Environment Analyst catches up with the senior team heading up Deloitte Sustainability Services - Eric Dugelay, global leader, based in Paris; and Helena Barton, partner in Deloitte Denmark and former Sustainability Services EMEA leader - to find out more about its growth journey and future ambitions, as well as views on where the market is heading.
As noted in a previous viewpoint (Environment Analyst 15-Nov-16), the milestones of 2016 - including the Paris Agreement ratification - signal a major change for how businesses interact with society, and will require them to increasingly measure, evaluate and communicate on their social and environmental impacts, thus boosting demand for a broader range of sustainability services from consulting firms such as Deloitte.
Globally, Deloitte employs close to 250,000 employees and generates annual revenues in excess of $36 billion to earn its position as the largest of the ‘Big 4’ auditing and management consulting giants. Deloitte is valued for delivering services in audit, tax, consultancy, financial, risk advisory, and related services in more than 150 countries and territories. Over the last decade, Deloitte has nearly doubled revenue and headcount, and has been ranked by Gartner as the number one global consulting organisation for seven consecutive years.
Its Sustainability Services group spans 50 countries and employs over 900 professionals of various expertise and backgrounds, supported by a global Centre of Excellence (CoE) which sets the vision and provides overall coordination for the global network of member firms. The CoE – which is based in Paris - includes four partners and relies on three regional leaders. Strategic clients are developed globally through the CoE across a variety of sectors such as automotive, agrifood, energy, resources, and also key global institutions like the European Commission.
For Deloitte, as well as for other Big 4 firms, the allocation of revenues relating to sustainability services is complex as the taxonomy of such services can be subject to interpretation. However, Deloitte has estimated global revenues of approximately $150 million from the business, and has set an ambitious target to double that figure within five years.
Globally Deloitte SS comprises around 50 member firms, of which twelve core practices account for over 85% of global revenues (Australia, Canada, China, France, Germany, India, Japan, Netherlands, South Africa, Spain, UK and US). Deloitte has been recognised by independent analyst firm Verdantix as a leader in the sustainability services marketplace.
Although perhaps slightly later than some of its peers - notably PwC (EA 09-Sep-16) and KPMG (EA 15-Dec-16) - to make its mark in the sustainability/environmental space, over the last seven years Deloitte has ramped up its service offering through strategic acquisitions and key hires, notably through four member firms - the US, France, Canada and Australia.
In 2010 Deloitte US acquired DOMANI Sustainability Consulting and ClearCarbon Consulting both of which were fully integrated into the business (EA 12-Jan-11). With these acquisitions the US practice was able to make a significant step forward in achieving its goal of being a leading sustainability services provider. In 2013, Deloitte France acquired sustainability consultancy Bio Intelligence Service. With this acquisition the French practice gained technical expertise in life-cycle assessments (LCA) and strengthened its foothold in the European market.
Two years later Deloitte France continued its shopping spree with the acquisition of Synergence, a major strategy agency in sustainable development. Following these buys, Deloitte France was able to cement its position as the market leader in sustainable performance audit, consulting, engineering and communication in this market, according to Dugelay and Barton.
In Canada, Deloitte then acquired Visser Consulting in 2014, a "leading provider of regulatory, safety and environmental compliance services to energy companies" in Western Canada. The acquisition enabled the Canadian practice to expand its regulatory, safety & environment group, and position the firm as a leader in helping energy firms meet regulatory requirements.
The Deloitte Sustainability Services team is also witnessing tremendous growth in emerging economies such as India. Growth in demand these markets is being driven by a number of factors such as water scarcity, contamination, agriculture and social inclusion.
Measurement & verification: Deloitte’s financial bedrock
Many of the key factors that influence a company's performance and profitability today — energy prices and availability, supply chain reach and resilience, regulation, and public sentiment, among many others — are changing quickly and dramatically. No business is immune to these systemic challenges and societal responses. "In response to global challenges which present both opportunities and risks, it is critical to plot adaptive strategies for operating effectively and communicating transparently," remarked global leader Eric Dugelay.
The foundation of Deloitte’s revenues and future growth in SS is built around its Measurement & Verification arm. Deloitte has been able to leverage its strong reputation in financial auditing and deep technical knowledge and understanding of industries and sectors to support clients in increasing the credibility and reliability of sustainability disclosures through both internal and external assurance on non-financial information. "Sustainability reporting has become increasingly commonplace. In fact, it is a membership requirement for the WBCSD, and a number of organisations use corporate sustainability reports to rank companies, including the CDP, the Dow Jones Sustainability Index, and a number of sustainability-focused investment platforms," explains Dugelay.
Assurance is becoming an increasingly important element in sustainability reporting. It provides external validation of the financial, social and environmental disclosures made within those reports. Independent assurance statements help companies enhance their credibility and reassure readers of reports that their disclosures are reliable. ¨Reporting effectiveness can be enhanced by obtaining an independent assurance statement; indeed, the subject matter of assurance of non-financial information, in particular of sustainability information, has now become mainstream in the audit world.¨ This was the underlying messages of a report published by the WBCSD as a deliverable of Eric Dugelay’s part-time secondment entitled Assurance: Generating Value from External Assurance of Sustainability Reporting.
For assurance services, the regulatory environment is a key acceleration factor for mid-to-long term growth. Deloitte’s track record and maturity enables them to fully realize this market opportunity.
Integrated reporting: a driver for integrated thinking
In 2013, Deloitte entered into the integrated reporting (IR) era with strong ambitions following the release of the International Integrated Reporting Framework by the IIRC. In a relatively short timeframe it has significantly begun to influence the corporate reporting landscape as it requires companies to gain better insight into value creation. "Now we are looking beyond the early hype surrounding integrated reporting and are witnessing a maturity that we believe reflects greater integrated thinking and decision-making in business," explained Dugelay. "Ironically, integrated reporting is not really about reporting at all. It’s about integrated thinking, responsible business behaviours and innovation."
Deloitte helps its clients apply integrated thinking to achieve strategic objectives and communicate corporate performance through integrated reporting. Integrated reporting requires the consideration of dependence and impact on a broader set of capitals beyond financial to include natural, social and environmental. "What this shows is that the ultimate goal of integrated reporting is the move towards long term value creation for a sustainable society," Dugelay added.
Deloitte Sustainability Services
This article was originally published at www.environment-analyst.com