As we close the book on 2022, I had the opportunity to speak with Grant Ferrier, Strategic Director with 2020 Environmental Group and Founder/President of Environmental Business International Inc., a publishing and research company that generates strategic market intelligence on emerging opportunities in the Environmental Industry, Climate Change Industry, and the Green Economy. In his 30 years in the industry, Grant has worked with owners and executives at over 700 environmental and A&E firms, as well as investment professionals, government agencies and think tanks. Below Grant shares his thoughts on the overall market, growing PFAS concerns, rising awareness of climate-related risks, and the near-term forecast.
What advice are you giving your environmental consulting clients on recession preparedness? What are you seeing leading firms do?
Grant Ferrier: “Environmental engineering companies have little fear or concern of recession as most have record backlogs. Funding behind federal legislation the last two years flowing downstream to state and local entities—and in the form of tax credits for clean energy developments—should last them a long time. The most pressing concern is hiring enough qualified people to fulfill all the work that they can sell and contract for. Certainly, there are more afflicted sectors, and commercial real estate is one of those due to the rising interest rates. Most of the larger companies are diversified enough to not suffer from this shift in market conditions too much.”
What’s your take on growth opportunities in the areas of climate change? ESG?
Ferrier: “Climate change and the energy transition remains a major macro factor driving the industry, but short-term issues around energy supply vulnerability and energy independence—both national and for individual users or institutions—has become more pressing. Climate resilience has already become a must-have factor in almost all infrastructure projects at this point, particularly in areas most vulnerable to issues like flooding, storms or wildfires.
“Reporting requirements at this point are more voluntary, but the majority of major corporations seem to be committed to long-term change and are preparing to be able to report. This will create opportunities for environmental consultants to help clients not over-promise and under-deliver. There is some hope and expectation that the SEC will codify climate risk reporting or other ESG metrics.”
What are you hearing on PFAS? Where do you see this heading?
Ferrier: “PFAS is truly everywhere and the debate around the public health threat that it presents continues to go on from the scientific to the public policy community with the public paying more attention to PFAS to some extent. Already there are numerous lawsuits and projects going on around afflicted communities, but the big domino to set off the market will be the maximum contaminant loads set by the US EPA for drinking water. This has been expected for some time and promised by EPA’s roadmap on PFAS. So, yes, there could be hundreds of thousands of projects over that will require consultant expertise for assessments, analysis and clean up. If the standards are set as many believe they will be, this could represent approximately $100 billion of spending in drinking water and wastewater treatment systems as well as remediation over the next 20 years or even less, with the majority of spending likely to be on drinking water system treatment updates.”
On 2023, are you glass half full or glass half empty?
Ferrier: “I tend to be optimistic about the industry’s business prospects. Many of our clients even say the glass is overflowing because they simply don’t have enough people to fulfill all of the projects that they’ve already contracted for. Overall, I would like to see inflation under control, interest rates come down, stock markets recover to near where they were, and the private investment market and risk tolerance come back for early-stage companies. Historically, environmental markets have lagged recession effect in both onset and recovery, and this is likely to repeat in some form this time, but again, the prevailing drivers of federal funds of the major investment and tax credit legislation, combined with the tailwinds of ESG and climate change should limit that impact.”