Searching for silver linings amidst the Brexit clouds

With the business implications of Brexit still far from clear, Matthew Farrow looks at what implications and prospects might unfold for environmental consultancies.

Almost six months on from the triggering of Article 50 it’s hard for anyone to feel much the wiser as to the way Brexit will unfold. No deal; staying in the Single Market; the ‘Norwegian option’; a bespoke trade deal; indefinite transition arrangements - only a brave person would rule any of them out at this point. In business though, planning has to be done whatever the uncertainties, so it’s worth thinking about the likely implications for a core part of EIC’s membership - environmental consultancies.

Both consultancy and environment protection are international activities and so it’s no surprise that many environmental consultancies recruit staff from across the EU.  Some have told me that up to 20% of staff in their London offices are non-UK EU nationals and that there are specific fields - ecology has been mentioned - where it is hard to fill posts from UK candidates alone.  

To my mind there is already a question as to whether the UK environmental sector has adequate capacity to deliver the environmental requirements of the government’s broad objectives across housing, infrastructure and air quality - something I’m not sure ministers fully grasp - and Brexit-induced skill shortages are hardly going to help. 

Of course, environmental consultancies are not alone in having concerns and it may be that a solution will be found. One minister I spoke to recently mused that a likely compromise would be going back to ‘free movement of labour’ rather than the current ‘free movement of people’- i.e. an EU national could move to the UK to take up an advertised job.

"There is already a question as to whether the UK environmental sector has adequate capacity to deliver the environmental requirements of the government's broad objectives across housing, infrastructure and air quality."

Another impact could be on the future ability of consultancies to win work from the European Commission and other Brussels bodies such as the European Environment Agency. For the multinational large consultancies who have offices in Brussels this won’t be much of a problem, but for UK-based SME environmental consultancies it may be more of an issue. It’s vital that as we leave the EU the UK signs up to the WTO Government Procurement Agreement as this will facilitate UK-based firms’ access EU contracts.  

What about the broader impact on the demand for environmental consultancy services post-Brexit? For nearly 40 years EU membership has locked the UK into a process of gradually tightening environmental standards and steadily more complex environmental obligations on mainstream firms such as developers and manufacturers. Given the time EU legislation takes from initial agreement of principles to actual implementation at member state level, this has helped support a fairly predictable pipeline of work for the environment consultancy market.

Of course it’s possible that post Brexit the UK will continue to have to comply with EU green laws. This will be the case if we stay in the single market in a relationship with the EU similar to Norway’s, or if we conclude a free trade deal with the EU which stipulates UK compliance with these laws (the EU parliament recently declared that such compliance should be a ‘red line’ in EU trade negotiations with the UK).  But if this does not happen, then my personal view is that UK (or at least English) environmental policy will be a combination of stasis in some areas combined with kneejerk reform in others in response to scandals and tragedies such as the Grenfell fire. This could mean less predictable work pipelines for consultancies.

Having said that, many firms look to consultancies for support and advice in times of uncertainty and with the outlook for environmental regulation and policy more uncertain than for decades, this in itself could drive additional consultative work.  

Every cloud and all that . . .  

Matthew Farrow is director of the Environmental Industries Commission, the leading trade body for environmental firms.