongst been heartened by an increase in client we have a remediation arm because we want them a £400,000 pay cut, with the larger demand noticeable this autumn. Pricing to be able to not just tell a client they have a shareholders swallowing a larger loss. “There services as competitively as possible is contaminated site but to come up with a is not a highly pyramidical structure here. clearly part of RSK’s strategy, but its way of helping to remediate it.” We have a broad base of directors and commitment to quality remains dominant. associate directors, who have a lot of “I would love RSK to be known by all Solution-focused approach influence over the direction the company potential clients out there as the very best Not all consultancies feel comfortable with takes and who are shareholders,” explains firm to go to,” says Ryder. “I want RSK to the idea of providing both advisory and Ryder. These one hundred-odd employee be thought of by buyers at other companies, contracting services, in part because of the shareholders benefited from RSK’s success by the biggest clients. From starting off with potential risk – or perception of risk – during the boom years and are now taking just me and a couple of others, and building around conflict of interest. The fear is that greater-than-average responsibility for RSK to the name it is today, one that the the existence of contracting businesses steering the company through recession. biggest and most demanding clients think might predispose consultants to ‘sell’ the Other measures taken in response to to go to, I find that satisfying,” he says. very contracting services its company offers. recession have focused on reducing fixed As Witherington points out, RSK’s staff On the other hand, it is not unknown for overheads. As a result, in January 2009 RSK can feel proud knowing that when the big environmental consultancies to own or have closed its office in Kemble and has also environmental consultancy contracts are a stake in contracting arms. For RSK, the closed one office in St Albans, transferring put out to tender, RSK’s name is often on fact that in certain fields it can offer both staff to nearby Hemel Hampstead. In the shortlists. “We want to be on the consultancy and contracting has earned it addition, it closed two offices in the Bristol shortlist for the most prestigious and many loyal clients. area, relocating staff to its two other Bristol complex work,” admits Witherington. One current remediation project focuses premises. “We’ve cut our peripheral costs to the minimum, but with people accounting for 80% of our cost base there comes a point Peter Witherington, when you have little choice but to pass cost reduction down through employees, either RSK deputy chairman by having fewer of them or by paying them Peter Witherington describes himself as all less. We’ve done a bit of both,” says a “geotechnical guy” who specialises in Ryder. While Ryder is clearly saddened that “dirty land” and as “one of the most he had to make any redundancies, he seems bought and sold” people in UK consoled by the knowledge that RSK has environmental consultancy. acted fairly and communicated openly with In the early 1990s, he was a director its staff. with Wimpey Environmental but as Wimpey narrowed its focus and sold off Competing on price businesses not directly involved in new Like many of its competitors, RSK has also homes building, Witherington was one had to consider the prices it charges its of those sold. clients, cutting them where possible. He then worked for Dutch firm Particularly when it comes to bidding for Fugro Environmental, becoming its work from property development clients, managing director. Fugro eventually RSK has sought to offer potential clients the decided to focus its efforts on offshore lowest possible price without undermining geotechnical work and sold its land- its profitability. It’s an issue that currently based environmental capability to faces many well-established and respected ENSR. names in the UK environmental As managing director of ENSR consultancy sector. International’s UK business, “We won’t buy work. We don’t price Witherington became part of RSK work at a rate we can’t make money on,” ENSR in 2006. environment-analyst.com ISSUE NO. 5, DECEMBER 2009  PAGE 8 executive interview

on an open cast mining site near Bolton The RSK employee who developed this to offer a client a solution, rather than that will eventually be available for property business, which is the only one of its kind simply an explanation of its problems and a development, but which will require a in the UK, was a recent GIS graduate from list of options. long-term and innovative approach to Kingston Polytechnic. This is another remediation before this is possible. “Our example of RSK’s willingness to support Surviving recession client needs contaminated land experts on How precisely RSK will survive and emerge its team who can see how remediation from recession has yet to become clear. It might be possible, not just the extent of all The cost of recent reported gross revenue of £62.9 million in the problems. We have that capability,” year to 29 March 2009 and Environment states Witherington. acquisitions is Analyst’s 2009 assessment of the UK Similarly, RSK’s service offering includes environmental consultancy market an innovative approach to safety inspection clearly visible on estimates that its core environmental of gas pipelines. Once again, this is a consultancy sales grew 248% from contracting business that grew out of RSK’s RSK’s balance sheet 2003-08. This reflected considerable merger expertise and experience as a consultancy. and acquisition activity, in addition to “There was a helicopter accident in the and they now need to strong organic growth. mid-1990s involving a helicopter patrolling The cost of recent acquisitions is now a Shell-operated pipeline. Shell asked us to contribute as much clearly visible on its balance sheet and there research the safest way to undertake as possible to the is a need for newly-acquired companies to pipeline inspection,” explains Ryder. “We contribute as much as possible to RSK’s looked at how it is done in America, where company’s bottom bottom line. fixed-wing aircraft are mainly used. We That said, RSK’s commitment to open could see there was a safety benefit from line communication with its staff, its focus on doing it that way. So we got one of the offering clients high-quality advice and real American operators to fly his single-engine solutions, and its strong track record in Cessna from Houston to Liverpool, we did individual employees’ enthusiasm and diversifying its services as the needs of some trials, working for Shell and a few vision as well as an example of an RSK clients change would seem a combination others, and we’ve been doing it ever since.” contracting business that grew out of efforts predisposing it to long-term success.

RSK: corporate developments

1989 RSK founded by Alan Ryder (EIA expertise), Sue Sljivic 2004 Acquisition of RemedX, specialist in in-situ (landscape architect with skills in the restoration of oil contaminated land remediation technologies. and gas sites) and Bernard Kenworthy (ecologist with skills in the restoration of onshore drill sites) 2006 ENSR acquired by Aecom, prompting RSK to buy back 26% stake owned by ENSR. Acquires UK arm of 1995 Acquisition of UK arm of American-owned Dutch firm Geodelft Environmental. environmental consulting engineers Radian, bringing expertise in auditing and air emission monitoring and 2007 Six acquisitions, including Carter Ecological, Structural modelling. Simultaneously, Radian acquires 26% of RSK. Soils, communications consultancy Technical Editing Services, Kent Geotechnics and Belgian firm ESA. 1999 Radian purchased by Dow Chemical. RSK buys back Offices in Abu Dhabi and Romania open. 26% of shares owned by Radian. 2008 Four acquisitions, including Stats Ltd, landfill 2000 RSK Ireland launches with office in Dublin. Office in monitoring business Argus Environmental, and Dutch Belfast opens in 2006. contaminated land specialist EMN.

2001 RSK acquires and merges with UK division of 2007- Launch of six new enterprises to expand American-owned ENSR, with ENSR acquiring 26% of 2008 service offering, including RSK Radiological, serving RSK. Deal expands RSK’s skills in site investigation, the nuclear sector. contaminated land risk assessment and laboratory analysis. 2009 Acquires Belgian firm Ameberco. Launches stand-alone 2003 Acquisition of safety consultancy Shear Management. renewables division.

environment-analyst.com ISSUE NO. 5, DECEMBER 2009  PAGE 9 NEWS ROUND-UP

Visit Environment-Analyst.com for more news and analysis

A subscription to Environment Analyst Market  Mouchel to support London Waste & Recycling Briefing is a package comprising full access to our Board Organisations seeking funds from the London Waste and online news in addition to this bi-monthly PDF Recycling Board will be assessed and assisted by Mouchel newsletter. Here is a selection of recent news articles 04-Nov-09 environment-analyst.com/2341 8 with web links to help you find them.  UK division of URS posts 2008 loss Revenue stable, but profits tumble; focus on serving needs of US-based multinationals BUSINESS NEWS & FEATURES 29-Oct-09 environment-analyst.com/2326 8  WSP wins LCA contracts for electrical appliances &  Pöyry reports growing demand for enviro services ethanol fuel WSP Environment & Energy issues details of two Finnish-based consulting and engineering group Pöyry incurred life cycle assessment (LCA) projects it has been commissioned to almost €10 million in one-off costs during the first nine months of carry out 18-Nov-09 environment-analyst.com/2385 8 2009 related to “adaptation measures” in the face of global recession 28 Oct-09 environment-analyst.com/2327 8  Grontmij to exit weak markets, more staff cuts UK named as weakest market, with damaging water contract delays;  Environ to open Moscow office Newly-appointed enviro services remain priority European operations director plans for growth, anticipates strong Q4 12-Nov-09 environment-analyst.com/2366 8 results 23-Oct-09 environment-analyst.com/2321 8  Arcadis says demand  SLR experiences “pick-up” in demand Canadian for enviro services business benefits from higher-value gov’t contracts growing again “Better 22-Oct-09 environment-analyst.com/2314 8 than expected” Q3 results; 2009 net income forecast cautiously revised upwards 11-Nov-09 environment-analyst.com/2356 8  ERM partners with US software firm to offer IT-based energy & GHG services An agreement between  State of UK wave & tidal power industry assessed by ERM and US-based software company Tririga should enable the Entec Report on the marine energy sector calls on the UK global environmental consultancy to provide clients with IT-based government to increase funding and to “express confidence” in the solutions 22-Oct-09 environment-analyst.com/2313 8 nascent industry 12-Nov-09 environment-analyst.com/2363 8

 UK’s biggest housebuilders given sustainability POLICY & LEGISLATION ranking Berkeley, Crest Nicholson & Miller Homes lead the pack  Decc names 10 sites suitable as demanding enviro standards challenge developers to innovate at for new nuclear Long-awaited an affordable price 09-Nov-09 environment-analyst.com/2352 8 series of energy national policy statements published  Bureau Veritas’ UK HSE consultancy growing by 20% 11-Nov-09 environment-analyst.com/2358 8 Improved profitability & organic growth, new approach to managing junior consultants 05-Nov-09 environment-analyst.com/2342 8  Climate change advisers call for energy policy overhaul Current UK policy and the EUETS are unlikely to deliver  Re-financed WYG to prioritise enviro consultancy required decarbonisation, warns advisory committee Revenue & profits of enviro, planning & transport division holding up 15-Oct-09 environment-analyst.com/2288 8 05-Nov-09 environment-analyst.com/2350 8  Ofgem points toward energy market intervention  New MD for Parsons Brinckerhoff Redpoint Energy & Wood Mackenzie assisted regulator in assessing in UK & Europe Balfour Beatty to retain PB future energy market scenarios for report that sparked media furore name; announces Nick Flew as MD 15-Oct-09 environment-analyst.com/2292 8 04-Nov-09 environment-analyst.com/2339 8  For our up-to-the-minute round-up of the latest  Expansion for river restoration experts Cain Bio developments in environmental policy and Specialist consultancy and contractor Cain Bio-Engineering is legislation, visit our website: seeking to expand further to meet demand for its river restoration services. 04-Nov-09 environment-analyst.com/2338 8 www.environment-analyst.com/policynews 8 environment-analyst.com ISSUE NO. 5, DECEMBER 2009  PAGE 10 Global markets

Busy times for Australia’s environmental consultants

Demand for environmental advisory having some of the leading skills worldwide we’re doing all the environmental work and services in Australia has proved in the environmental area. America is way they’re doing all the engineering.” resilient in the face of global behind and Australia is probably somewhere It is no secret that many large, UK-based recession, thanks to large energy and in between. The skills we’ve acquired with environmental consultancies view Australia as mining projects, strong public the purchase of Enviros are highly applicable a growth region, not least RPS, which finances and growing public to the changes we’re seeing in legislation in a announced its £31 million acquisition of awareness of climate change impacts lot of the countries we operate in.” Conics in July (8 Environment Analyst, and water scarcity. Rob Bell reports “A broader environmental offering in our 01-Jul-09 ). The purchase of Conics, a Australia has become in recent years one home market is also key to success, and was 570-strong, Brisbane-based planning, of the most attractive markets for companies the very reason that 15 years ago we realised surveying and environmental consultancy involved in the globalisation of the we were sitting ducks if we didn’t bring in with revenue of A$78.8 million (£39.4 environmental consultancy sector. Huge million) and pre-tax profit of A$11.5 million opportunities in mining and energy, rapidly- (£5.8 million), brought RPS staff numbers in evolving attitudes to environmental issues “When bush fires the country to almost 1,000. It also expanded on the part of the business community and substantially RPS’ activities in the state of wider society, and a seemingly recession- threaten Sydney and Queensland. proof economy have combined to make RPS chief executive Alan Hearne told Australia a serious proposition for Melbourne people Environment Analyst that the consultancy consultancies wishing to increase their intends to double the number of its Australian overseas operations. take climate change employees within the next few years: “We are Although major UK environmental positive about the development of all our consultancies have big ambitions for their seriously. There’s markets in Australia. Both the economy Australian businesses, they do not have the generally and public finances in particular are market to themselves. Australia is home to a been a change of in good shape relative to other developed number of strong, domestic players, attitude in Australia countries. This coupled with strong Asian including Coffey and Sinclair Knight Merz connections and the wealth of natural resources (SKM), the latter having strengthened its – much more so than means growth opportunities are good.” reputation as an international consultancy While Australia’s economic growth has with significant environmental capability in North America” slowed noticeably as a result of global with its recent purchase of UK-based Enviros recession, it has continued to grow somewhat. (8 Environment Analyst, 13-Oct-09 ). – Alan Hearne Real GDP growth was estimated to be 0.6%, “Like many of the major UK-based as of July 2009. Although this is a far cry from consultancies, our strategy is focused on RPS the heady growth rates of late 2007, when how we can serve our clients where they are 4.2% was recorded, Australia’s economy has located. The acquisition-based growth not contracted during 2008 and into 2009, strategy that led us to buy Enviros is about leading skills in order to compete with our unlike those of many other developed nations. increasing our skills base and being able to rivals – not local Australian competitors but The purchase of Conics represents RPS’ provide our clients with services where they rather the world’s best, the Mott MacDonalds, first foray into eastern Australia. Previously, need them. I assume the motivation of the Arups and Aecoms of the world.” its focus had been on Western Australia, UK firms in Australia is similar,” says Geoff where RPS has had a presence since 2003. Linke, general manager of SKM’s global M&A activity Since its arrival in 2003, RPS has acquired water and environment business. “There’s a RPS chief executive Alan Hearne is bullish twelve companies in the western part of the strong market in Australia, so we have seen about RPS’ ability to provide something that country, however, the consultancy is now some of these firms make big moves into home-grown consultancies cannot. “Our focusing its attention on developing stronger the country in the past three to five years.” Australian competition comes from a businesses in the south eastern states of New SKM’s acquisition of Enviros will increase consulting engineering background and like South Wales and Victoria. SKM’s environmental skills and resources on most consulting engineers they are desperately Discussing RPS’ activities in Western a global basis, something Peter MacKeller, trying to get into environmental services as Australia and Queensland, Hearne said: “We who leads SKM’s European, Middle East well, as these offer better growth prospects. have more people in Queensland than and African business says the company For those of us who specialise in these things, Western Australia, but more revenue in needs, having not had enough environmental we’ll normally get a bigger share of the better Western Australia. We’re strong in both now, staff to meet demand. SKM chief executive markets. So, where we’re joint-venturing with and they are the two states leading Australia’s Peter Dougas adds: “We see the UK as SKM on a big project in Western Australia, economic recovery, driven by oil and gas in environment-analyst.com ISSUE NO. 5, DECEMBER 2009  PAGE 11 Global markets

Western Australia and coal seam gas and coal Sutcliffe, principal consultant with Environ, associated forest fires have been a key driver, – and, to a degree, tourism – in Queensland.” demand for contaminated land services has because people have experienced real difficulties been strong, especially on Australia’s east that they are prepared to connect back to the Energy & mining clients coast. Meanwhile, the environmental issue of climate change. When bush fires RPS is far from alone in seeing Australia as a impact assessment (EIA) sector is already threaten Sydney and Melbourne, people take land of opportunity, with other international strong and mature, says Sutcliffe. climate change seriously. There’s been a bit of a environmental consulting players such as sea change in attitudes in Australia, much more Environ, WSP Environment & Energy and Climate change catch-up so than in North America.” Aecom also active in the country. At the Consultancy work relating to climate change Some of RPS’ work in Queensland relates beginning of October, Western Australia and energy efficiency was hampered for many to the impact of climate change on the premier and minister for state development years by the climate change scepticism of John state’s tourism sector, including sea level rise. announced that Aecom had been hired to Howard, Liberal prime minister from As well as transforming climate change from carry out the environmental impact 1996-2007. He has been replaced by the an abstract idea into an increasingly worrisome assessment (EIA) for a controversial liquefied much more environment-friendly Labour reality, Australia’s long-running drought has natural gas (LNG) processing plant at James leader Kevin Rudd. The change of created opportunities for consultancies with Price Point in the Kimberley region. In government has been accompanied by skills in water resource planning. “The many cases, it is the buoyant energy sector continuation of lasting drought in much of prolonged drought has prompted a lot of that is providing environmental southern and eastern Australia and dramatic thinking about water supply. There is a whole consultancies with opportunities. environmental events, including a dust storm range of water management projects underway “There are very big opportunities in oil that turned Sydney red in September. and a lot of environmental issues to consider. and gas, coal and other minerals,” agrees The political change in atmosphere and With desalination, there is the energy required Hearne. “Unfortunately for those who are extreme weather events have combined to to desalinate and the impact of brine returns not already there it is probably too late. encourage the Australian public, business and on the environment. Overall, drought has been Those of us already on the ground have a policy-making communities to wake up to the a major driver of environmental services,” head start that it will be hard to make up.” potential severity of climate change impacts. comments SKM’s Linke. Hearne’s assessment that further new “The climate change agenda is real, and there is entrants to the Australian market may find a push to pass legislation on carbon reduction,” Property slump it difficult to establish themselves may be says SKM’s Linke. “It will and is already WSP Environment and Energy is another accurate, as there are plenty of international driving a bigger market for public and private consultancy that has earmarked Australia as a consultancies already well entrenched sector management of carbon footprints.” region for growth. In 2006, it launched into alongside major local multi-disciplinary RPS’ Hearne thinks public attitudes in the Australian market with the acquisition of consultancies such as Coffey and SKM (see Australia to global climate change are changing three companies: ARK Consulting Group, box 8 page 13 ). because people are experiencing impacts first Responsive Environmental Solutions and ESH Demand from Australian mining clients is hand: “After being rather negative about Connect Australasia. The following year it strong and becoming more multifaceted, climate change at the time of Kyoto, Australian acquired project management specialist according to SKM’s Linke. “The mining sector politicians and the people they represent have Fitzwalter Group, while WSP Group acquired hasn’t really slowed down much during the moved rapidly to a commitment to manage Australian green building firm Lincolne Scott. global economic crisis and environmentally it their economy in a more carbon-friendly way. Today, group-wide staff numbers has definitely moved to a more sustainable Politics clearly plays a part, but my view is that approximately 500 in Australia, with about 80 position. Mining clients now appreciate the the severe drought of recent years and the of these part of WSP Environment and Energy. impact of climate change on their businesses,” Extreme weather events, such as September 2009’s dust storm that blew through Sydney, he says. “Demand from the mining sector is have raised public awareness of the risks posed by climate change strong from a compliance point of view and also for projects that involve engaging with the community, making sure projects fit well with community expectations. The gas and coal seam sector is also driving demand for environmental consultancy services. “The gas sector is picking up, with very large energy opportunities linked to LNG projects, where there are large environmental programmes and stringent compliance requirements,” comments SKM’s Linke. “In Queensland, there’s the emergence of a coal seam gas sector.” Wikimedia Commons Increasing environmental regulation has also proved a boon to demand for contaminated land services, where both Environ and WSP Environment & Energy have strong practices. According to Gordon environment-analyst.com ISSUE NO. 5, DECEMBER 2009  PAGE 12 Global markets

The consultancy’s strength in Australia has financial markets and a lot of consultants are says SKM’s Linke. “Other parts of the market primarily been in the property and waiting to see what the Rudd government have not been so strong, and we’ve gone contaminated land sectors but, as in the UK will decide to do.” through a period where capital spend has not and USA, recession has had a detrimental A national carbon emissions trading changed – in water, for example – but is effect on demand. “The impact of the scheme was proposed by the Rudd going into fewer, larger projects”. economic crisis has been huge. Property government at the end of last year, but final For instance, desalination projects are transaction/development is the key driver for agreement on its details has not yet been capital intensive, so significant sums are most pollution to be cleaned up in Australia, reached. Australia has yet to adopt a specific being spent but on fewer, larger projects. but no one is borrowing and very few target for greenhouse gas emission “Overall we’ve held up pretty well. We came properties are changing hands,” says Kylie reduction, instead offering a range of 5-25% out of the last financial year with strong Lloyd, WSP director of environmental reduction by 2020, with commitment to a revenue and strong profit. This financial solutions. “There have been a number of specific target dependent on other nations’ year is tighter and tougher but we’ve stayed stimulus packages from government to try and announcements at the upcoming UN pretty strong. We’ve had to tighten our belts keep property going, but these have focused climate summit in Copenhagen. and focus on our clients,” says Linke. on residential markets, for homeowners, and Environ’s Australian business has been generally relate to greenfield sites. A lot of Proximity to South East Asia growing, according to Sutcliffe, despite the purses are being held tightly closed.” Australia is physically much closer to the consultancy’s policy of not pursuing growth In the six months ending 30 June 2009, expanding markets of China and other south for growth’s sake. And while recession has WSP Environment & Energy’s turnover for east Asian nations than the UK and USA. had an impact, it has been less damaging its Australia and Far East region stood at £4.7 However, it is debatable how much of an than anticipated. However, Environ remains million, down 2% on the first half of 2008. advantage physical proximity to this rapidly- cautious about the future: “Even though “We’ve had to take certain measures to make expanding market now offers multinational economists are hailing a recovery, we are sure we keep our key people and as many as consultancies, since many already have offices nervous that a double dip may occur,” says possible employed,” admits Lloyd. “But we’ve in south east Asian hubs, while improved Sutcliffe. held up pretty well – we have a number of tele-communications and IT suggest that a Hearne is more confident about RPS’ good clients and have been able to maintain strong Australian presence probably offers prospects for continued strong growth in volume. But the overall number of jobs out only a limited advantage for consultancies Australia, and it is unlikely that its there is down and everyone has to work harder seeking to serve the south east Asian market. acquisition of Conics will be RPS’ last for their money.” Redundancies have been “We have been in parts of south east Asia for Australian purchase. “We’ve been growing made from within WSP Environment & more than ten years now and continue to grow very fast organically, and no doubt that Energy’s Australian business, at a rate of about those opportunities,” says SKM’s Linke. “We’re growth will continue. As well, I think our 10-15%, in keeping with the scale of staff cuts geographically close and there are good model has worked pretty well in Australia. I made on a global basis. relationships between Australia and many Asian think we’re the largest and, I’d claim, the best WSP’s Lloyd warns that while Australia’s countries. We’re in the same time zone and we UK consultancy there,” says Hearne. “We’ve Labour government is showing more interest can get people to south east Asian offices fairly made a bigger pitch and more investment in in the issue of climate change than its easily. However, the world is getting smaller and the market than any of the rest.” predecessors, it cannot afford to ignore the you have to be realistic. People can access skills That said, a flood of new SKM views of powerful industrial sectors, such as from around the world.” environmental staff, thanks to its purchase of the logging and pulp and paper industries, The Australian market is clearly evolving Enviros, seeking project work in sunny which may be resistant to the introduction rapidly, with mining and energy offering Australia may present a challenge for many of measures to reduce emissions and improve significant stimulus to an economy that international environmental consultancies energy efficiency. Nevertheless, WSP sees hasn’t taken the same economic battering as operating there and seeking to grow further. climate change services as a field with many other industrial nations. “Australia has “We’ve already taken the fight to the UK prospects. “We’ve got a fledgling business in not been immune to this crisis. The market is environmental consultancies” says Dougas. climate change, but we’re definitely looking tighter, but there are some buoyant parts of “And I think they’re noticing us – news of the to grow it,” says Lloyd . “Australia does not the market, and that is still causing problems Enviros acquisition has been received with a have a legislative framework as yet, so the with finding enough people to do the work,” great deal of interest by our competitors.” Australia’s largest environmental consultancies*

MWH GHD Ecowise Environmental *The companies listed above Aecom Golder Associates RPS Environment & Planning (in no particular order ) told ALS Laboratory Group Hydro Tasmania Consulting Beca Australia’s WME Environment URS Australia KPMG Noel Arnold & Associates Business magazine that they Aurecon Australia Parsons Brinckerhoff Evans & Peck employ at least 200 Cardno Sinclair Knight Merz Rural Solutions SA environmental consultants. Coffey Environments SMEC Australia ERM Worley Parsons See 8 WMEEB magazine environment-analyst.com ISSUE NO. 5, DECEMBER 2009  PAGE 13 salary & careers survey

Consultancy bears brunt of depressed green jobs market

The recession has taken the wind advertise has diminished. That said, he have opened offices in the wider European out of the sails of the UK acknowledges that the number of live Union, Middle East and further afield. environmental services sector, but vacancies on Allen & York’s books has certain areas of the ‘green collar’ decreased – although “not by as much as Job opportunities jobs market are proving resilient. most people might imagine” – from 390 While the UK environmental consultancy Liz Trew presents the findings of this time last year to 230 today. industry may be more dispersed and a little Environment Analyst’s first career Allen & York reaped the benefits of a thinner on the ground, it is far from being and salary survey for booming market and has invested heavily all doom and gloom in the UK, with environmental professionals, since its inception as one of the first certain skills still in great demand in spite of conducted jointly with leading specialist environmental recruitment firms the recession. “The clearest opportunities sustainability recruitment specialist in 1993. It reached its peak in terms of staff are in energy management and renewable Allen & York. numbers in the early part of 2008, and is generation,” says Heppenstall. After more than a decade of virtually “The agenda for companies to reduce uninterrupted growth in demand for their cost burden through better utility environmental specialists in the UK, and management has led to the creation of with skills shortages and salary hikes many new roles over the last year of which resulting from fierce competition for talent, energy managers have been prevalent,” he the economic downturn of the last eighteen adds, lending credence to the theory that months has prompted a sea change in the the downturn could help realise a switch environmental jobs market. towards a lower-carbon economy. It has been a well-documented tough On the renewables side, plans for ‘round year for British-based environmental three’ offshore wind projects have kept consultancies, particularly those with a developer teams busy and work related to heavy reliance on corporate due diligence, earlier rounds is still buzzing throughout contaminated land and services to the consultancies, according to Heppenstall. property/construction sector. Most of the Expertise in offshore environmental impact big name consultancies have shed jobs, with assessment (EIA), ecology and other specialist some having used the opportunity to wind farm-related skills have all been highly restructure and streamline their businesses desirable over the last six months. in the hope that they will be stronger for it Corporate and industrial employers are From Allen & York’s perspective, demand when recession lifts. creating in-house energy management posts, for environmental professionals has “remained says Allen & York’s Joe Heppenstall overwhelmingly more consistent” through the Allen & York perspective recession in the corporate/industrial Recruitment agency Allen & York’s business still the market leader despite employee environmental management sector than in manager, Joe Heppenstall, says that the best numbers since then dropping, in line with consultancy. He confirms that “outside of the consultancy firms have been able to soak up its clients’ and the market in general. banks, there have been far fewer redundancies the downturn in certain areas by “We have not been immune to the in the corporate green space as a percentage redeploying staff on other projects or downturn, but we have been at pains to than there have been in consultancy.” Some locations, “but these are few and far structure effectively to continue high quality firms have even strengthened in-house teams between, so the trend has been a negative support for our clients,” explains Heppenstall. during this time. one on the whole”. “We had to make hard decisions, which is Heppenstall also points to increasing A quick glance at leading environmental/ healthy, but maybe this shows that a results- opportunities in the public sector, despite sustainability trade magazines reveals a driven business like ours has been as hard hit government plans to reduce spending, as dearth in classified job advertisements in as our clients’ businesses.” organisations up their measures and recent months, in stark contrast to the Allen & York’s current list of openings controls. This trend appears set to continue situation two years ago when pages were include a proportion of overseas vacancies, with initial implementation of the carbon positively brimming with vacancies. “which continues to increase,” observes reduction commitment (CRC) energy However, the reduction in classified job Heppenstall. Allen & York has seen many efficiency scheme next year. ads may not simply be a reflection of the of its key clients looking to spread their softening market. Heppenstall claims there wings internationally “rather than Survey highlights are “still very good jobs out there in good hunkering down and shelving The UK’s environmental workforce is numbers,” but he says candidates are no developments”. Several of the larger, distributed between five key sectors: the longer as hard to find so the need to UK-based environmental consultancies corporate world, dedicated consultancies, the environment-analyst.com ISSUE NO. 5, DECEMBER 2009  PAGE 14 salary & careers survey

public sector, NGOs and other environmental within the environmental sector. wages average £34,700, suggesting that the industries (such as water, waste management Individuals’ job security is weakest public/private sector pay gap is not as wide and contracting firms). Environment Analyst’s amongst environmental consultants, with as many might imagine. first salary and careers survey is based on 42% of consultant respondents feeling less “There is a perception that those in the responses from more than 2,500 individuals secure in their roles than a year ago. By public sector are paid much less than to an online questionnaire conducted during comparison, only 28% of those employed consultants but that really has not been true summer 2009 as well as the records of 22,000 by NGOs felt that their job security was for some years now,” argues Heppenstall. recent candidates on the books at Allen & more under threat. “It’s also great to see that the north/south York. The survey results reveal how individuals The survey results also support the divide in sustainability terms does not really and their employers across the five main notion that the general level of mobility exist salary-wise.” According to an analysis sectors are coping during recession. within the environmental professional of the current salaries of candidates seeking Almost a quarter of respondents to the employment through Allen & York, the online survey reported staff redundancies as average for those working in London was their organisation’s main response to the Some 28% said £32,500 compared to around £30k for the downturn. A further 21% said that a pay freeze northern regions of England, Scotland and was the main action taken, while 17% said the number of Wales. their employer had stopped recruiting. Other environmental In terms of primary activity, online significant actions included the redeployment survey respondents working in corporate of staff, pay cuts and reduced bonuses, while professional staff in social responsibility (CSR) and just over 4% cited the closure of offices/ sustainability earned the highest premium divisions as the key recessionary response. their organisation overall, with an average basic salary of In total, some 28% of respondents said £45,900, whilst those engaged in ecology the numbers of environmental professional was decreasing year and conservation work earned the least, at staff in their organisation was decreasing £29,800. However, the Allen & York year-on-year (see Figure 1). However, a on year, but a similar candidate records suggest climate change similar proportion (25%) said their jobs are top of the tree in terms of pay scale, organisations were still expanding proportion said with a senior manager or associate/partner environmental teams. Environmental their organisations’ in this field achieving an average of £53k. consultancies were more likely to be shedding jobs than other types of organisation, with environmental teams Pay rises subdued just over 32% of consultants reporting falling The economic challenges of the last staff numbers compared with 26% of those were expanding eighteen months are evident in the pay rise in the environmental industries, 25% in the trends reported by our online survey public sector, 22% in corporate sector and workforce has been curtailed by recession, respondents. We asked participants what 19% in NGOs. with 56% of participants more cautious level of salary increase they had received in Unsurprisingly, 37% of the online survey about moving jobs now compared with the last twelve months. Just under half of sample said they felt less secure in their job twelve months ago. That said, a still the respondents had not received an now than twelve months ago, compared significant proportion (26%) of survey increase at all this year, with 15% actually with just 11% who felt more secure. respondents are looking to move to a new receiving a pay cut. Around 9% had their Although more than half felt similarly employer within the next year. salary slashed by more than 10%. secure in their role now as a year ago, as Alongside this, a significant minority many as 46% felt less secure about the Remuneration received healthy pay increases, with more security of employment more generally The mean average salary across the industry as than a fifth reporting an increase in excess reflected in the responses to the online survey of 5%, with 13% of those in the 10%+ Figure 1: Current trend in number of UK is estimated at £39,500, with 40% earning increase bracket. The mean average pay environmental professional staff less than £30k and 22% bringing home more increase for the sector as a whole was a little than £50k. Average salaries vary considerably more modest – but still respectable – 3.1% Decreasing according to organisation type, position and for 2008/09. However, this is a marked significantly Increasing 7.0% significantly level of experience, age, gender and primary reduction on the average 5-7% per annum 3.0% Decreasing work activity. A summary of some of the 20.6% increases that had become the norm for the headline statistics on salary differentials is environmental sector during the few years shown in the box on 8 page 16 . leading up to recession.

Increasing The highest average salary – by some The survey statistics also indicate that 21.5% degree – is found in the in-house corporate those who have not changed employers in sector at £46,900, which may simply reflect the last couple of years were less well off in that these positions tend to be filled by terms of salary increments. Meanwhile, more experienced individuals. Meanwhile, looking at pay rises awarded by organisation Static the average salary for consultants is type, results indicate that the highest rises 47.8% £38,900, while NGOs languish at the lower were awarded in the environmental end of the scale at £29,800. Public sector industries, followed by corporate/industrial environment-analyst.com ISSUE NO. 5, DECEMBER 2009  PAGE 15 salary & careers survey

firms. Consultants generally received a Accept lower below-average pay increase in the twelve pay only months leading up to the survey. 10.1% Bonuses have been similarly subdued, with well over half of survey respondents not receiving any bonus last year. The highest average bonus payouts in 2008 were found in the corporate/industrial sector (at 7.4% of total salary), while the lowest payouts were in the public sector. Neither (Download the Employer’s Edition of the 37.0% salary survey report 8 EA Survey for Work less hours only access to full pay rise and bonus statistics). 41.2%

Financial sacrifice Whilst the survey provides a clear indication that the personal incomes of many environmental professionals are taking a hit this year as a result of recession, it also Accept lower pay shows that most individuals are prepared to and work less hours 11.7% make further sacrifices in order to save colleagues from redundancy. Nearly two thirds said they would either accept lower Figure 2: Willingness to accept lower pay and/or work fewer hours in order to save pay or work fewer hours, or a combination colleagues from redundancy of the two, in order to prevent more job losses in their organisation (see Figure 2). reason to be optimistic about the mid-to-long of high profile tenders accepted and are Approximately 22% indicated that they term prospects for consultancy and the wider operating on a leaner, higher utilisation basis would accept lower salaries, although 37% environmental services industry. Allen & for existing staff, which means many are now would not find it acceptable to make any York’s Heppenstall echoes the optimism of our looking to recruit – albeit in small numbers personal sacrifice in terms of pay or working survey respondents: “The investment potential – to support newly-won work. This is not hours. remains strong for the sector and the low- the end of the downturn, but it is still good With any luck, further sacrifices will not carbon and environmental goods and services to see that some have turned the corner.” be needed. Survey respondents were generally offered will only become more diverse, optimistic about the prospects for the requiring a greater skill set and more support.” Environment Analyst and Allen & York would environmental industry for 2010-15. While “Undoubtedly, the energy side of the like to thank the environmental professionals who 27% felt prospects were good or very good industry, carbon management and helped us with our survey. for the remainder of 2009, the proportion renewables will play a large role in the rises to 64% for 2010 and beyond. Although future of the industry,” he adds, as may An Employees' Edition of the report is free to around a quarter of respondents were announcements following the COP15 download from our website, while the full downbeat about prospects for this year, this global climate negotiations in December. report and dataset, presented in the Employers’ decreases to just 8% for the longer term. Heppenstall has noticed a recent Edition, is available at a discount rate of £48 improvement in mood amongst Allen & to Environment Analyst Market Intelligence Outlook York’s key client organisations. “Recently, Service subscribers. The Employers’ Edition It may take the environmental consultancy things have started to change... with more includes full pay rise and bonus statistics. sector another year or two to recover to candidate interest being shown,” he says. pre-recession salary levels, but there is good “Consultancies seem to have had a number See 8 www.environment-analyst.com/survey

Average salary of Allen & York candidates by position and organisation type (All salaries are £000s sterling and based on 12 months pay)

Junior/ Officer Assistant/ Project graduate (government Specialist/ junior middle Senior Associate trainee bodies) technician manager manager manager manager Director

Consultancy & professional advisory 22.9 - 30.1 24.1 42.6 42.3 48.7 59.6 Corporate/industrial 22.3 - 33.5 25.5 42.6 48.1 44.8 69.2

Environmental industries 22.6 - 33.1 25.5 39.4 44.6 58.3 60.7

NGOs 21.7 - 24.9 29.3 39.8 38.3 - 63.3

Public Sector 21.3 28.1 26.2 20.9 40.7 39.4 30.3 52.7

All 19.3 28.1 31.2 24.2 40.1 43.2 44.4 56.2 environment-analyst.com ISSUE NO. 5, DECEMBER 2009  PAGE 16 expert supplier

Benchmarking corporate ‘green’ performance

Real data about corporate policies – issuing from companies comparable data to be made available to the environmental performance is themselves.” investment community. thinner on the ground than many Trucost’s founders, Simon Thomas and outside the ‘green’ business Andrew Jacobs, both had a background in Filling data gaps community generally assume. investment banking, while Mattison was a “We felt it was necessary to ensure that Erin Gill speaks with Richard management consultant (with a doctorate alongside a narrative and commentary, there Mattison of Trucost about filling in neuroscience) whose work on the original was some real data that could be examined gaping data gaps Trucost business plan proved so enjoyable by investors,” explains Mattison. “It’s the The rise in recent years of the concept, if he joined the company. What all three had equivalent of saying ‘Ok, we have the not always the practice, of sustainability or in common was the belief that if chairman’s statement from the financial corporate responsibility (CR) reporting has environmental issues are to become accounts but we have no profit and loss frequently been accompanied by expressions investment drivers, it is essential for real, (p&l) account. There has to be an account of unease, even cynicism, by some of the company’s environmental stakeholders. The fear is that shiny CR performance in tandem with the company’s reports constitute window-dressing and narrative about its environmental contain little of value for those seeking to achievements and prospects”. With the help assess companies’ real environmental of an advisory panel of environmental performance. economists, Trucost developed a database of One response to this cynicism has been corporate environmental disclosures that efforts to standardise CR reporting, the best assesses organisations against more than 700 known of which is the Global Reporting metrics. Initiative (GRI). This has gone some way Clearly, detail is Trucost’s business. toward encouraging a proportion of the Mattison happily describes Trucost as a world’s largest and/or most media-friendly niche player: “We have the world’s largest organisations to report some environmental database of environmental performance performance data. More recently, the data on companies and other organisations, Carbon Disclosure Project (CDP) has such as local authorities. It covers more than succeeded in coaxing some of the world’s 4,500 bodies, and we spend a lot of time largest companies to publish similar standardising and validating data disclosed information. to us to ensure it is robust and comparable. Environmental performance data is our sole Beyond the case study focus”. Overall, however, the situation remains a More unusual than the size of Trucost’s frustrating one. Environmental data is not database is the fact that the information it published as a matter of course by We have the world’s contains is comparable, as Mattison corporates and when selective data is largest database emphasises. This allows any organisation’s released it is generally not issued in a format performance to be benchmarked against its that allows for easy comparisons to be made of environmental sector and compared to any other with information about other companies. It organisation’s data. is this data gap – and the challenge of filling performance data What’s more, Trucost uses its in-house it – that Trucost has increasingly made its model to fill the sizeable data gaps that purpose. about companies and continue to hamper assessment of “Trucost was founded in 2000. We saw environmental performance. With corporate that companies were trying to take more other organisations. disclosures still extremely patchy, Trucost accountability for their environmental developed a model that allows it to estimate impacts, but a lot of attention was focused It covers more than organisations’ environmental performance on case studies that companies were 4,500 bodies even when there is no published producing or new environmental policies information available. “We draw on sources they were trumpeting,” explains Trucost of proxy information, such as fuel use, chief operating officer Richard Mattison. – Richard Mattison expenditure on various items known to “We felt there was a lack of quantitative drive environmental impacts, or a larger information about the actual performance Trucost proxy such as which business activities a – the effect of corporate environmental company is engaged in and to what scale,” environment-analyst.com ISSUE NO. 5, DECEMBER 2009  PAGE 17 expert supplier

explains Mattison. “We use information like Defra when it was developing the key assets under management. “There is revenue to calculate environmental impacts performance indicators (KPIs) to underpin evidence that this information is from 464 business activity types.” the UK’s ill-fated operating and financial increasingly analysed in the investment review (OFR). Mattison views Trucost’s process,” argues Mattison. However, he Estimating impacts work on the OFR as significant and admits that large volumes of money are not It is an approach that attracted Newsweek influential, despite Gordon Brown’s last- yet flowing toward companies that are, say, magazine, America’s second-largest news minute decision at the end of 2005 to more carbon efficient than their weekly, when it sought to rank the country’s abandon mandatory OFR reporting, as part competitors. 500 largest companies according to both of a bid to convince business leaders that Increasingly, Trucost has worked on their environmental reporting and their the UK government continued to be projects that seek to create capacity within performance (8 Environment Analyst friendly to business. the investment community to assess, 22-Sep-09 ). Trucost’s modelling capability “The process of developing those KPIs compare and rank investment decisions was sorely needed in many cases, given that lent very heavily on our technology and from an environmental perspective. Its publication of environmental data remains data – though it’s not obvious from the work with credit raters Standard & Poor’s the exception rather than the norm for guidelines that were published,” explains (S&P) is an example. Trucost has assisted America’s largest companies, including Mattison. “It was the first set of guidelines S&P in the development of a carbon- those operating in high-impact sectors such covering a full range of environmental efficient index. Based on the S&P500 as electricity generation. issues that allowed companies to report on index, its carbon-efficient sister invests more Using proxy data to judge the size of an genuinely key issues. The approach to using heavily in those businesses within the organisation’s or sector’s environmental KPIs for corporate environmental reporting S&P500 that have a lower carbon intensity impacts was also an approach that attracted has since been adopted by other countries and less so in those with a higher intensity. as they have developed their own reporting guidelines, including Germany, France and Trucost: client list most recently Canada”. Trucost has Courting fund managers worked jointly Investment community At the outset, Trucost targeted corporates, Bank of America Merrill Lynch keen to help them report on the with environmental Deutsche Bank quantitative aspects of their environmental GLG Partners performance. While Trucost attracted some consultancies, International Finance Corporation “pioneering” corporate clients and London Pensions Fund Authority continues to work with such companies, it including RPS and Mercer Investment Consultants gradually became clear that the investment NYSE Euronext community was where greater interest in Bureau Veritas Standard & Poor’s Trucost’s capabilities lay. “From the UBS investment community’s perspective, our “The reason investors are interested is Vanguard database of corporate environmental because the index has historically achieved a VicSuper performance information allows them to do 30-50% carbon reduction relative to the Virgin Money the analysis they are seeking without being S&P 500 and yet it has maintained the experts in each and every individual same financial performance. To an investor Corporates environmental impact,” says Mattison. it’s a case of ‘why wouldn’t you?’” says Baxter Healthcare Following on, Trucost developed a Mattison. “If you can guarantee the same BSkyB method of analysing the environmental performance, but you are investing in Compass Group impacts of investment portfolios and carbon-efficient companies to a greater Connaught comparing these against industry averages extent, you effectively have a response to Gate Group and each other. Financial services any future regulation that imposes the cost Greene King companies such as Henderson were of carbon on those businesses.” Mecom Group enthusiastic about the potential offered by Reuters Group this method. “We enabled Henderson to Institutional ignorance Ryanair publish information about the Assessment of environmental performance environmental performance of their funds at a portfolio level should be of interest to a in real, quantitative terms relative to their broad range of investment fund managers, Government bodies Environment Agency investment benchmark,” explains Mattison. particularly those managing assets for Defra “So, Henderson was able to say that long-term returns, such as pension fund London Borough of Barking & compared to the FTSE All-Share its managers. However, Mattison acknowledges Dagenham investment portfolio was better or worse that most fund managers have yet to London Borough of Lewisham and by what percentage.” embrace ‘green’ issues in a meaningful way. London Borough of Waltham Forest Thus far, Trucost has assessed more than “Environmental performance should be a Mid Essex Hospitals NHS Trust 1,000 investment portfolios, collectively driver, but in reality, I think, most pension representing more than £1 trillion worth of fund managers don’t know, are not environment-analyst.com ISSUE NO. 5, DECEMBER 2009  PAGE 18 expert supplier

equipped or educated enough about how to As national and international climate policies monitor the environmental impacts of their Increasingly, demand improved energy efficiency from investments, and how these impacts might large organisations, and as energy price hikes affect the financial performance of their Trucost’s work and/or volatility remain significant, the need pension funds,” says Mattison. to investigate how energy is consumed Trucost is at pains to point out that focuses on improving within an organisation is expected to result pension fund managers already have a in increasing client demands. With this in fiduciary duty to consider environmental investors’ capacity to mind, consultancies such as AEA, IT firms impacts, if they are signatories to the UN such as IBM, and IT-focused manufacturers environment programme’s (UNEP) rank companies from of industrial solutions such as Siemens are principles for responsible investment (PRI). seeking to sell energy data analysis services. Of course, the UN principles are only an environmental Trucost’s service offering is slightly effective if signatories understand – or are perspective. different. While its data can help an made to understand – their implications. To organisation understand its energy and this end, Trucost is currently working on a Thus far, it has carbon emissions profile – as well as a host report for UNEP about the financial costs of other environmental impacts – Trucost’s of corporate environmental impacts. assessed more than analysis is much more focused on how the One long-standing, supportive client has environmental performance of an been the Environment Agency and its fund 1,000 investment organisation or group of organisations managers. For the past four years, Trucost compares to that of others. This suggests has been assisting them to “dig deep into the portfolios, that Trucost’s value is likely to grow environmental performance of their pension exponentially only once the investment fund assets”. During this time, the Agency’s collectively worth community’s interest in climate change, fund managers have taken action in response more than £1 trillion energy efficiency, water consumption and to the performance data provided by Trucost other environmental indicators is and have been able to demonstrate real, transformed from a talking point – albeit an quantitative reductions in the environmental increasingly-popular one – into a genuinely footprint of the Agency’s equity portfolio, Given Trucost’s position within the material issue. relative to an industry benchmark. market, it comes as no surprise that the Other pension fund clients include company has worked jointly on projects Hermes, who advise the BT pension fund, with consultancies, including with RPS and and Australia’s Victoria Superannuation Bureau Veritas and is open to further Scheme (VicSuper), which considers water partnerships. “The whole climate change resource issues closely when making and environmental advisory space has investment decisions; which isn’t surprising become quite confusing for potential given Australia’s on-going experience with clients. I think it’s important for those in drought. Trucost has also worked for several of this field to figure out how they can work the largest American pension funds, including together to provide clients with what they the California Public Employees’ Retirement need,” comments Mattison. System (Calpers) and the California State Indeed, consultancies wishing to Teachers’ Retirement System (Calstrs). benchmark clients’ environmental performance against competitors’ Partnering with consultancies achievements and/or against average sector While Trucost’s work may be mistaken by performance are positively invited to knock some as consultancy, the company has no on Trucost’s door. “Because we have so aspirations to be classed as such. It is a data much data we can do things like statistical provider and analyst and is happy to remain checks that tell companies what they are Trucost assisted Newsweek in its inaugural, so. The unique nature of its methodologies reporting compared to what their peers are annual ‘green’ ranking of America’s largest and the size of its dataset are its strengths, reporting. Sometimes we see huge errors, companies and Trucost is content to leave advisory when companies have got their calculations work to others. wrong. Our systems allow such errors to be “We are a team of almost 50 people now. flagged up,” says Mattison proudly. Trucost: We are like the S&P of the environmental company facts performance world. How that information The future is data is then used and how decisions are reached There are many within the environmental  Founded in 2000 about whether a particular organisation consultancy sector who believe that the  Base: Chancery Lane, London  should be installing more efficient needs of clients will soon focus much more No of staff: almost 50  technologies or doing something else to seriously on data analysis, particularly data Finances: turnover £1.4m, operating improve its performance is not something relating to energy consumption, energy flows at a loss (year to 31/03/08), significant for us to advise on,” says Mattison. within a business and consequent emissions. injection of new investment, Aug 2008. environment-analyst.com ISSUE NO. 5, DECEMBER 2009  PAGE 19 Market Intelligence Service

Five information channels in one subscription FULL REPORT 1. Market Assessment of UK Environmental Consulting Sector 2009 NOW AVAILABLE 2. Market Assessment - Executive Presentation (105 slides, ideal for board presentations) 3. Top 30 UK Environmental Consulting Companies 2009: Competitor Analysis 4. Environment Analyst Market Briefing (our bi-monthly newsletter). 5. Full access to the Environment Analyst online news service

Benchmark Survey of the UK Environmental Consulting Sector 2009 Service area analysis

Market Assessment of the UK Environmental Consulting Sector 2009 Fig. 4.2 Proportion of market revenue in each service area 2008 • These figures are derived from the

Air quality 5.3% survey responses, combined with our own in-depth analysis of the top 7.7% Climate change & energy 30 players in the market . They are  Detailed commentary reinforcing our market assessment data, 15.7% Financial analysis based on revenues estimates for Contaminated land/remediation Benchmark Survey of the UK Environmental Consulting Sector 2009 7.6% “Environment Analyst Core Ecological/landscape services 15.1% Environmental Consulting” services analysis and forecasts EIA & sustainable development (see Part 2) 7.2% Env. liabilities, risks & hazards 7.3% Env. management & compliance Benchmark Survey of the UK Environmental Consulting Sector 2009• The metrics shown here are based Env. noise/vibration 3.3% Seni or on the financial KPIs of a sample of ltant  How recession is impacting demand, M&A activity and financial Benchmark key performance indicators of consuselected consultanciesfirms that responded in 2008 to our survey 3.9% Organic Aver age er Client sectorf ee r at e analysis Env./sustainability policy & strategy Fig. 2.13 turnov er at i on It illustrates the wide variance in 11.6% Pr oj ect s Profit r emun -- • Aver age per n growth Waste management/recycling ct mar g i business models and performance pr oj e l o y ee £600 10.8% emp 10-1 5% 13% - Fig. 5.4 Proportion of revenue in eachTurnover client valsector, ue 20084 £675 metrics of firms in the sector Water quality & resource management ad - performance (including margins, contract values and fee rates) Consultancy per he 1 10-15% 10% £38,0005% £550 size 5-10% -- Other services 4.4% £67,800 £21,300 4 Large £330 Central government £62,100 £12,00016% 18% • 5-10%The client 11% sector breakdown- shown 8% 10% 12% 14% 19.4% 4 2% 4% 6% Large 9% -- 0% £58,300 £15,000 9 - -here is based purely on the £500 Chemical & pharmaceutical 3.5% Large - % s h ar e £120,100 £50,000 2 15-20% Large Construction/property £79,300 £6,500 responses from-5% our survey-- sample ENT ANALYST 10.3% 2 - -  Breakdown of drivers, threats and opportunities in each major SOURCE: ENVIRONM Large 5-10% -- £225,000 £80,000 -• Financial & professional 4.5% Large Central government is by far the ANALYSIS £24,500 £10,900 2 - - - Large largest single client sector, Energy - oil, gas & nuclear 10.2% £66,700 £200,000 6 - - £32, 000 Large -- £23,300 £35,000 6 accounting15-20% 10% £33,000for just £440 under a fifth of Manufacturing 3.2% Large -- £77,400 £15,000 4 - - Large market revenues service area Extractive (mining, quarrying) & metals 3.7% £88,000 £25,000 --- -- Large • -- £65,300 £16,000 3Over - - two-thirds of the market Local government & RDAs 9.7%Large -- -- £33,700 £11,200 12demand comes from government ����������� Large -- ����������� ��� Renewable energy 6.4% £67,200 £63,000 - 12 Large - bodies,10-15% energy 30% & utility firms and Retail & leisure £104, 000 6 2.8% Large construction/property5-10% 76% £51,000 £1,000 companies £142, 900 £75,000 £400  Analysis of how firms are responding to the economic downturn Large £400 Technology & communications 1.6% £97,200 £50,000 -- • 5-10% 20% £45,000 £630 - Smal l ...see next figure for- client sector Transport £106, 300 1 - - £480 5.2% Smal l --- analysis for the top 30 players--->- 1 15-20% Smal l 5-10% 29% £39,500- £540 Waste firms 6.1% £10,000 £10,000 4 -- Smal l £3,000 £3,000 0-5% -- Water utilities 11.8%Smal l 15 -- and positioning for the upturn £65,400 £50,000 -- 14 Ot h er Smal l 1.6% £113,900 £5,400 6 - - £35,000 £1,056 Smal l - -- £81,600 £5,700 3 - - 0% 5% 10%Smal l 15% 20% 5-10% -- £81,800 £20,000 5 Smal l £142,900 £50,000 1 - - SOURCE: ENVIRONMENT ANALYST % s h ar e Smal l £100,000 £50,000 2 - -  Includes the full results from our Benchmark Survey of the UK Smal l £25,000 £20,000 ANALYSIS Smal l £60,000 £39,000 Smal l ������� ������� ����� Environmental Consulting Sector ������  See our website for contents and list of figures: ����������� �������������� www.environment-analyst/intelligence

“This report by Environment Analyst is the most authoritative and detailed independent study of the UK environmental consultancy market to date - and excellent value for money. It will get regular use as a reference tool by the senior management team at Enviros. This is the first place to go for market intelligence on our sector” – Nigel Clark, Marketing Director, Enviros/Carillion Consulting

“The report from Environment Analyst contains a substantial volume of extremely useful information - both for consultancies and for those outside the sector looking to gain an insight into the market dynamics and impact of recession. It’s the best we’ve seen” – Tom Woollard, Partner & Business Development Director, ERM

Top 30 UK Environmental Consulting Companies 2009: Competitor Analysis

CONTACTS Web site www.aeat.co.uk E-mail Jacobs Engineering AEA Technology [email protected] CORPORATE DEVELOPMENTS Head office 329 Harwell IBC, Didcot 1996 22-firm umbrella formed as privatised offshoot of UK AEA CORPORATE DEVELOPMENTS  Key information about each firm, their vital statistics and our SWOT analysis Oxon, OX11 0QJ 1999 Divests analytical services business 2001 Jacobs acquires international business of LawGIBB2001 Divests (incl. UK) nuclear engineering & consulting divisions Tel CONTACTS 08702001 190 Babtie 1900 formally Fax establishes0870 190 8109 environmental consulting2002 Closes env. engineering & technologies division, ERG Directors and engineering division Web site www.jacobs.com Bernard Bulkin (Chairman) 2002 Disposal of engineering software division [email protected] E-mail Andrew2004 McCree Babtie acquires (Chief Executive Fawley Aquatic Officer) 2006 Research Establishes 2002 Romanian Acquires Canadian subsidiary Kinectrics in Bucharest energy (AEA and Mediu) environmental firm 2004 Jacobs acquires Babtie Head office Jacobs House, 427 London Road, Alice Cummings (Chief Financial Officer) 2003 Sells nuclear science/research division Reading, RG6 1BL 2006 Babtie business rebrands under Jacobs banner for each firm Ownership plc listed on the LSE 2006 Kinectrics sold to private equity group 0118 963 5000 Fax 0118 949Locations 1054 manages the Atomic Weapons Establishment for MoD Tel UK, Romania, US 2006 UK rail consultancy & engineering business sold Chris Eldred, executive directorFounded of operations 1988 2008 Acquires one-third share in AWE Management Ltd, which Directors 2009 Pay freeze in response to global recession2008 Acquires Project Performance Corporation in US for £33.1m Ian Higham, director of operations 2009 Takeover rumours persist (PE & trade interest) VITAL STATISTICS 2009 Issues warning that 2008/09 results hit by Govt project delays No of offices UK  Learn about competitors’ strategic business priorities, growth drivers US parent listed on the NYSEEnv. consulting staff World CLIENT OVERVIEW% of sales (2008) Ownership 6  Env. consulting contracts  10 Government & agencies (local 31& national) Locations Global 515 920* Energy & utilities  Average EC contract value   19 % of sales (2008) Founded 1947 World CLIENT OVERVIEW  UK  930 1,070 Extractive, manufacturing & processing 19 Biggest EC contract Government & agencies (local & national) £75.7K 52  Group turnover37   5 VITAL STATISTICS Construction/property 10.5  Operating profit1350 (group) 2,500 Energy & utilities  2 No of offices £76.4m £80.9m Others Financial/professional/service sectors     24 15.5 and constraints Env. consulting1,000 turnover 2,000 Extractive, (stated)Construction/property manufacturing & processing Env. consulting staff   2 Env. consulting turnover per headFinancial/professional/service £136.7K £11.0m sectors Env. consulting contracts  £76.4m £80.9m 6 EACEC estimate Key clients: Average EC contract value   14 EACEC 5-yr£594.8m growth £12bn(2003-08) Others BERR, British Airways, Cornwall County Council, Defra, Biggest EC contract  95-100% 95-100% Key clients: Group turnover  128.3%Dept. for Transport, European Commission, Sakhalin Energy SERVICE AREA£78.3m FEE INCOME (£m) Operating profit (group, see note below*) Central Govt, Environment Agency,Investment English Co, Partnerships, Technology local Strategy Board, The Carbon Trust  £58K   Includes profiles of the following firms: Air quality authorities, Nuclear Decommissioning Agency, Scottish Water Env. consulting turnover (stated) Climate change50-70% & energy 2003 2004 2005 2006 2007 2008 Env. consulting turnover per head Contaminated land/remediation 6.4 6.6 0.9 EACEC fees estimate    0.8  Ecological/landscape services 8.0 8.3 0.7 8.3 0.9 EACEC fees 5-yr growth (2003-08) 477.3%  2003 2004  2005 2006 20070.6 2008 0.8 9.9  EIA & sustainable development 1.6 1.7 0.7 9.5 9.5 13.4   0.2 0.6  0.6 8.4 10.4 13.4  15.2 Env. liabilities, risks & hazards 0.0 0.0 7.5 1.2 4.3 SERVICE AREA FEE INCOME (£m)  0.2 0.6 6.8 3.8 0.5  15.2 Env. management & compliance 1.6 1.7 3.4 0.0 8.7 0.0 Air quality  1.7 6.2 3.1 7.7 0.0  1.5 Env. noise/vibration 2.4 2.5 6.9 1.7 2.4 0.0 Climate change & energy  0.8 2.86.2 2.1 2.0  0.0 Env./sustainability policy & strategy 2.4 2.5 1.9 2.5 3.2 2.0 Contaminated land/remediation  1.5 5.6 1.7 2.9 2.5  3.6 Waste management/recycling 0.6 0.7 2.6 2.9 0.9 2.4 Ecological/landscape services  0.4 1.5 2.3 0.8 3.5 3.3 Water quality & resource management 1.6 1.7 0.7 0.4 0.9 4.4 EIA & sustainable development  0.6 2.1 0.6 0.8 0.5 4.0 Other services 3.2 3.3 0.7 1.7 6.5 0.0 Env. liabilities, risks & hazards  0.2  0.6 0.6 5.8 1.5 0.0 Total (based on EACEC estimate) 1.6 1.7 5.1 6.2 5.2 1.3 ADAS, AEA, AECOM (Faber Maunsell), AMEC (Earth & Environment), Env. management & compliance 0.2 0.6 4.6 4.6 9.9 4.4 2.5 2.7 4.1 2.1 0.016.8 Env. noise/vibration   1.1 4.2 3.7 0.0 2.5 14.5 ENVIRONMENT ANALYST SWOT £31.8 £33.2 £41.5 £49.7 £67.2 £72.60.05.0 3.4 Env./sustainability policy & strategy 0.9 3.4 0.0 6.5 3.6 S • Strong exposure to central Govt policy work 10.1 0.0 0.0 Waste management/recyclingS • Track record in climate change  consulting      7.3 £7.5 £28.1 £30.9 £34.3COMMENTARY £38.4 £43.3 Water quality & resourceW • Over-reliance management on major public sector clients         Since privatisation in 1996, AEA has streamlined its operations from Other services W • Net debt increasing, significant pension liabilities over 20 seperate business units with expertise across a wide range of COMMENTARY Arcadis GMI, Arup, Atkins, Black & Veatch, Bureau Veritas, Total (based on EACEC fees estimate)   areas - many related to its roots in the nuclear sector - to focus on the O • Grow business in US through PPC acquisition... Jacobs has 55,000environmental employees and worldwide energy consulting business. Its heritage in the O • ...leverage PPC's IT capabilities in GHG management         public sector has resulted in strong ties with the UK government, ENVIRONMENTT • ReputationANALYST damageSWOT (NGO criticism of international which accounts for around a half of total project income. AEA has S • env. assessment study for major oil multinational)  recently embarked on a strategy to increase its presence in private sector markets focussing on core competencies in the renewable S • T • Weakened financials ---> (unsolicited) takeover bid     energy & climate change, air quality and waste management disciplines. Capita Symonds, Entec UK, Environ, Enviros, ERM, W •       W • ...but very low presence in government markets      O •       O • Notes: *Includes Project Performance Corp staff (US firm  acquired in Aug 2008), but PPC turnover not included in 2008 figures T •       T • Golder Associates (UK), Halcrow Group, Hyder Consulting (UK),          Notes:*Op. profit for year ending 31 Dec 2007 = £28.2m, turnover = £507.7m, source: Jacobs Engineering UK Ltd annual report & accounts    Jacobs, Mott MacDonald, Mouchel, MWH, Parsons Brinckerhoff,     RPS Group, RSK Group, Scott Wilson, SLR Consulting Ltd,   URS Corporation, Waterman Energy, Environment & Design, White Young Green Environmental, WSP Environment & Energy

www.environment-analyst.com/intelligence environment-analyst.com ISSUE No. 5, NOVEMBER 2009  PAGE 20 Consulting market

Waiting for stronger growth in nuclear sector enviro demand

A significant number of One environmental consultancy with a current generators as well as those with work environmental consultancies serve strong track record serving nuclear clients in on decommissioning, radioactive waste the UK nuclear sector, with the UK is Golder Associates. “We have been storage, long-term waste management, and decommissioning work having led serving the nuclear sector for well over ten we are targeting new build.” in recent years to some growth. years. It’s a sector that we like a lot,” says Atkins’ environmental team also has a Erin Gill asks whether nuclear new Jonathan Marsh, Golder’s UK client sector history of serving the nuclear sector, build promises a gold rush for leader for power and head of its nuclear particularly assisting nuclear electricity environmental consultants services team. “We try to serve the whole generators to comply with environmental Judged solely by recent media coverage, sector, not just the decommissioning and regulations and the demands of the it would be easy to assume that the be-all- new build elements of the market. planning system. “We carry out and-end-all of the UK nuclear sector is new Radioactive waste storage is also important, environmental options’ assessments, best build – the new generation of reactors as are the needs of the defence sector. So our practice audits, produce waste management envisaged by government for ten sites clients include defence companies and plans and look at environmental impacts, named in its recently-unveiled nuclear including radiological impacts, of nuclear energy national policy statement (NPS). site operations. This work is mainly to show Environmental consultancies serving the industry regulators that the site in question UK nuclear sector have a slightly different, is compliant,” explains Allan Ashworth, more rounded perspective. While the principal environmental consultant in prospect of new reactors at up to ten Atkins’ water and environment division. locations suggests considerable volumes of Ashworth adds that Atkins’ “strength in work ahead – with some of it sure to please radioactive substances legislation” is thanks to technical minds that relish intellectual its mix of clients, which includes regulators challenge – there are other areas of the and policy makers as well as nuclear industry sector that also require environmental organisations. “We are often at the forefront consultancy services. of new policy and regulatory initiatives, For a start, the 19 nuclear power reactors which means we have a thorough that currently generate about 13% of the understanding of the context in which the UK’s electricity continue to require a certain nuclear industry has to operate,” he argues. amount of environmental consultancy, much of which relates to environmental Decommissioning demand permitting. Meanwhile, there is work With the adoption in 2006 by the emerging from the UK’s publicly-funded, government’s Nuclear Decommissioning long-term decommissioning programme, Authority (NDA) of a coherent strategy for aimed at cleaning up and closing down sites Decommissioning the decommissioning of redundant – and from Dounreay to Dungeness. Questions soon-to-be-redundant – reactors and other are being raised about how quickly raises challenging structures at existing nuclear sites, more decommissioning will proceed and, thus, consultancies began selling environmental about the volume of work consultancies questions for services to decommissioning clients. RSK is should expect to head their way; environmental one such consultancy. “RSK saw that the nevertheless, it remains clear that the nuclear decommissioning sector was an programme is here to stay and will require consultants, including emerging one and two years ago launched a input from environmental consultants for joint venture called RSK Radiological with decades to come. ‘sustainability’ issues US-based Radiation Safety and Control Real progress on the long-term Services (RSCS),” explains RSK management of radioactive waste may also be related to the Radiological’s managing director Philip De on the horizon, with some consultancies Foggi. RSCS has considerable experience in already active in this field. Such consultancies re-use of materials managing decommissioning projects, are also often involved in decisions relating to having done so for three American reactors. the management of UK’s stored radioactive and buildings “We are very pleased with how well the waste, pending its intended transfer to business has grown,” says De Foggi. long-term waste management facilities. – Jonathan Marsh Established in autumn 2007, RSK Finally, there are the nuclear-related needs of Radiological initially won decommissioning defence sector clients. Golder Associates work from Magnox, which remains its environment-analyst.com ISSUE NO. 5, DECEMBER 2009  PAGE 21 Consulting market

primary decommissioning client. However, areas such as environmental due diligence, It is the description of Sellafield and it is also currently working at Sellafield, the environmental impact assessment (EIA) and Dounreay as ‘high hazard’ that points to the low-level waste repository (LLWR) near waste strategy. reason behind the lop-sided allocation of NDA Drigg, and at the Springfields fuel One of the challenges facing environmental funds. “I’m impressed with the way the NDA production site in Lancashire run by consultancies seeking a sizeable and steady is handling decommissioning,” says RSK’s De Westinghouse. RSK would like to do stream of decommissioning work is the way Foggi, who worked in the US nuclear sector further work at Sellafield and to secure before coming to the UK to lead RSK work at Dounreay, says De Foggi. Radiological in 2007. “ They have assessed Similarly, Hyder’s decommissioning work sites and identified those with greatest risks has been primarily for Magnox. It has yet to and hazards and are directing funds to them. work on decommissioning at Sellafield, Money seems to be allocated appropriately. though it would like to, or at Dounreay, Sellafield is the biggest hazard and Dounreay is which is less of a priority for the next, and both are fully funded.” consultancy. Hyder has carried out The complexity of some of the decommissioning-related environmental decommissioning projects at Sellafield and impact assessments (EIAs), best practicable Dounreay, and the need for careful environmental option (BPEO) assessments, judgement, makes for especially-interesting site waste management plans and work, suggests Golder’s Marsh: “There is stakeholder engagement work. “We some very interesting and challenging work conducted the full public, end-state to be done on decommissioning, especially consultations for the Oldbury and Berkeley RSK Radiological has grown quickly, with in risk assessment of contamination, the sites and we have worked on environmental work related to nuclear new build increasing decommissioning of buildings, and their aspects of delicensing,” says Hyder’s substantially this year, says Philip De Foggi demolition. There are sustainability issues, business development director for nuclear, such as the potential reuse of Susan Hewish. “There is a lot of demand for Sellafield and Dounreay dominate the UK decommissioned materials and buildings. specialist environmental skills in nuclear decommissioning programme and the funding And there are questions around delicensing decommissioning.” attached to it. Currently, Sellafield accounts and end state. That is a complicated area, Halcrow is another consultancy seeking for approximately 60% of the monies released almost a subject in its own right. There environment-related work linked to by the Nuclear Decommissioning Authority remains a lot of water to pass under the decommissioning, having expanded its (NDA), with Dounreay receiving roughly bridge, including risk assessment work and environmental capabilities to serve the 10%. This means that the 19 other sites – stakeholder engagement.” nuclear sector three to four years ago. In the including 11 Magnox sites – which are also While the NDA’s hazard-based approach case of its contaminated land skills, this part of the decommissioning programme to prioritising Sellafield and Dounreay meant recruiting someone with radiochemical receive very small sums in comparison. While cannot be faulted, it is frustrating for both as well as conventional contaminated risk some profit can be made serving Magnox the management teams of lower-hazard assessment skills, explains Halcrow’s director needs, consultancies wishing to earn large Magnox sites and for many environmental of environment, Alan Fletcher. amounts from decommissioning need to work consultancies that work cannot proceed regularly at one or both of the UK’s two more quickly at these sites. “The general ‘Conventional’ skills high-hazard sites – and securing work at good state of the civil, power generation Although many of the consultancies serving Sellafield and Dounreay is not always easy, sites is a credit to the industry,” comments the nuclear sector naturally have staff with with large construction contractors such as Hyder’s Postlethwaite. Nevertheless, Hyder specialist radiological skills, much of the Costain and Babcock acting as gatekeepers. and others in the market, such as Entec, environment work generated by nuclear Royal Haskoning, Jacobs, RPS, Arup and clients is ‘conventional’ and, therefore, Cerco Assurance as well as smaller similar to projects undertaken for other consultancies such as VT Group and industrial and utility clients. For instance, Quintessa would win more work if the Hyder’s work for current nuclear generators NDA was able to channel more money involves classic environmental consultancy toward these civil sites. Instead, much of the issues, such as waste management, flood environmental work at lower-hazard sites is risk, PPC permitting, environmental currently limited to small-scale, “care and licensing, contaminated land remediation maintenance” type contracts. and hydrogeology issues, according to technical director for environment, Nick Budget worries Postlethwaite. The bad news is that the financing of UK Halcrow’s Fletcher echoes this point, nuclear decommissioning is likely to get explaining that while it has a small team of worse before it gets better. With public nuclear specialists, like many of its Hyder has identified early-career finances in poor shape, the government is multidisciplinary competitors, it has a environmental staff and is providing them looking for ways to reduce its spending and policy of “reaching back” into its more with nuclear sector experience, says Nick many within the nuclear sector expect a sizeable environmental team for expertise in Postlethwaite reduction in decommissioning funds, environment-analyst.com ISSUE NO. 5, DECEMBER 2009  PAGE 22 Consulting market

despite the political importance attached to important to keep decommissioning on nuclear sites, careful pre-construction demonstrating that the country’s end-of-life schedule and to do it well,” argues Hewish. assessment of the state of land and water nuclear facilities will be cleaned up properly. will be a priority. Hyder’s Hewish also looks “We live in financially challenging times,” New build requirements forward to work focusing on the cultural acknowledges Golder’s Marsh. “People Potential demand from new build clients for heritage and landscape value of nuclear would be daft if they didn’t think environmental advisory services is considerable sites. Surely, the next generation of nuclear government budgets were under pressure.” and wide ranging, with preliminary work infrastructure need not be quite so “There is a lot of concern about upcoming already having been undertaken by many unattractive as the existing one. spending cuts and the rumour mill is going consultancies. “I think there will be a massive Meanwhile, the UK’s experience with at full tilt,” agrees Halcrow’s Fletcher, adding amount of new build work,” says Hyder’s radioactive discharges emanating from its that there has already been a bit of a “flight Hewish. Her colleague Nick Postlethwaite existing portfolio of sites, including a series to nuclear new build” by environmental agrees: “When we look at the government of incidents at Sellafield that have angered consultancies. The NDA expects to provide documentation about sites we know, it’s clear neighbouring nations such as Ireland and an indication in late February/March 2010 there will be considerable amounts of new Norway, is one of the factors expected to of spending priorities for the three-year prompt new build clients to integrate period beginning April 2011. environmental protection fully into their Although it is undeniable that design and development programmes. decommissioning budgets are being Marine and estuarine protection will be a considered carefully and may be reduced, particular priority, which should generate there are several reasons why the UK work relating to ecology monitoring and Treasury may seek to protect risk assessment as well as environmentally- decommissioning spend as much as robust designs and management systems for possible. Atkins’ Allan Ashworth cites three new cooling towers. Also, the need to reasons for maintaining decommissioning design nuclear infrastructure to cope far spend. For a start, the UK is committed better than existing sites do with the under the terms of the Ospar Convention challenges of nuclear waste storage has been on the protection of the environment of the acknowledged. north east Atlantic to make further progress “The nuclear new build industry is going in reducing radioactive discharges to sea, ahead much faster than we expected, it’s with some “difficult targets to achieve really exciting,” says RSK’s De Foggi. “Since before 2020,” says Ashworth. the end of 2008, we have been doing as “Decommissioning now, rather than later, much work for new build clients as for may well help us meet these targets.” There is no guarantee decommissioning and the new build work is In addition, the UK government’s stated growing at a faster rate than our intention of increasing the country’s nuclear that all ten sites decommissioning business initially did.” De workforce in preparation for the nuclear Foggi estimates that RSK Radiological’s new build programme could protect earmarked for total annual revenue for the year ending decommissioning budgets. “Work in the nuclear new build will March 2010 should be in the region of £4-5 decommissioning sphere can be relevant to million, with approximately £2 million of the skills needed for any new nuclear become homes to new this coming from new build clients. generation,” comments Ashworth. Finally, Work for environmental consultants will the decommissioning programme is just the reactors also arise thanks to the need for all type of on-going public spending scheme documents submitted to the new that the UK government says it wants to – Alan Fletcher Infrastructure Planning Commission (IPC), support to ensure the country recovers from which will oversee the planning component recession as quickly as possible. Halcrow of the nuclear new build programme, to be Hyder’s Hewish agrees that there are “very thorough and robust”, suggests Golder’s good reasons for protecting Marsh. In addition, new build clients will decommissioning budgets. In some cases, build environmental work, with demanding require advice on climate change impacts, the cost of simply maintaining and timescales.” Hyder’s strength in ecology should such as flood risk and sea level rise, he says. managing nuclear legacy is far greater than attract surveying work and its expertise in While Halcrow’s Fletcher looks forward to the cost of decommissioning. This is managing multi-disciplinary teams that look at growing demand from nuclear new build particularly so with regard to seriously- the needs of sites holistically is also a strength, clients for environmental consultancy contaminated areas and structures at argues Postlethwaite. services, he also sounds a note of caution. Sellafield. There is also the argument that Many environmental consultancies with “All of these utilities are hard-headed progress on decommissioning must be contaminated land expertise are hoping to businesses and they think globally. We maintained if the UK public is to remain win work from the three new build cannot assume that they will proceed with all supportive of the nuclear new build consortia, led by EDF, Iberadrola and the new build projects envisaged by the UK programme. “The public needs to be kept RWE/EOn respectively. Since the new build government. It’s a little more uncertain than on board for nuclear new build, so it is sites are generally adjacent to existing that,” he says. It’s a useful point: the French, environment-analyst.com ISSUE NO. 5, DECEMBER 2009  PAGE 23 Consulting market

German and Spanish utilities that lead the clients. Just as consultancies cannot send identified several early-career environmental three UK nuclear new build consortia may staff to offshore oil and gas facilities without consultants and is exposing them to nuclear focus their efforts elsewhere. They may also first securing necessary accreditations, so industry work. “These are people with three to choose to reduce their nuclear new build they must negotiate the nuclear sector’s eight years in consultancy, pre-chartered status spend and focus more on renewables. As requirements before many types of on-site consultants,” explains Hyder’s Postlethwaite. Fletcher correctly states, “a new dawn for work can proceed. “It’s a real opportunity for them.” nuclear has been predicted many times Finally, there is the question of the UK’s With slackening demand for before”, and there is as yet no guarantee that much-discussed nuclear skills shortage. environmental consultancy from many new reactors will be built on all ten sites While there is widespread agreement that sectors of the UK economy the key note for earmarked by the UK government. this is an issue for some areas of nuclear 2009, consultancies serving nuclear clients engineering, there is little evidence that the are eager for demand from the sector to Special requirements UK lacks capacity to serve the environmental increase further. Until it does, they will be One of the inescapable realities of serving needs of the nuclear sector. “It’s undeniable reluctant to expand their teams further. nuclear clients is the need for environmental that there is a perceived skills shortage, but “Growth is on the horizon,” argues Marsh, consultants to accept the “rigour” – as RSK’s I’m not sure it is an issue for environmental adding that he has identified people he De Foggi puts it – demanded by the nuclear consultancies serving the nuclear sector,” says would like to hire, including, for example, sector. Part of this relates to the considerable Golder’s Marsh. “There are a lot of talented individuals emerging from Loughborough bureaucracy that comes with meeting nuclear people working in this field and that University’s radiochemical transport sector safety and security requirements. For sometimes seems to be forgotten.” programme. But he will have to wait for the example, environmental consultancies That said, those with specialist expertise in market to pick up a bit before he expands working on site must have staff accredited as the environmental impacts of radiological his team. It is a similar picture at other “suitably qualified and experienced pollution are in demand and RSK’s De Foggi consultancies, where expansion awaits a personnel”, or SQEPs. There is also the need acknowledges that “there are not a lot of better understanding of future nuclear for staff to go through what can be a people with 15-20 years’ experience out there, decommissioning budgets and a sustained protracted security clearance process. and the whole world wants them”. However, increase in demand from new build clients. While these are by no means most of the work undertaken by For now, the UK nuclear sector offers insurmountable obstacles, nevertheless, they environmental consultancies for nuclear many environmental consultancies a certain require on-going administrative effort by clients can be provided by ‘conventional’ amount of work, but in spite of the lavish consultancies. Halcrow’s Fletcher describes environmental specialists, provided they media attention paid to recent nuclear new it as similar to the specific safety understand the sector’s particular build announcements there is, as yet, no accreditation requirements of oil and gas requirements. With this in mind, Hyder has gold rush.

Groundwater baseline monitoring at Dounreay Golder Associates Golder environment-analyst.com ISSUE NO. 5, DECEMBER 2009  PAGE 24 markets

Consultancy share prices show some improved performance

“Recent updates Fig. 1 Consultants and market performance (3 month performance) across the Scott Wilson Hyder Consulting consultancy sector – Waterman WSP Hyder, Scott Wilson, FTSE Support Services FTSE All Share RPS & WSP – have RPS been positive, Mouchel AEA Technology confirming in-line Consultancy avg Atkins or better trading WYG conditions” -100% -80% -60% -40% -20% 0% 20% 40% 60% 80% Priced as Financial, Arbuthnot estimates. Source: Thomson at close 1 September 2009

Fig. 2 Consultancy sector valuations

David Brockton, Calendarised data to a Price Mkt Cap Price change (%) P/E (x) Div yield (%) Dec year end (p) (£m) 2008 2009 YTD 2009E 2010E 2009E 2010E

Arbuthnot Securities AEA Technology 28.0 64.1 (76.3) 64.7 9.8 13.6 - -

Atkins 558.0 558.6 (41.5) (16.8) 8.0 8.8 4.8 5.0

Hyder Consulting 252.0 95.2 (75.0) 100.8 8.0 8.5 2.1 2.5

Mouchel 177.5 199.5 (27.4) (48.0) 6.9 7.4 3.4 3.4

RPS Group† 211.9 455.4 (56.3) 51.4 12.1 11.5 1.9 2.2

Scott Wilson Group 120.0 87.6 (63.7) 26.3 6.8 8.1 3.3 3.3

Waterman Group† 48.5 14.9 (61.0) (17.1) 7.4 8.4 4.5 4.5

White Young Green 9.4 5.0 (83.1) (84.3) 0.9 2.4 - -

WSP Group 330.0 209.8 (64.8) 62.6 8.1 8.4 4.5 4.5 Weighted average (39.6) (17.5) 8.4 9.1 3.2 3.4

Linear average 187.8 7.6 8.6 3.5 3.6 Source: Arbuthnot estimates, † Hemscott Company Guru. Source: Arbuthnot estimates, 2009 17 November Prices updated as at close on Tuesday,

Fig. 3 Consultants and market performance (2008 to date) re-based to 100 110 Consultancy sub-sector FTSE All Share FTSE Support Services rebased 100

90

80

70

60

50

40 1 Jan 17 Mar 19 May 14 Jul 2 Sep 27 Oct 6 Jan 9 Mar 30 Apr 13 Jul 13 Nov 2008 2008 2008 2008 2008 2008 2009 2009 2009 2009 2009 Source: Thomson Financial, Arbuthnot estimates. All data re-based to 100 Financial, Arbuthnot estimates. Source: Thomson environment-analyst.com ISSUE NO. 5, DECEMBER 2009  PAGE 25