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Consulting firms that fail to establish their climate change expertise during 2009 will miss out on the biggest opportunity in the consulting market in the past 20 years, according to independent research conducted by Verdantix.

The Verdantix analysis of the U.S. climate change consulting market applies 56 evaluation criteria to assess 19 consulting and professional services firms including BCG, Booz & Company, CH2M Hill, ENVIRON, ERM, Ernst & Young, ICF International, McKinsey & Company, PA Consulting Group, and PwC.

"Despite the downturn, demand for climate change consulting is surging. President Obama's climate change agenda, cost savings from energy efficiency and the need to compete on sustainability credentials drive demand," said David Metcalfe, author of the report. "Our analysis reveals that environmental and management consultants, audit firms and IT advisors are scrambling to upgrade their climate change services."

The research, based on dozens of interviews with practice leaders and 15 buyers of consulting services, reveals that some advisory firms lack the depth of expertise to help -- so they need to invest despite the recession. To clarify the alternatives for buyers in a confusing and fast-changing market, Verdantix analysed 19 consulting firms with its Green Quadrant methodology.

The Verdantix analysis finds that:

• Seven consulting firms stand out as Leaders. CH2M Hill and McKinsey & Company stand out -- even among the leaders -- due to the breadth and depth of their capabilities and proven track record over the last 2 years. Two Big Four firms, Deloitte and PwC, and environmental consultancies ENVIRON, ERM and ICF International are also positioned in the Leaders Quadrant.

• Consulting firms with specialist skills will surge forward in 2009. Buyers of consulting services should turn to Ernst & Young for cleantech advice, AT Kearney for sustainability strategy projects and Booz & Company for climate change strategy. Blu Skye and GreenOrder are an ideal choice for change programs. PA Consulting Group has the capability to deliver transformational energy efficiency and climate change programs.

• Many advisors need to bulk up their climate change expertise. Not all consulting firms have invested in the development of their climate change services. Notably Bain & Company, Boston Consulting Group and KPMG U.S. have done little to market their capabilities and credentials on sustainability and climate change.

"Our independent customer panel told us that carbon management is their top priority: 73 percent identified it as a significant initiative," said Verdantix Director, David Metcalfe. "Sixty percent of the buyers of climate change advice we spoke with, all working for $5 billion revenue U.S. firms, said they invested in climate change strategy advice and greenhouse gas inventory projects in 2008. In terms of future spend, energy efficiency is top of the agenda for 2009."

The analysis concludes that buyers of sustainability consulting projects will need to select a portfolio of advisory partners due to the wide-ranging challenges triggered by sustainability and climate change. Specifically, buyers should:

• Target management consultancies for strategy development. International strategy consulting firms like McKinsey & Company, Booz & Company and AT Kearney -- score well in our analysis -- and are best placed to advise on corporate climate change strategy. Environmental consulting firms, despite their deep climate change expertise, often lack strategy consulting skills.

• Hire specialist expertise for opportunity identification. Despite having less than 30 employees, boutiques like BluSkye and GreenOrder are well-aligned with climate change and sustainability product development and opportunity identification. For cleantech products CH2M Hill, Ernst & Young and the Shaw Group are good choices.

• Invest in advice that combines policy and financial performance. Deloitte and PwC stand out as the top choices for advice on policy and regulatory developments. Through their expertise in tax, regulations and financial management these firms can advise large corporates on how to exploit new climate and energy regulations for financial advantage.

• Source industry expertise for operational analysis. Firms in sectors with significant energy demands and emissions to manage, such as oil, gas, mining, power generation, chemicals and metals, should turn to consulting providers like CH2M Hill, ENVIRON, ERM, and ICF International due to their deep knowledge of industrial processes.

"As President Obama's energy and climate change policies become clearer, large corporates and their professional advisors must be ready to act," continued Metcalfe. "Consulting firms must hire, strengthen and market their capabilities -- or miss out on the dramatic growth which is sure to come in 2010."

Verdantix is a Monadnock Research partner and an independent business research firm focused on climate change, carbon markets, and business sustainability.

Report Table of Contents

TABLE OF CONTENTS

STATE OF THE MARKET
The US Will Undergo A Climate Change Market Transition

EXECS NEED HELP BUT LACK FAMILIARITY WITH OFFERINGS
Problem Owners Focus On Carbon Management And Resource Efficiency
Strategy, GHG Inventory And Energy Efficiency Top Spending Plans
Existing Relationships And Tactical Needs Direct Consulting Spend
Thought Leadership And Environmental Credentials Support Brands
Spending Plans Err On The Side Of Caution

GREEN QUADRANT® ANALYSIS OF CLIMATE CHANGE CONSULTANTS
The Green Quadrant Methdology
Evaluated Firms: Selection Criteria
Evaluation Criteria
Seven Providers Lead The Climate Change Consulting Pack
Consultancies With Specialist Expertise Will Surge Forward In 2009
Six Providers Will Expand Their Entrepreneurial Offerings

CLIMATE CHANGE REQUIRES A PORTFOLFIO OF ADVISORS
Select A Portfolio Of Climate Change Consulting Firms
Plan Your Journey From Tactical To Transformational

PROVIDER PROFILES
AT Kearney
Bain & Company
Boston Consulting Group (BCG)
Blu Skye
Booz & Company
CH2M Hill
Clear Carbon Consulting
Deloitte
Ernst & Young
GreenOrder
ICF International
Jacques Whitford
KPMG
McKinsey & Company
PA Consulting
PwC
The Shaw Group

TABLE OF FIGURES

Figure 1. Converging Trends Of Sustainability, Climate Change And Energy
Figure 2. Sustainability Executives Believe Climate Change Is A Strategic Issue
Figure 3. Carbon Management Dominates Climate Change Initiatives
Figure 4. Most Firms Have Hired Climate Change / Sustainability Consultants
Figure 5. Strategy Development And GHG Footprints Lead Consulting Engagements
Figure 6. Energy Efficiency Tops Spending Plans For 2009
Figure 7. Verification Firms Lead The Consulting Spend List
Figure 8. Buyers Exhibit Low Familiarity With Climate Change Consulting Services
Figure 9. Buyers Limit Definite Spending In 2009 To A Handful Of Providers
Figure 10. Green Quadrant: Climate Change Consulting USA
Figure 11. Capabilities Criteria For Climate Change Consulting Firms
Figure 12. Market Momentum Criteria For Climate Change Consulting Firms
Figure 13. Capability Scores For 19 Climate Change Consulting Firms
Figure 14. Market Momentum Scores For 19 Climate Change Consulting Firms
Figure 15. Global Presence Scores For 19 Climate Change Consulting Firms
Figure 16. Select A Portfolio Of Consulting Firms To Advise On Climate Change