The worldwide market for environmental consulting (EC) services saw a 2.1% rise in value during 2015 to reach US$28.5 billion (£19.3 billion), according to the latest research report published by Environment Analyst.

The in-depth analysis of the leading two dozen international players (the ‘Global 24’) points to growth being driven more by the larger integrated and multidiscipline business models than the environmental/sustainability specialists - which had previously been the most resilient to the ongoing challenging market conditions.

The global sector growth represents a modest but very welcome reversal from the 2.6% and 0.8% declines recorded in 2014 and 2013 respectively, sustained by buoyant market conditions in Europe - driven largely by infrastructure development - and a revival in the key North American market, the industry’s biggest regional revenue generator (accounting for 52.6% of total sector revenues), which had seen negative growth for the previous two years.

The Western European and North America regions saw growth rates of 4.9% and 2.2% respectively in 2015, but lack-lustre performances in Asia-Pacific and Africa & the Middle East, together with an accelerated decline in Latin America constrained the global market as whole to low single-digit growth.

Global EC growth in 2016 is expected to have increased by a similar rate of 2.2%. The general sentiments and actual financial results released by the Global 24 to date suggest that last year continued to be as difficult as 2015 largely because of the continuing depressed oil price, natural resources downturn and global economic volatility.

The report identifies three major types of operator in terms of their core business model, market positioning and the proportion of environmental consultancy revenues relative to the overall group - large-scale integrated firms, multidisciplinaries and specialists - for which further interesting performance trends are observed.

Improving 2015 growth rates achieved by larger fully integrated and multidisciplinary players

Key to the industry’s reviving fortunes in 2015 was the improving growth rates achieved by the larger fully integrated and multidisciplinary players in this space (with organic year-on-year EC growth rates of 3.9% and 2.9% respectively), whilst in contrast the specialists in the Global 24 - those with over 50% of their business in environmental consulting - suffered the brunt of the declines, with the organic growth of this sub-group at -5% in 2015.

The more robust performance of the bigger more diversified players is attributed to a number of factors, including:

• many of the larger firms are now reaping the benefits, synergies and economies of scale from their involvement in the sector’s mega mergers in recent years;
• the global trend towards large-scale infrastructure projects requiring a range of skills sets also plays into their hands, perhaps more so than the specialists.

At the same time, the proliferation of M&A activity has dramatically re-ordered the rankings at the very top end of the industry, with the top ten in particular significantly consolidating their position over the last five years to claim a combined market share of 32.9% up from 23.8% in 2010.

AECOM is number one in sector

In 2015, the sector number-one AECOM - the biggest of all the large-scale integrated firms in this analysis following its merger with another of the global EC market leaders URS in 2014, with group revenue close to $18 billion and staff of 90,000 (around 10% of which are accountable to EC operations) - managed to extend its lead over its closest rival, second-placed CH2M.

AECOM benefits from a top-three positioning in three major regions (North America, Asia-Pacific and East Europe/FSU), while third-ranked Tetra Tech enjoys its strong position largely thanks to its number-one ranking in water and waste related EC services.

Further down the rankings, other recent M&A pairings have led to the appearance of both Sweco and Stantec in the Global 24 analysis for the first time thanks to their respective acquisitions of Grontmij and MWH Global.

 Also featuring for the first time in this report edition is US-based HDR, which has itself partaken in significant M&A activity to grow the business over the last five years and realise its international aspirations.

AECOM, CH2M and Tetra Tech top three revenue earners in 2015

In order of global gross EC revenues in 2015, the top ten are: AECOM, CH2M, Tetra Tech, Arcadis, Environmental Resources Management (ERM), Golder Associates, AMEC Foster Wheeler, RPS Group, Ramboll Environ, and WSP | Parsons Brinckerhoff.

The next 14 in order are: GHD; HDR, Sweco (including Grontmij) and MWH Global (now part of Stantec) in joint 13th; Antea Group and Jacobs in joint 15th; Cardno and Mott MacDonald in joint 17th position; ICF International; WorleyParsons, Royal HaskoningDHV and SLR in joint 20th place, Atkins and Coffey International (now owned by Tetra Tech).

Based on the work area breakdown of the Global 24's aggregated EC revenues, Environment Analyst finds that contaminated land remains the largest single discipline in the global EC market in 2015, representing some 31% of the total, ahead of the 22% share held by water and waste management services.

According to the report, the willingness to forge inter-sector and cross-sector partnerships is also becoming increasingly significant in the management of complex infrastructure and other major projects.