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Sustainability consulting is a field that has grown significantly in recent years. An increasing number of large firms have begun publishing annual sustainability reports, with the number of S&P 500 companies that produce sustainability reports having grown from 20% in 2011 to over 90% today. The sustainability consulting industry is expanding rapidly, with a compound annual growth rate of 17% in 2022 and revenues of $16 billion. The sustainability and social impact consulting field has evolved significantly from where it was ten years ago, when sustainability consulting was a niche field dominated by firms with fewer than 15 employees. Since then, consolidation in the industry has continued apace, with large professional services firms acquiring smaller boutique firms in order to diversify their offerings in response to the mainstreaming of corporate sustainability.
There is wide recognition of the need for greater rigour and reliability in sustainability reports, and new initiatives are emerging for mandatory disclosure standards, third-party verification and quality assurance, science-based targets, global harmonization of sustainability standards through the newly created International Sustainability Standards Board, among other trends. New expectations around the fiduciary responsibility of corporate directors to mitigate climate-related risks to their businesses, driven by the widespread adoption of disclosure standards developed by the Task Force on Climate-Related Financial Disclosures, have created increased attention around the importance of emissions reductions and low-carbon business models. The explosion of interest in ESG investing, whereby environmental, social, and governance factors are considered material investment decision criteria, has dramatically increased the need for credible and granular sustainability data from corporations for the purpose of driving investment decisions. All of these trends have greatly widened the scope of corporate sustainability as a strategic consideration, thus spurring the growth of the sustainability consulting industry.
Sustainability consulting is more nascent than the related field of environmental consulting, which tends to be dominated by engineering services firms and environmental experts (i.e. companies like WSP and ERM) rather than conventional strategy consultants or professional services firms such as McKinsey or Deloitte. Although the fields overlap significantly, sustainability consultants tend to be focused on helping firms identify ways to improve their sustainability performance and resource efficiency, while environmental consultants are often hired to help firms comply with environmental regulations and minimize ecosystem impacts. Another related field is social impact consulting, an industry which tends to be dominated by smaller players and independent consultants with mission-driven business models that focus on providing consulting to social enterprises, NGOs, and community organizations.
Key Concepts and Definitions
The sustainability landscape features an ‘alphabet soup’ of acronyms and other jargon that can be difficult to absorb at first glance. The recent rise of ESG investing has added a diversity of new terms to the older language of corporate sustainability and CSR, and there remains some contention around which ESG strategies can be truly seen as ‘sustainable’. See the following definitions for additional clarity.
Sustainability Standards: There are a variety of global sustainability standards which organizations use as frameworks to disclose their performance on sustainability issues. Many global sustainability standard setting organizations are currently in the process of being consolidated into the International Sustainability Standards Board (ISSB), an initiative of the International Financial Reporting Standards Foundation. The other major international sustainability standards setter is the Global Reporting Initiative (GRI), which develops both the oldest and most widely used set of standards unique in its focus on both stakeholder and shareholder value creation. For more information about sustainability standards and ratings, see this article from the GRI. For a full list of sustainability standards and frameworks organized by issue area, see our company transition toolkit.
Simple vs. Double Materiality: In financial accounting, the concept of ‘materiality’ refers to whether or not a piece of information is deemed relevant for decision-making purposes, on the basis of whether its exclusion would change the result of a particular decision. Traditional notions of materiality (i.e. simple materiality) focus exclusively on financial materiality, or whether or not the information in question will affect shareholder value. The concept of double materiality represents a paradigm shift in thinking about corporate reporting: simply put, it means that both financial and non-financial forms of value are considered material, and it implies that a corporation’s impacts on the world are as decision-relevant as the world’s impacts on the corporation. While the newly created ISSB currently adopts a simple materiality approach, interpreting social and environmental risks through the narrower language of financial value creation, the GRI advocates for a double materiality lens with a focus on stakeholder value creation as the basis of sustainability reporting. The European Union has officially adopted the double materiality lens as its required approach in its updated Corporate Sustainability Reporting Directive, and the European Financial Reporting Advisory Group has signed a statement of cooperation with the GRI. More recently, the ISSB and GRI have announced their intentions to align their respective standards.
ESG: The acronym ESG refers to business or investing strategies which consider environmental, social, and governance factors to be material considerations for decision-making processes. ESG strategies focus on reducing risks presented by environmental, social, or governance factors, such as property damages driven by extreme weather events or reputational damage resulting from complicity in human rights abuses. Although they are related concepts, ESG should not be conflated with sustainability: ESG tends to focus on the material risks to a company’s operations presented by environmental, social, and governance issues, whereas the concept of sustainability aims to assess a company’s positive or negative impacts on society and the environment. ESG is ‘outside-in’, while sustainability is ‘inside-out’.
Taxonomy: A sustainable finance taxonomy is a mandatory or voluntary set of standards around what investment products or economic activities can or cannot be considered ‘sustainable’, for the purposes of improving transparency and reducing greenwashing. Many countries are in the process of developing their own mandatory sustainable finance taxonomies, with the most comprehensive taxonomies coming from the EU and China.
Climate-Related Risk: Climate-related risks are those risks posed to a business by the effects of climate change, which include either physical risks (i.e. property damage) or transition risks (i.e. stranded assets due to carbon pricing regimes and low demand). The Task Force on Climate-Related Financial Disclosure has taken the lead in developing standards for the disclosure and management of climate-related risks. For more information, see the TCFD recommendations report.
Scope 1, 2, and 3 Emissions: Companies reporting on their annual greenhouse gas emissions are required to differentiate between three scopes of emissions. Scope 1 emissions cover emissions that are under direct operational control, Scope 2 emissions refer to emissions from purchased electricity or energy, and Scope 3 emissions refer to all emissions that an organization is indirectly responsible for throughout its supply chain. For more information, see the GHG Protocol.
Net-Zero and Science-Based Targets: Many corporations have made pledges to reach net-zero carbon emissions by the year 2050, but not all of these pledges are credible. The Science-Based Targets Initiative is a third-party verifier which aims to assess whether a corporation’s net-zero targets are legitimate and based in science. For more information about net-zero leaders in Canada, see Destination Net-Zero.
Carbon Offsets and Sequestration: Carbon offsets are a way to use carbon removal or negative emissions technologies to remove greenhouse gases from the atmosphere to create credits which can then be sold to corporations that cannot otherwise reduce their GHG emissions. Carbon offsets have been heavily criticized by many actors, with the Intergovernmental Panel on Climate Change warning that they face “multiple feasibility and sustainability concerns.” Science-based targets cannot make use of carbon offsets in lieu of genuine low-carbon transition plans, or can only use independently verified carbon offsets when no technological alternative is readily available. Credible carbon offsets must be additional, in that they account for emissions reductions which would not have otherwise occurred without the offset purchase. For more information about credible carbon offsets, see the Oxford Principles for Net-Zero Aligned Carbon Offsetting.
Nature-Related Risk and Nature-Based Solutions: Many corporations are now considering nature-related risks in addition to climate-related risks, which include risks related to the collapse of vital ecosystem services that are necessary for normal economic functioning. For more information about nature-related risk, see the Task Force on Nature-Related Financial Disclosures. The International Union for the Conservation of Nature has developed the concept of nature-based solutions to refer to projects that restore ecosystems and steward biodiversity.
Impact Assessment: Impact assessment is an umbrella term used to refer to the assessment of the impacts of an organization’s behaviour on society and the environment. At the project-level, impact assessments are meant to assess potential harms while there is still opportunity to modify or abandon the project plans. Companies looking to improve reporting on their social and environmental impacts should utilize the framework developed by the Future Fit Benchmark.
Sustainable Development Goals: The Sustainable Development Goals (SDGs) are a list of 17 high-level goals related to human flourishing and ecosystem well-being developed by the United Nations. Many corporations reference SDGs in their sustainability reports, but few integrate them into their overall strategies or actually measure their contribution to the SDGs. For more information about corporate action on SDGs, see the SDG Action Manager.
Circular Economy: The circular economy is a concept referring to an economic system in which no waste or pollution is produced, materials and resources are continuously circulated, and natural systems are regenerated. For more information about the circular economy and circular business models, see the Ellen MacArthur Foundation.
Life-Cycle Assessment: Life-cycle assessment involves the assessment of the cumulative social and environmental impacts of a product or project throughout its entire lifespan. Minimizing life-cycle impacts is a key component of the circular economy.
Greenwashing: Greenwashing occurs whenever a company makes false or misleading claims about its sustainability practices. Many ESG investing strategies have been accused of greenwashing. To learn more about common greenwashing tactics, see this article from EcoWatch.
Although much progress has been made, many firms’ CSR or ESG strategies lack credibility for the reason that they remain siloed from business strategy and other functions, and are not reflected in core business decisions. Sustainability teams are often not provided with enough resources or organizational power to affect change, and are often housed under marketing departments where they serve as an extension of a firm’s PR efforts. For most organizations, sustainability reporting is not integrated with mainstream financial reporting, meaning that ESG concerns are still not considered material issues (and therefore not worthy of attention from senior officers). As a result of these obstacles, sustainability plans and strategies are often vague and ambiguous, contain few concrete or near-term targets and goals that are quantifiable and realistic, and lack the appropriate capital allocation and organizational resources to be truly transformative. Many sustainability teams spend all their time collecting data for reports, rather than actually pushing for organizational change, resulting in the awkward fact that sustainability reporting can become a substitute for real action. Firms frequently highlight positive success stories in their sustainability reports, while failing to disclose major controversies or ESG failures (i.e. avoiding taxes, or facing fines and sanctions for violations of the law), and in those contexts sustainability reports amount to little more than elaborate forms of greenwashing.
Over the past 20 years, corporate sustainability reporting has become increasingly mainstreamed. The proportion of N1000 companies producing sustainability reports has gone from just 18% in 2002 to over 80% by 2020. Unfortunately, there is scant evidence to prove that corporate sustainability reporting has led to genuine improvements in companies’ practices and performance. There are a litany of issues with sustainability reporting, including a profusion of meaningless targets, inconsistency between standards setters, opaque supply chains, confusing information, a lack of auditing, and the inherently voluntary nature of reporting mechanisms. Firms often use sustainability reports to highlight positive behaviours while neglecting to report on their adverse impacts, while their sustainability strategies remain separate (and at odds with) their overall business strategies. For a summary of academic research on the limits of sustainability reporting, see this open letter to the International Financial Reporting Standards Foundation.
Most worrisome of all is the problem that most firms tend only to focus on those social or environmental issues that are deemed material to the company’s bottom line. This narrow focus on simple materiality (i.e. enterprise materiality) has the tendency to reinforce the underlying problem of shareholder primacy by exclusively interpreting environmental and social risks through the language of financial accounting. If sustainability reporting is supposed to be about a firm’s effect on society and the environment, then the focus on enterprise materiality reverses this principle by focusing exclusively on how social and environmental problems affect the balance sheet. This causes firms to have less interest in reducing their social and environmental impacts than on finding ways to limit how social and environmental problems will harm their overall financial position. It also has the consequence of causing firms to become blind to long-term social and environmental problems that are of grave concern to society but are not yet considered relevant business risks.
ESG investing strategies have faced criticism for similar reasons. As recent Bloomberg analysis has demonstrated, ESG ratings have less to do with reducing negative impacts than with ensuring a company’s continued profitability. Their analysis of MSCI’s ESG metrics showed that a company’s “water stress” score had nothing to do with measuring a company’s impact on local water supplies, but rather whether local supplies contained enough water to sustain their factories. Research by the OECD has shown that many ESG indices are not actually less emissions-intensive than their parent indices, and even that in some instances “high E scores positively correlate with high carbon emissions.”
Even within the paradigm of enterprise materiality, corporate sustainability reporting is still falling short. Few firms are fully complying with the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD), one of the most prominent international standards-setters on the risks of climate destabilization to business. Only 3 in 10 companies fully disclose their environmental and climate-related aspects of their business model. Very few companies complete scenario analyses against a 2˚C or lower scenario, and only 6% of companies identify the short, medium, and long-term time horizons over which identified risks would impact the organization. According to GreenBiz, few companies overall implement climate resilience strategies, use different climate-related scenarios, or disclose processes for identifying, assessing and managing climate risk or integrating it into overall risk management.
To learn more about what firms should be doing to improve their sustainability reporting and governance practices, see Section 4.3 of our Company Transition Toolkit on transparency and reporting, as well as Section 4.2 on leadership and governance.
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Key Ecosystem Players
All major management consulting and professional services firms have developed their own sustainability practices. McKinsey hosts a sustainability consulting practice which focuses on net-zero and ESG strategy, decarbonization transformations, net-zero financial institutions, sustainable investing, and green buildings. McKinsey has also made a strategic acquisition of Planetrics, a climate risk stress testing company, and its parent firm Vivid Economics in a bid to develop leadership in the rapidly growing market for climate risk assessment. Bain hosts a ‘Sustainability and Responsibility’ service line while BCG has its own ‘Sustainability Consulting and Strategy Service’, with sector-specific experts that cut across industry lines. At Deloitte, sustainability work is located in the supply chain services and risk solutions service areas.
The market for sustainability and social impact consulting is extremely diverse, with a wide variety of players by no means limited to traditional professional services firms. Sustainability consulting can cut across areas such as strategy, risk, and technology consulting, while also intersecting with engineering services, architecture and design, and many other fields. Sustainability consulting practices can focus on strategy and planning, technical support, auditing and verification, sustainable marketing, and more. To learn more about sustainability consulting practices outside of the major professional services firms, see this article from Triple Pundit.
Sustainability consulting is an offering featured at many leading engineering services firms, such as WSP, Stantec, AECOM, RPS, and more. There are a wide variety of pure play sustainability consulting firms, such as ERM, Quantis, Anthesis, or the Delphi Group, which make sustainability expertise their core business model, in addition to smaller environmental consulting firms such as Choice or GCL that focus on impact assessment and site remediation. There are also many smaller sustainability consulting firms which focus on specific sustainability issues, such as Reeve Consulting, which focuses on sustainable supply chains and procurement, Climate Smart, which focuses on carbon neutral business models, or Circulab, which focuses on circular economy practices. Prominent firms that feature social impact consulting practices, with a focus on issues such as human rights or non-profit management, include Business for Social Responsibility, The Bridgespan Group, or 180Degrees Consulting. Some other Canadian sustainability and social impact consultancies include:
- Quinn & Partners
- Social Impact Advisors
- Social Impact Consulting
- LURA Consulting
- Shared Value Solutions
- Four Our Future
- Future Ancestors Services
- Diversity in Sustainability
The environmental consulting industry is also growing, but less quickly. Analysis of the top 25 firms, representing 44% market share, showed that climate and energy services, environmental management, compliance and due diligence, and water and waste management remain the highest growth areas. These firms include companies such as Stantec, WSP, AECOM, and SNC-Lavalin Group, for whom environmental consulting is a relatively small part of their overall revenue.
Career Resources for this Sector
Careers in sustainability consulting require versatile knowledge and a degree of familiarity with a wide range of frameworks and concepts. ECO Canada has written an article describing a typical sustainability consulting role. Sustainability consultants can be asked to work on many different kinds of projects, including but not limited to:
- Sustainability plans, target-setting, and implementation;
- Reporting and disclosure;
- ESG materiality assessments;
- Life-cycle or impact assessments;
- Environmental audits or inspections;
- Energy strategy;
- Waste and water management;
- Sustainable supply chains and supplier engagement;
- Adaptation planning.
To locate opportunities in sustainability consulting and sustainable business in Canada, see our job board.
To learn more about obtaining a career in sustainability consulting and sustainable business more generally, see this presentation from the Duke Fuqua School of Business, as well as resources from Sustainable Career Pathways, including their networking links and job resources portal.
Look at our full list of employers on our job board to find many more impact-driven employers in this sector!
Courses, Programs, and Events
Candidates interested in sustainability consulting might want to consider either sustainability and environmental management degree programs, or business programs with available majors or specializations in sustainability. Relevant university programs, both in Canada and elsewhere, include the following:
- McGill University – Managing for Sustainability
- Simon Fraser University – Sustainable Business Joint Major
- University of Waterloo – Environment and Business
- University of Waterloo – Sustainability and Financial Management
- UBC Sauder School of Business – Sustainability and Social Impact Concentration
- University of Guelph – Sustainable Commerce
- HEC Montréal – Microprogramme en Développement Durable
- HEC Montréal – Certificat en Développement Durable
- HEC Montreal – BBA option Gestion du Développement Durable
- University of Toronto Rotman – MBA Major in Sustainability and Social Impact
- University of Toronto – Master of Science in Sustainability Management
- University of Waterloo – Master of Environmental Business
- Western University – Masters in Environment and Sustainability
- University of Ottawa – Master’s of Environmental Sustainability
- Columbia University – Masters of Sustainability Management Certificate in Sustainable Finance
- Oxford University – MSc in Sustainability, Enterprise, and the Environment
- Oxford University – MBA 1+1 Dual Degrees (many options)
- Harvard Extension School – Sustainability Graduate Program
- Stanford Graduate School of Business – MBA Dual Degree with MS in Environment and Resources
- HEC Montréal – D.E.S.S en gestion: développement durable
- HEC Montréal – Microprogramme en gestion et développement durable
- HEC Montréal – Maîtrise en management et développement durable
- Université de Sherbrooke – Maîtrise en environnement
- Université de Sherbrooke – Microprogramme de 3e cycle en conseil stratégique en environnement
- Université de Sherbrooke – Diplôme d’études supérieures spécialisées de 2e cycle en gestion de l’environnement
- Université Laval – Certificat en développement durable
- Université Laval – Maîtrise en administration des affaires – responsabilité sociale et environnementale des organisations
- Université Laval – Microprogramme de deuxième cycle en administration des affaires – responsabilité sociale et environnementale des organisations
- UQAM – Programme court de 2e cycle en responsabilité sociale des organisations
- Université de Moncton – Maîtrise en études de l’environnement
- Seneca College – Sustainable Business Management (SMB) Graduate Certificate Program
To learn more about certifications that are relevant for a sustainability career, see this article from Sustainable Career Pathways. For certificates, online courses, and programs/fellowships related to sustainability, see the following:
- The Climate Web – Open Access Courses (free)
- Project Drawdown – Climate Solutions 101 (free)
- TCFD Knowledge Hub – Understanding the Recommendations of the Task Force on Climate-related Financial Disclosures (free)
- TCFD Knowledge Hub – Introduction to Scenario Analysis (free)
- TCFD Knowledge Hub – Biodiversity-Related Disclosure (free)
- TCFD Knowledge Hub – Water-Related Disclosure (free)
- UNGC Academy – Setting Science-Based Targets to Achieve Net-Zero (free)
- Boston Consulting Group – Climate & Sustainability Virtual Experience Program (free)
- GHG Protocol – Corporate Standard Training Webinar and Scope 2 Guidance Training (free)
- GHG Protocol – Corporate Value Chain (Scope 3) Standard E-learning (paid)
- GHG Institute – 2021 Basics for Organizational GHG Accounting (paid)
- Acumen Academy – Social Impact Analysis (free)
- Wharton School of Business – Business Strategies for Social Impact (free)
- Social Innovation Academy – 2022/2023 Fellowship Program
For upcoming events and conferences focusing on sustainability, see the following:
Interested candidates should also look to join or follow networks for sustainability and ESG professionals, such as the following:
Additional Resources to Learn about this Sector
To learn more about corporate emissions reduction plans and net-zero targets, see the Section 1.1 of our Company Transition Toolkit on emissions. Many large firms are adopting more ambitious emissions reduction plans; at least 20% of the world’s 2000 largest publicly traded companies have made net-zero commitments. However, according to the Corporate Climate Responsibility Monitor, very few major firms have made net-zero pledges that are actually credible. For a compilation of all the most up-to-date net-zero tools and resources, see Destination Net-Zero (focusing on Canada) as well as the Net-Zero Knowledge Hub. To learn more about the Science-Based Targets Initiative (SBTI), see this convenient flowchart.
To learn more about biodiversity, ecosystem services, and nature-based solutions, see Section 1.2 of our Company Transition Toolkit. The Science-Based Targets Network (SBTN) has developed a comprehensive set of guidelines for businesses looking to report on their biodiversity impacts and dependencies and develop a plan for mitigation actions. Firms should make sure to look out for guidelines and frameworks from the Taskforce on Nature-Related Financial Disclosures (TNFD). To see a searchable list of over 1,240 businesses taking actions to improve nature, see this list of case studies from the SHIFT community.
To learn more about the circular economy, see Section 1.3 of our Company Transition Toolkit. The Ellen MacArthur Foundation, in partnership with the University of Exeter, has developed a Circular Economy Business Design Guide that aims to help firms develop a holistic vision of their risks and opportunities when it comes to implementing circular business strategies. The National Zero Waste Council has developed a list of five areas for businesses to consider as they move to embed circularity. For more specific information about circular economy best practices broken down by sector, check out these guides from the Smart Prosperity Institute.
To learn more about water and pollution management, see Section 1.4 of our Company Transition Toolkit. The Water Footprint Network has developed this assessment tool, and the Global Environmental Management Initiative has developed its own local water tool for analysis of water usage at the local level. The CEO Water Mandate has a specific target-setting guidebook.
Sustainable procurement and supplier engagement is another key component of sustainability consulting roles. For more information, see Section 4.4 of our Company Transition Toolkit. For a comprehensive introduction to supply chain sustainability policies, see this practical guide for continuous improvement developed by the UN Global Compact. Firms can also review this guide from the Judge Business School at Cambridge that focuses on supplier engagement for sustainability. For an introduction to the themes and core concepts of supply chain traceability, see this guide from the UN Global Compact. The World Economic Forum has created an insight report that provides a road map for all businesses to decarbonize their supply chain (i.e. Scope 3) emissions, as well as a brief guide on supply chain decarbonization incentives.
For more information about sustainability and social impact news and thought leadership, see the following media sources:
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