Your peers are spending big on sustainability services; providers are building the capability to match

Sustainability services revenue grew by an encouraging 66% over the past two years. However, this is significantly outpaced by headcount (126%) and deal growth (140%). Several explanations include the complexity of assigning sustainability services metrics—especially when sustainability (rightly) becomes more embedded in both enterprises and services. So don’t deprioritize sustainability. Do the opposite. Your enterprise peers are increasing their spending, and consulting, technology, and business services firms are rapidly building the capability to match. Look to our broader research at HFS, and you’ll find that sustainable investment, decision-making, and hiring are all increasing, too.

Our sustainability services market analysis predicted phenomenal growth in 2022. We saw that come to fruition in the 2024 report, but with some variation. Across the 18 leading firms in both our studies, sustainability headcounts and client numbers more than doubled at growth rates of 126% and 140%, respectively, while revenues grew by 66% only. When considering service providers’ prediction of 240% revenue growth (vs. a not-too-way-off 190% and 207% for headcounts and clients, respectively), what happened?

Our 2024 sustainability services market analysis covered 25 leading consulting, technology, IT, engineering, and business services firms. We then compared the revenues, headcounts, and clients of the same 18 firms that appeared in our 2022 study. The average sustainability services revenue grew from $750 million to $1.2 billion, a 66% increase. The average dedicated sustainability services headcount grew from 3,800 to 8,600, a 126% increase. The average number of sustainability services clients grew from 1,250 to 3,000, a 140% increase.

Reporting sustainability services metrics has always been difficult. The more sustainability is (rightly) embedded in organizations and services, the more difficult this becomes. Several other dynamics potentially explain the growth numbers. Whatever the explanation, enterprises are spending and service providers are moving accordingly.

• As reporting technology and services capabilities mature (often the entry point for enterprise sustainability), smaller deals are becoming more widespread from the Big 4, with their audit hats to IT services firms moving into consulting and other sustainability services.
• Sustainability, including data gathering, analysis, and reporting, is also being integrated into technology platforms and services. Companies such as Microsoft, SAP, and other large and small firms are adding sustainability or have simply called it out more distinctly.
• Acquisitions are not yet fully paying off. There was a sustainability services acquisition boom from mid-late 2020 to early 2023 and then a relative pause. For large services firms, revenue is not fully catching up to their increased headcounts. Also, the headcounts are repositioned from across their existing business. Expect that to change as these acquisitions help larger firms cross-pollinate—bringing their scale to specialist acquisitions and vice versa.

The Bottom Line: Follow the money, people, and deals. There are no signs of a material sustainability backlash—it’s quite the opposite. The sustainability services business is booming. So don’t deprioritize sustainability. Match your peers or go beyond. Be sure to develop internal capability. Sustainability is a decades-long effort—but consulting, technology, and broad business services firms are right there to help you along the way.