Our operating performance | Environment and Climate Solutions Market context Multiple drivers continue to support strong interest in our environmental and climate-based professional services. These include the need to address climate change through decarbonisation and the need to mitigate against more extreme weather conditions. Services that can help organisations address Governmental priorities, meet societal expectations around environmental quality, drive corporate behavioural change and provide purpose-driven outcomes for customers are particularly in demand, both now and in the foreseeable future. Our main market presence in the environment and climate sector is in Australia, extending into the adjacent Pacific market. Market conditions for environmental consulting over the past year in Australia have generally been favourable but competition remains strong from both larger engineering firms and small operators. In the UK, the hosting of COP 26 in Glasgow in November 2021 acted as a major spur for climate-related investment and interest as noted by the national Climate Change Committee’s work during 2020/2021: the UK’s Sixth Carbon Budget (Dec 2020); a report to UK Parliament (Jun 2021); an independent assessment of the UK’s Net Zero Strategy (Oct 2021); and the release of the new Environment Act (Nov 2021). As business, industry and governments face greater public scrutiny on environmental issues, we provide the expertise that they need to measure, monitor and manage environmental risks. In the defence sector, the UK Ministry of Defence Climate Change and Sustainability Strategic Approach was released in March 2021 and the Defence Equipment & Support Environmental Strategy launched in May 2021. These policy drivers resulted in the initiation of action at multiple levels and across all HMG-Defence related agencies. Following legislation to make climate risk disclosure mandatory in New Zealand and the outcomes of COP 26, many government and share/stock exchanges are also now moving towards the introduction of mandatory climate risk disclosure. In our Asian markets, this includes the Singapore Exchange’s announcement in late 2021 regarding mandatory disclosures. All disclosures will need to be supported by technical climate risk assessments across decarbonisation and physical risk. Environment and climate markets in North America remained strong, particularly with the Biden and Trudeau administrations announcing further investment in climate action post-COP 26. This is underpinned by investment in climate and natural hazard mapping work at both state and municipality level. Across all markets, COVID-19 remained a significant factor in influencing the pace of environmental investment, causing uncertainty on project budgets, planning, timing, and logistics (esp. travel and fieldwork) for many customers. Performance With many consultants positioning themselves in the broader ESG sphere, environment and climate was a highly competitive market during the reporting period. Customers have been able to demand quick turnarounds for bids and projects, which impacted our delivery and workflow/cashflow. Within the UK, we continued to deliver our niche environmental services markets across the oil and gas sector (predominantly supporting customers in the North Sea with environmental permitting), floodplain management and broader sustainability services as part of defence and other UK Government contracts. Opportunities to apply this expertise to a broader subset of marine industries to support the transition to a low carbon economy were explored. The flood mapping and modelling market remained stable, although much of the investment continues to be driven by large ‘framework’ contracts through the UK Central Government, which we can only access through larger partners. In Australia, our technical expertise is well-known and is held in high regard, especially in states such as Queensland, New South Wales, Western Australia, and Victoria, where our flood modelling, coastal engineering, aquatic ecology management, climate risk and environmental approvals for infrastructure projects were in demand. Overall, climate-related work in Australia was steady with a healthy pipeline of proposals and leads. We have won a major piece of work in the Pacific (with SPC) at the end of 2021 which continues our push into the wider region. BMT Group | Shaping our future 20
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