Global Climate Change Consulting Market Estimated to Witness High Growth Owing to Increasing Government Regulations and Growing Demand for Carbon Neutrality
The global climate change consulting market is estimated to be valued at US$ 6.04 Bn in 2024, exhibiting a CAGR of 6.5% over the forecast period (2024-2031). The market is witnessing high growth owing to increasing government regulations worldwide to curb carbon emissions and move towards a greener economy. Furthermore, there is a growing demand from organizations across industries to achieve carbon neutrality and net zero emissions targets over the next decade, which is driving consulting needs in areas such as carbon accounting, climate change strategy, and transition roadmaps.
Market Dynamics:
The growth of the global climate change consulting market is driven by the increasing government regulations for carbon emissions worldwide as well as voluntary commitments by organizations towards carbon neutrality. Stringent regulations such as the European Union's Green Deal and policies around emission trading schemes are compelling industries to cut emissions and transition to cleaner processes and technologies. At the same time, reputational benefits of achieving carbon neutrality are driving demands for consulting from companies across sectors. Consultants provide advisory on measures such as carbon footprint assessments, science-based targets, transition roadmaps, and disclosure frameworks to help organizations reduce environmental impact.
Increased Government Regulations on Carbon Emissions is Driving Demand for Climate Change Consulting Services
Government regulations on carbon emissions and energy efficiency are becoming more stringent around the world. To comply with these new laws and regulations, companies are increasingly seeking expert guidance from climate change consulting firms. Consultants help organizations understand the regulatory landscape, perform carbon footprint analyses, develop emission reduction strategies, and obtain certifications to demonstrate compliance. As regulations continue to tighten in the coming years across different industries and countries, demand for consulting services to navigate this complex area will rise significantly.
Growing Concerns about Climate Change is Influencing More Businesses to Hire Consultants
In addition to regulatory pressures, there is a shift in consumer attitudes and expectations about climate change. More customers are factoring a company's environmental impact and sustainability efforts into their purchasing decisions. In response, businesses are appointing climate change consultants to strengthen their environmental credentials, manage reputational risks, and tap into new market opportunities around sustainable products and services. Consultants can help companies measure, report and reduce their emissions, switched to renewable energy sources, and promote their climate action achievements through effective communications. As public concern about climate change continues to grow, the market for voluntary climate change consulting separate from regulatory compliance is booming.
Cost of Transition to a Low-Carbon Economy Acts as a Deterrent
The transition to a low-carbon and climate-resilient economy requires huge financial investments across all sectors. Retrofitting infrastructure, replacing vehicles and equipment with eco-friendly alternatives, purchasing offset credits and certifications are very expensive undertakings for companies. In some cases, the costs of overhauling operations may outweigh the potential returns. This acts as a deterrent for smaller businesses and organizations operating on tight budgets from engaging climate change consultants and accelerating their emission reduction efforts. The high cost of transition remains one of the key challenges restraining faster growth of the consulting market.
Lack of Awareness about Available Solutions is a Barrier
Outside of highly regulated industries, awareness about climate change impacts and the range of available solutions remains relatively low for many businesses. Organizations do not fully comprehend the tangible benefits consulting can deliver in terms of cost savings, risk mitigation and improved marketing. There is a lack of information on how different climate change strategies like carbon offsets, renewable energy procurement can be tailored to specific sectors. This lack of awareness and understanding of concrete actions acts as a barrier for the climate change consulting industry. Unless companies recognize climate change as a significant issue warranting strategic guidance, demand is limited.
Growing Support for Green Finance Opens New Avenues
Sustainable finance is gaining tremendous momentum with various instruments like green bonds and climate-focused funds emerging. Investors are paying more attention to environmental performance of their portfolios. This raises capital that can be channelled into climate technologies, renewable energy projects, nature-based solutions, and independent certification bodies. Consulting firms have an opportunity to support growth of green finance sector by offering advisory services to investors, underwriters, and companies regarding climate risk assessment, green financial product development, and verification of invested projects. The influx of finance into climate change solutions will spur demand for associated consulting and auditing work.
Carbon Pricing Programs Spur Emissions Trading and Offsetting Market
Carbon pricing is seen as a cost-effective policy tool to reduce emissions. Many jurisdictions have introduced or plan to launch emissions trading systems (ETS) and carbon taxes targeting various industries. These programs stimulate supply and demand for carbon credits, offsets and allowances. Climate change consultants are well positioned to capitalize on these emerging carbon markets through services like carbon market analysis, ETS program design support, verification of credits, and brokering offset transactions. The anticipated expansion of carbon pricing worldwide will directly create new business prospects for consultants experienced in emissions quantification, trading and offset project development.
In conclusion, while costs of climate action and lack of awareness pose restraints, drivers like stricter regulations, renewed environmental focus and innovative financing mechanisms will ensure steady future growth of the global climate change consulting industry. The opportunities arising from carbon pricing initiatives and green finance in particular will open new profitable lines of service.
Link: https://www.coherentmarketinsights.com/market-insight/climate-change-consulting-market-2537
Key Developments:
- In June 2023, McKinsey & Company, a leading global management consulting firm with extensive expertise across various industries, joined forces with multiple NGOs to advance sustainable practices in agriculture. This collaboration aims to tackle critical challenges related to climate change and resource management by fostering innovative agricultural techniques and sustainable farming methods. By combining McKinsey's and the NGOs' insights and resources, the initiative seeks to strengthen the resilience of agricultural systems and support farmers in adopting eco-friendly practices, ultimately contributing to a more sustainable future for the agricultural sector.
- In January 2023, AECOM, a prominent global infrastructure consulting firm, expanded its environmental consulting division to emphasize climate resilience projects. This strategic development is designed to enhance AECOM's capacity to address the growing challenges posed by climate change, enabling the firm to offer innovative solutions that assist communities in adapting and thriving amid a changing environment. By strengthening its expertise in climate resilience, AECOM aims to support clients in implementing sustainable practices and infrastructure that promote long-term environmental sustainability.
- In October 2022, PwC, a leading global professional services and consulting firm, introduced a new suite of climate risk assessment tools specifically designed for businesses. These tools are intended to help organizations effectively assess and manage their exposure to climate-related risks, facilitating improved decision-making in response to climate change challenges. By offering robust methodologies for evaluating physical climate risks, PwC aims to empower companies to incorporate sustainability into their strategic planning and operations, underscoring its commitment to assisting businesses in navigating the complexities of climate impact and resilience.
- In July 2022, Intertek Group PLC, a renowned Total Quality Assurance provider for various industries globally, announced its acquisition of Clean Energy Associates LLC (CEA). CEA, a leading independent provider of quality assurance, supply chain traceability, and technical services for the solar energy and energy storage sectors, aligns with the rising global demand for energy and the need for sustainable practices. This acquisition supports the global effort to reduce greenhouse gas emissions and enhance energy production from diverse sources in both the short and long term.
Key Player:
Deloitte Touche Tohmatsu Limited, PwC (PricewaterhouseCoopers), McKinsey & Company, Boston Consulting Group (BCG), ERM (Environmental Resources Management), AECOM, Jacobs Engineering Group, WSP Global Inc., SLR Consulting, Ramboll Group, Tetra Tech, Inc., Navigant Consulting (now part of Guidehouse), Wood PLC, Ricardo plc, and Anthesis Group
