The headline findings of the second Environment Analyst COVID-19 Industry Impacts & Outlook Survey (global edition) - which our members completed online through November - point to a dramatic uplift in expectations for business performance in the wake of the global pandemic compared to our first survey in June.
Six months ago when we first canvassed our audience - largely consisting of business leaders, executives and practitioners active in the environmental & sustainability (E&S) consulting sector worldwide - national lockdowns, travel restrictions, and the associated health and economic impacts had created much uncertainty. And this fed through to pretty sombre predictions for revenue growth for companies, averaging -9% for 2020 and -5% for 2021.
But the latest survey indicates a significant upswing in business confidence and greater levels of certainty as 2020 draws to a close - as it has become increasingly clear that the impacts from the COVID situation on our members’ revenues, clients, fees and projects are not as bad as had been feared in the early stages of the pandemic. Year-on-year revenue growth projections indicted in November's survey averaged +1.3% for 2020 and +6.3% for 2021.
With 149 individuals participating in the latest survey, the results illuminate many of the ongoing challenges and changes, as well as new opportunities within consultancy, as a result of the pandemic pressures and governmental economic recovery plans, and how these may translate into demand for E&S services going forward.
The full survey results and analysis have just been published to EA Strategic Members and those who participated in the survey (report downloads page).
Key findings include:
- Place of work trends - around nine out of ten respondents report to be working from home (and the majority still on a full-time basis), similar to the figure from our June survey. Some 26% say they are now back in the office regularly, while another 31% expect this to happen in the first half of next year and 13% say it will stretch to H2 2021. People said they worked an average of 1.3 days per week from home prior to the COVID crisis, rising to 4.4 days during lockdowns - with an expectation that their average for 2021 will be 2.7 days WFH versus 2.3 days in the office. However, almost one-fifth of those surveyed said they expect never to return to the office on a regular basis. The average amount of time spent out of the office (whether that be a physical one or virtual one) making on-site or client visits is currently 10.4 hours per week, but this is well down on the pre-COVID average of 15.5 hours that they indicated (see Figure 1).
Fig 1. Hours per week 'out of office' on-site and/or visiting clients (Source EA Global CV-19 Industry Impacts & Outlook Survey II, Nov 2020)
- Working hours and evolving responsibilities - a fifth of respondents said they are still working increased hours, which is by now a well recognised unintended consequence of the enforced WFH trend - and as such they are probably helping to keep consultancy utilisation rates well inflated. Only 3.6% indicated they now work fewer hours than prior to the pandemic. Upskilling and resource flexibility came across as a strong feature in our June survey and continues to be so with 42% reporting expanded responsibilities since the start of the COVID outbreak and 56% saying they have sought to retrain or study new areas. Commonly upskilling is focused on areas such as business development, digital marketing, digital tools and AI, sales, project management, part-time MSc or PHDs, soft skills and statistics, technical refresher courses and project management.
- Layoffs and furloughs - job losses through 2020 (to November) were indicated by 40% of survey participants, down from 53% in the June survey. On average they reported their organisations had laid off just 2.3% of the workforce, which is an extremely low figure and testament to the resilience of the industry as well as government job retention, pay roll support and furlough schemes (incidentally, none of our November survey respondents said they were furloughed). As the CEO and MD of Cardno, Susan Reisbord, told Environment Analyst recently: "We’re proud of how many people we’ve kept on and how we’ve been able to minimise furloughs and layoffs…There were some pockets of the business where layoffs were required due to market dynamics - and COVID accelerated some of that." [EA 07-Oct-20].
- Remuneration trends and cost-saving measures - around three in ten (31%) said their remuneration (salary+bonus) package had been frozen - similar to our June survey (34%). However, the numbers reporting cuts to their packages are down this time round at just 9% compared to the 38% reporting so five months previously. Some 13% of respondents to the latest survey said prior cuts or freezes on salary+bonus packages had since been rescinded. On average, packages are reported to be down year-on-year (with the full report providing comprehensive data on remuneration changes by company size, country and sub-region). Enforced paid time off (PTO) or sabbaticals (unpaid leave) were cited by 29%, similar to the June survey. Other cost-saving measures put in place by their firms, as indicated by the respondents, include: reduced budgets for career and professional development/industry events (35%) and office closures (16%).
- Project and client sector impacts - the vast majority said their work had been impacted by project delays (76%) and/or cancellations (31%) due to COVID-19, but 22% had experienced neither. We asked members to indicate the trend in new project pursuits in different industry verticals - the results of which show that those more aligned with a sustainable recovery, health and the digital economy (including renewable energy - which is the number-one growth sector), and also relating to the circular economy, technology and communications are all performing well. Projects from the public sector in general are also holding up (see Figure 2). However, areas associated with the travel and services sector such as retail, hospitality, aviation, and residential & commercial construction are yielding less opportunities. The conventional energy and mining sectors are also in the net negative camp.
Fig 2. Trends in new project pursuits by sector (Source EA Global CV-19 Industry Impacts & Outlook Survey II, Nov 2020)
- Financial outlook for 2020 & 2021 - Figure 3 below illustrates the spread of survey responses on financial expectations in terms of (organic) revenue growth in 2020 and 2021. The proportion citing a negative impact on their organisation’s revenue in 2020 has fallen dramatically from 81% in our June survey to just 30% in the November survey. Meanwhile, those expecting positive y-o-y growth in 2020 has jumped from 2% in June to 46%. All in all, the mean average expected change compared to the prior year is +1.3% for 2020 and +6.3% for 2021 (compared to the highly negative growth predictions of -8.6% and -4.9% respectively in the June survey). The median revenue growth expected is now 0% for 2020 and 2.5% for 2021 but there is a much greater uncertainty - and hence a wider spread of responses - for next year as one would expect. Our full report contains detailed granular analysis of the revenue projections by company size, country and sub-region, but in general those from larger firms (>1,000 FTEs) are more cautious in their projections. In addition, there is greater optimism exhibited by respondents based in North America for a strong bounce back in 2021, with the mean averaging 7.5-8% compared to 1-3% in Europe. Australia & New Zealand was the only sub-region where growth expectations in 2021 are lower than for 2020.
Fig 3. Revenue impact compared to previous year (Source EA Global CV-19 Industry Impacts & Outlook Survey II, Nov 2020)
- Green economy accelerator - to end on a further positive note our members are much more confident now (compared to June) that the pandemic is ultimately accelerating sustainability and the low-carbon transition, with two-thirds (67%) saying so, up from 57% five months previously. The median respondent expects the COVID crisis to hasten the transition by up to three years, with 40% believing it could be by more than that. Commenting on the green recovery and what it means to his global consultancy firm, president and CEO of WSP Alexandre L’Heureux said: "The estimated $10 trillion global COVID-19 stimulus will be pivotal for the world's low-carbon transition, and this includes the incoming US administration’s climate agenda to achieve economy-wide, net-zero emissions by 2050. [..] And environmental stewardship is in our DNA." [08-Dec-20]. Some 46% of our survey sample expect their organisation to benefit directly from governmental green recovery and economic stimulus plans in 2021, whilst 27% weren’t sure yet and 27% said no they would not expect to benefit.
All survey participants and EA Strategic Members will be receiving an email giving access to the full set of our COVID-19 Industry Impacts & Outlook Survey II charts and analysis. If you are not a member but interested in obtaining a copy please contact Lisa Turner (firstname.lastname@example.org)