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We spoke to ERM’s global chief executive officer Tom Reichert to get some early insights ahead of his Industry Keynote Address at our Global Business Summit next week.
16 August 2022 / Business, Digital, ESG, Global, North America, Strategy
Tom will be giving the Industry Keynote Address at Environment Analyst’s Global Business Summit next week (23-24 August, Denver). Here, he provides a preview of his insights.
EA: ERM recently celebrated its 50th anniversary. How has the environmental & sustainability consulting industry developed over that period, and what role has ERM played in the development and acceptance of high value environmental advisory services?
TR: The industry has seen many changes over the last fifty years as organizations have adapted to the evolving sustainability agenda. ERM’s work has shifted and expanded from helping clients to respond to environmental policy and regulatory developments to what we do today – which is helping them to unlock new sources of value by integrating sustainability into the fabric of their business strategy and operations.
Throughout this whole period, ERM has been at the forefront of the industry. We worked with the earliest movers on sustainability across multiple industries, and those experiences equipped us with the knowledge and skills to move the sustainability agenda forward with a broader set of clients.
Beyond our client work, we’ve also played a key role in shaping the sustainability landscape through our many collaborations with multi-stakeholder organizations that have helped to push sustainability up the global agenda and ignite action, and through our contributions to key global policy frameworks. To give just one example, ERM developed the scenario analysis playbook for the Task Force on Climate-Related Financial Disclosures (TCFD), which has been a driving force in making firms’ climate-related disclosures more consistent and comparable.
ERM has achieved a lot over its 50-year history, and we celebrate those achievements while keeping our eyes firmly fixed on the future. We have a rapidly closing window to avoid the worst impacts of climate change, preserve nature and tackle inequality – yet ERM has the right capabilities and sustainability ecosystem in place to help businesses rise to the complex challenges they face. Our purpose of shaping a sustainable future with the world’s leading organizations has never felt more relevant than it does today.
EA: How is ERM adapting to this new climate crisis/ESG and digital transformation era. Where do the traditional environmental consulting ‘bread & butter’ services (EIA, ecology, contaminated land) fit with the new platforms/technology driven offerings?
TR: For ERM, these traditional services remain a core part of our offer to clients, who require end-to-end, integrated sustainability services – from permitting and environmental impact assessments to emissions reduction and stakeholder engagement. The breadth of our services and expertise helps clients to view and address the biggest sustainability issues – climate, nature and social inequality – in an integrated way.
This is underpinned by ERM’s efforts to continually embed digital technologies across our suite of capabilities, creating solutions that ensure our clients remain at the cutting edge of ESG strategies and approaches. Our analytics lab and innovation incubator provide a pipeline of products and tools that augment and enhance how we service clients. For example, ERM’s cloud-based solution emissions. Al helps carbon intensive companies to overcome challenges related to inaccessible data and lack of robust insights, so they can decarbonize their operations and reduce emissions, energy and fuel costs by up to 7.5% annually.
Furthermore, it’s also about helping to identify emerging technologies and how best they can be harnessed in service of sustainable outcomes, advising clients and enabling them to explore the potential through partnerships, for example.
EA: In what way is your own recruitment from a management consultancy, and your experience in digital transitions, a sign of how this sector needs to adapt and how it can develop its value proposition?
TR: ERM has been evolving its value proposition and building out its strategic and digital capabilities for many years. Part of my role is to help accelerate that shift, to take what we have to the next level by ensuring we are continually enhancing our relationships with C-Suites and Boards, developing the right internal solutions, building the right partnerships and bringing in new skills and capabilities through our talent and acquisition strategies.
The intersection of sustainability and digital has been recognized across our sector, and there has been significant investment in data and analytics in particular. For example, we have developed ESG Fusion, an AI-enabled ESG rating platform designed to provide comprehensive ESG data to investors focused on privately-owned companies within just 48 hours. Through real-time analysis, it enables private market investors to make better investment decisions faster, quantify ESG risks and identify new opportunities for value creation.
As stakeholder expectations, regulation and emerging global carbon markets continue to evolve, we can expect strong competitive forces to align around them, which will require new digital capabilities to be continuously developed.
EA: What position in the ESG ecosystem of service providers should ERM and other environmental professional services firms occupy, what do you think their core offering is and how does that compare with the management consultants/Big 4?
TR: The market for sustainability services is developing at a real pace, and the professional services firms operating in this space are evolving to meet that demand. We welcome this trend – there is a huge market here and we need an extensive ecosystem of sustainability service providers to tackle today’s challenges.
In terms of ERM’s position in the market, we believe that we continue to occupy a unique space.
In the decade of action, companies must accelerate their plans to operationalize sustainability. Because while more organizations than ever have set ambitious sustainability goals and are investing in technology and improving their reporting and disclosure, fewer know what it takes to really embed sustainability throughout their operations.
We believe that our ability to combine strategic thinking and analysis with highly technical implementation advisory capabilities is unmatched. ERM has almost 30 Technical Communities that are set up to help our people develop the deep sustainability skills required to manage complex implementation. They get to learn from the world-class expertise of our scientists and engineers (2000+ of whom hold PhD and Masters degrees), developed over many years and multiple projects around the world. We believe that our ‘boots to boardroom’ value proposition is what continues to set us apart – the ability to turn strategy into execution on the ground.
As an industry, we need to celebrate our depth of expertise and showcase that as a unique selling point. We have huge experience of delivery that many of our competitors in the management consultancy space cannot easily replicate.
EA: What do you see as the biggest megatrends impacting the sector over the next five years?
TR: Climate, nature, social inequality and sustainability literacy are the critical topics we need to address. They are inextricably linked and require integrated solutions developed by teams with the right expertise to seamlessly navigate these interconnected challenges.
Sustainability literacy underpins the solutions required. We are looking at a major change agenda which means everybody needs to be engaged. As a sector, we have a major role to play in educating businesses across all functions in their organizations as today’s sustainability challenges can only be resolved with active participation and engagement from the entire organization, not just from the sustainability or EHS departments. In parallel, learning institutions and governments need to educate their broad stakeholder groups on the systemic change agenda we have to embark on.
Related to each of these trends, the global economy’s transition to a lower-carbon future is having an enormous impact across sectors and that will only accelerate. For example, beyond the short term we expect to see a significant increase in the uptake of renewables as investment continues to grow. Again this is an area where ERM is well placed to take a leadership position, not least due to recent acquisitions such as the Renewables Consulting Group, but also development projects such as ERM Dolphyn.
Another huge trend is the cost of capital becoming more closely linked to a business’ sustainability performance and the demand for forward-looking disclosure information. As with all major changes this development will continue to be debated and challenged, however the direction of travel is clear – corporate sustainability action is becoming a precondition for financial investment, and companies will be required to demonstrate how they are delivering on commitments made. They will be measured by evidence of action, impact and above all the integration of sustainability into business strategy and operations.
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Hear more from Tom at Environment Analyst’s Global Business Summit on 23-24 August in Denver, where he will be delivering the Industry Keynote Address.
Secure your ticket here.
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