2021 Top 200 Environmental Firms: Market is Whirlwind of Change – Engineering News-Record

COVID-19 and the altered energy sector took a toll last year on how construction industry firms worked and how much revenue they produced. But 2020 also pushed the market for environmental services—with its dimension, growth and sustainability on a new path as global political, economic and social forces finally align in the reality that the earth is fragile and climate change is here.
The Top 200 Environmental Firms have never been more bullish about their prospects, as decarbonization of economies and attention to legacy pollution and other problems create new mandates for global government and business environmental, social and governance (ESG) agendas, with more pressure from courts, investors and grass-roots advocates.
“The macro trends … on many, many fronts over the past particularly 15 to 18 months have just been extraordinary in the kinds of changes and pace of change we’ve seen,” says Jan Walstrom, senior vice president and global environmental market director at Jacobs. “For those of us who grew up when the environmental market started many decades ago, this is like the next major shift playing out, truly for the rest of this century. There’s no going back, and there shouldn’t be any going back.”
Adds Aurecon CEO William Cox: “Gone is the time when creating a sustainable business focuses only on meeting compliance requirements.” 
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Total environmental services revenue reported by the Top 200 jumped substantially in 2020 to $90.2 billion, with many firms able to sustain and even beat revenue forecasts in the pandemic year. A key accelerator to the list total was the addition of global waste and water management giant Veolia Environmental S.A. and its $29.7 billion in reported revenue (see story, below). Fluor’s return to the list after completing multiple financial reviews of project charges added nearly $2 billion in revenue that boosted totals in federal and nuclear related environmental services.
Two newcomers among the top 75 firms are diversified waste services firms Montrose Environmental Group Inc. and Covanta Environmental Solutions.
WSP Global Inc. crossed the $1.5 billion mark in environmental services revenue last year, noting “a full year contribution from our 2019 and 2020 acquisitions,” says CEO Alexandre L’Heureux. The firm will rise higher on next year’s list, with its purchase of Top 200 major player Golder—in a $1.14-billion deal closing in Aprii that “significantly accelerates our growth in a big-demand sector,” he told analysts in a post-announcement call last December. 
Environmental services has been a major area of industry consolidation, fueled by, among other things, private equity cash and a need for added talent in key niches. Industry mergers and acquisitions consultant Morrissey Goodale said July 9 that dealmaking is up 26% in the past 12 months with “sellers eager to lock in a sale ahead of any tax increases in 2022.”  The firm said 108 transactions announced in first quarter 2021 made it “the hottest three months ever.”
Buyers also include “digital companies moving into our market,”  says Lytle Troutt, president of Resilient Environments at Wood. “Microsoft and Google already are buying up environmental firms.”
U.K.-based sector business tracker Environmental Analyst said the global market for environmental consulting services grew by just 0.6% last year to $38 billion after annual hikes of 5% to 6.5% from 2017-19. Still, “this is a resilient performance given the unexpected and unprecedented challenges,” says director Liz Trew. She sees growth of 5.3% in 2021, with about $9 billion “in new market space” forecast in the next four years. 
But “as we move into 2021, inflationary pressures abound in our marketplace. This is undoubtedly a cause for concern,” says PPM Consultants Inc. principal L. Todd Perry. “If 2020 taught us anything, focusing on your core business and fundamentals is crucial. Our outlook remains positive as future contracts are at an all-time high year to date.”
Dealmaking | By Debra K. Rubin
Even as an epic purchase of rival Suez S.A. looms, global waste and water management giant Veolia Environmental S.A. (No. 1) leads the Top 200 list for 2021. The French firm is the world’s largest water-services provider, with about 179,000 employees, it says. Paris-based Suez, with $18 billion in global revenue and a staff of 90,000, leads in providing private water services. The deal process which had been rancorous, is set to close by year end to create an estimated $44-billion giant to include Suez assets in the Americas, Asia and Australia. Other units will become a new business owned by private investors.
Veolia last year developed a corporate strategy program for 2020-23 “to guide its ambition to be the benchmark company for ecological transformation,” a firm spokesman told ENR. It “would enable Veolia to raise revenue in the next year from environmental services … [and] make these more impactful.” A 2017 mercury release in Wisconsin just brought a $95,000 federal fine against Veolia, but it also announced a biofuel-making venture with TotalEnergies. The firm’s nuclear unit also has expanded work at the Fukushima Daichi nuclear power plant in Japan, site of a 2011 accident, and for the U.S. Energy Dept.’s nuclear complex. A deal was just signed to build and operate by 2022 a pilot unit to recharge a French reservoir with treated wastewater, which it says would be a first in Europe. 
By and large, firms balanced each other in movements up and down the list. AECOM attributes less disaster recovery work and spinoff of its management services unit for reduced total environmental revenue last year but notes a 21% rise in other areas. Frank Sweet, its environmental group president, says the firm “has 1,000 people who spend 75% of their time on ESG projects,” including a U.K.-based group that “does just climate change studies for infrastructure projects.” The work now represents 2% of AECOM’s business, double that of most competitors, he contends. “It’s a big growth area going forward,” says Sweet.
Smaller Top 200 participants note revenue growth last year despite pandemic challenges. For No. 196-ranked EHS Support LLC, resource shortages among its industrial and manufacturing clients “resulted in increased demand for ongoing [environmental health and safety] compliance support,” says CEO Andrew Patz. “This trend is expected to continue even when things stabilize based on what we have seen in the first quarter of 2021.”
Some firms note environmental services revenue slowdowns due to delayed and uncertain infrastructure project execution in 2020. Funding uncertainties last year, both pandemic and election-driven, tempered growth for contractor Cascade Environmental, with lower revenue leading to “difficult decisions regarding spending and head count reductions,” says CEO Ron Thalacker. “Our 2021 outlook is cautiously optimistic.”
According to Lisa Kay, COO of consultant NV5, “Work increased for our essential industry clients. Our environmental unit didn’t see much of a slowdown.”  She said where work slowed, “we made up with environmental safety and health work related to COVID-19.”
The firm’s industrial customers “are focused on their mission, but they are more aware of climate resilience and whether it impacts their bottom line.”
Langan saw more work, however, to support booming e-commerce-related construction at often contaminated industrial and manufacturing areas, and battery storage projects for power and connection needs in expanded work from home, it says.
Black & Veatch created a business line specifically to address environmental services, says Carrie Sherer, associate director of government affairs. “We expect our offerings and revenue in this space to increase.”  HDR points to renewable energy as its “fastest growing market” for new environmental services.
Hazardous waste management grew in market volume among the Top 200, generating $25.56 billion in revenue, about 28.1% of the total, with both metrics up from last year.
Gilbane Building Co. holds “significant backlog” on remediation work at the Hunter’s Point former U.S. Navy base in San Francisco, says Karen Medeiros, executive vice president. The controversial cleanup site is being redeveloped for residential and commercial use.  She adds that the Biden administration’s American Jobs Plan outlines that $5 billion will be invested in remediation and redevelopment of brownfield and Superfund sites.
Increased government attention to standards for PFAS chemicals and a new push to remediate them is a developing Top 200 market niche. In response to New York state’s adoption of maximum contaminant levels last year for three emerging contaminants, H2M architects + engineers developed a pilot test program for water suppliers across the tri-state area that it anticipates will launch a new firm specialty, says CEO Rich Humann.
AECOM now is doing U.S. tests for its patented DE-FLUORO technology, with previous tests conducted at Australian sites, to measure PFAS contaminant destruction and byproducts formation, says Sweet. Jacobs’ PFAS approach “is looking toward nature-based kinds of solutions,” says Walstrom, noting “incredibly promising” pilot work undertaken for more than a year. 
Related to the energy transition, Kurt Beil, GHD northern hemisphere environment market leader, says the Australia-based firm is involved in 30+ blue and green hydrogen feasibility studies and pilot projects in key global markets. “We also see technologies born in the petroleum exploration and extraction industries reinventing and adapting to focus on carbon capture and sequestration,” he says.
Black & Veatch is doing a feasibility study for one of Brazil’s largest green hydrogen projects. “We are helping oil and gas learn how to harness ammonia to transport hydrogen to places without water supplies to make it,” says Sherer. Wood’s Troutt notes that “oil and gas companies have historic liabilities, and we help convert them to clean-energy assets. COVID has given us all a new mindset.”
Steve Nalefski, Burns & McDonnell environment services group general manager, says “utilities are evolving as proactive. They are looking at greenhouse gases, renewable energy, reducing their carbon footprint and ESG. We see more and more clients adding infrastructure design” to address “climate changes down the road—rising sea levels.”
He says “we can expect a more consistent approach” in the Biden administration. Companies want to be in compliance but they want consistent and predictable regulations, which are easier to manage.
Funding for water infrastructure is sure to increase well above recent $2.6-billion annual levels, with President Joe Biden seeking $7 billion a year for eight years and the Senate passing $6 billion a year, says Jon Freedman, Suez North America senior vice president for global government affairs. “Biden is absolutely committed to addressing climate change with an eye toward mitigating its effect on water,” he says, noting worsening droughts.  “We can do something about it,” Freedman says. 
The nearly $2-billion Northeast Water Purification Plant in Houston, the largest U.S. progressive design-build water plant project, is set to add 80 million gallons per day capacity when its first phase operates by January 2023, and another 240 mgd by 2025, says Walstrom of Jacobs, which is program manager in joint venture with CDM Smith. Freedman anticipates more funding for water recycling and reuse. “Stripping out the H20 molecule from wastewater is the most cost-efficient way to mitigate the effect of climate change on water,” he says.
Maryland-based American Contracting & Environmental Services Inc. grew by 38% in 2020 in its water and wastewater construction market, says Joe Godin, executive vice president. “This was primarily driven by our entry into the alternate-delivery market, including CM at risk, design-build and task order,” he says. “We were able to complete a much higher volume of work with similar levels of staff.” Godin notes a large number of regional projects set to bid in 2021. 
Backlog Trends | By Debra K. Rubin
Photo credit: Charter Contracting Co.
COVID-19 and energy market shifts cancelled or delayed project awards and execution for many Top 200 firms, but several ended 2020 with triple-digit backlog growth for next year and beyond. 
The 279% boost for consultant Ground/Water Treatment & Technology LLC (No. 191) resulted from “a long-term strategy of pursuing larger and more complex remediation projects. This was not a surprise,” says marketing manager Forrest Whitesides. “Our local/regional market slowed in 2020, but we are seeing that return to pre-pandemic levels this year.”
The pandemic also slowed revenue for remediation contractor ECC (No. 138) from its large stable of federal clients, but backlog grew 137% last year in part due to wildfire disaster response work in Oregon and California. This included a number of late 2020 awards. “With an increase in wildfires, hurricanes and earthquakes, we have been accustomed to backlog surges throughout our history,” says Madalyn Weber, marketing manager.
Charter Contracting Co. (No. 128) posted a 134% boost in backlog last year. “Several projects that were currently on Charter’s backlog and new work that was acquired in 2020 had a significant timing slide,” says Ashley Dell’Accio, marketing manager, including a  $10-million project awarded in December “that was 95% backlog.” Delayed work also includes major dredging and other construction tasks on the $36.5-million Muddy River Flood Risk Management project in the Boston area (right). “We dealt with a lot of unknowns, including delayed release of RFPs, plans and specs and regulatory approvals that created gaps and limitations in being able to forecast revenue projections,” she says.
Staab Construction (No. 171) attributes its 100% backlog hike to more anticipated competition in its core water and wastewater markets due to reduced commercial construction. “As a result, we took a more aggressive approach in our bidding strategy,” says company financial manager Shannon Remmen.
Looking at non-U.S. markets, list newcomer Dillon Consulting Ltd., Toronto, “continued to deliver environmental services to Canadian clients with minimal disruption in 2020,” says firm partner Tyler Barkhouse, although revenue was flat “due to many clients needing to hold the line wherever possible.” He sees projected growth for the next 12 months “on target at 10%.”
In the U.K., Mott MacDonald Group’s environmental business is also on the ascent. Spread over 21 countries, it grew 20% between 2016 and 2019 to $230 million, supported by 1,240 staff, says Denise Bower, external engagement director. She sees the U.K.’s developing environment bill as “a massive driver for environmental services” there. Introduced in 2018 but delayed by a general election and the pandemic, it is set to become law later this year. 
Firms also point to the European Union’s “Green Deal” as a major catalyst as it aims to become climate-neutral by 2050. Investment in renewables will target decarbonizing of energy production, which accounts for 75% of the bloc’s greenhouse gas emissions. Another goal is to cut energy consumption by improving thermal efficiency of buildings. The plan calls for $1.2 trillion in investments over 10 years, with up to 25% through public private partnerships.
Norway’s government last fall launched a 10-year carbon capture and storage program, initially targeting cement production and waste incineration sites. It expects to cover two-thirds of the estimated $3-billion cost, with the private sector making up the balance.
Bowers points to Australia as a key market, with environmental assessments “at the top of the agenda” in state and local infrastructure planning “especially in the key area of transportation.” But growing demand for environmental services is straining resources. With competition for staff, “we do feel constrained,” she says. “Many skills are not transferrable.”  
Firm in Focus | By Debra K. Rubin
Photo credit: Water Resources Group
As it moves past last year’s COVID-19 challenges, Water Resources Group (No. 83) is hopeful that its revamped and expanded corporate structure allows it to benefit from rebounding markets. The firm is a holding company for water and wastewater sector construction specialists Rice Lake Construction Group, based in Minnesota, and Stanek Constructors in Colorado and California. “Last year was a struggle … with all the uncertainty and unknowns on how things were going to go,” says Rice Lake President Wade Leonard, noting late budget decisions and numerous projects tabled. He says pandemic cost-sharing issues with owners “led to us skipping several projects.” Rice Lake has worked on 280 projects, including the $20-million upgrade of the Little Falls, Minn., water treatment plant (right) that will double its capacity when finished this year. “There will be more work to bid in the coming year but we now face the worker shortage that everyone else has,” he says. 
Dennis K. Alexandersen, who heads international business development for Germany-based BAUER Resources GmbH, said the firm plans regional expansion of its Middle East focus on constructed wetlands but also sees China as “a market with great potential,” despite still-continuing COVID-19 entry restrictions. “Asia is one of the most vulnerable regions on Earth to the impacts of global warming,” adds Aurecon’s Cox. “Its diverse geography and dense populations repeatedly face the full effects of climate change.”
With the Top 200’s challenges clear, AECOM’s Sweet contends that companies “may look back to 2020 as a renaissance for the environmental sector.” He sees further efforts to “revolutionize” how work is done and for the sector to “ascend to a higher level.” 
Data support by Jon Keller and Rebecca Pence

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As ENR Editor-at-Large for Energy, Business and Workforce, Debra K. Rubin has a broad vantage for news, issues and trends in global engineering and construction related to key areas that include global energy transition, corporate business and management, regulation and risk and next-generation workforce development.
Debra also launched and manages ENR's Top 200 Environmental Firms ranking, which defines key players in a vastly growing and changing global market; and is editor of ENR WorkforceToday e-newsletter on industry talent management. Click here to receive this free monthly newsletter.
She also is a key organizer of ENR's annual Groundbreaking Women in Construction conference, a major AEC industry forum for talent management and women's career advancement. Click here for more detail on plans in formation for the next live event.
Mary B. Powers has reported on engineering and construction issues in the global energy and environmental sectors for more than 30 years from Washington, D.C. and Birmingham, Ala.  She formerly wrote for the Platt's group of energy sector publications under McGraw Hill and S&P Global that included Inside Energy and Megawatt Daily, and was state editor for the Lexington, Ky., Herald Leader. Mary has a master’s degree in journalism from The American University.
 
Peter Reina is Correspondent London, U.K.

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