Regulations that are the bane of one industry often create opportunity for another.
That has been the case in the environmental realm, where the expansion of regulations has increased demand for consulting services.
At the same time, the effectiveness of some of the regulatory protocols over time has caused a shift in the way some environmental consultancies approach the business.
Magali Delmas, a professor of management at
UCLA’s Institute of the Environment and the Anderson School of Management, said the number of accidents involving hazardous waste and toxic substances has declined over the past 30 years, in large part because businesses produce fewer toxic substances and are better at treating the hazardous waste they do produce.
Few expect that landscape to be altered significantly as the Trump administration moves forward on cutting some regulations.
That outlook is especially true in California, where state and regional regulators still hold sway.
Eddie Arslanian, a principal and director of operations for the Southwest business unit at environmental consulting firm Ramboll Environ Inc., said demand remains high for consulting services related to air quality in Los Angeles, particularly after highly publicized industrial pollution incidents.
“There are new regulations that are arising out of local situations that have occurred,” said Arslanian. “Agencies are now taking tougher stances.”
He said his company is expecting to see some cutbacks nationally if new policies are put in place but he does not think there will be much of a cutback in California. The state’s environmental regulations are even stricter than those at the federal level, so changes in national policy will have a greater impact on other states and a lesser effect on California.
The federal Environmental Protection Agency sets health-based standards for air quality that all states must achieve, but California has other requirements that businesses in the state must meet. The South Coast Air Quality Management District, which covers all of Orange County and the nondesert regions of Los Angeles, San Bernardino, and Riverside counties, for instance, is responsible for developing and implementing a plan to reduce air pollution from all stationary sources of emissions.
Arslanian said AQMD and other state agencies have been taking tougher stances on such pollution risks, an ongoing source of business for Ramboll.
“When dealing with local agencies such as the South Coast Air Quality Management District, it is better for businesses to band together through trade organizations to give them a better place at the table with the agencies,” he said.
Remediation expectation
Phillip Nicolay, vice president and client director at Arcadis, a Dutch environmental and engineering services company with offices downtown, said his firm has seen demand drop for some types of work.
“Over time, there has been a reduction in site assessment and remedial investigations, which may be because many of the sites were identified years ago and have been assessed with some sort of remedial action already undertaken,” he said.
Nicolay said he expects demand for such services to rise again as new regulations on toxic substances are passed and emerging contaminants gain the attention of regulatory bodies. Examples of the latter include NDMA, which was formerly used in the production of rocket fuel and is an unintended byproduct of chlorination of wastewater at treatment plants, and 1,4-Dixone which is found in paint strippers and dyes.
He said Arcadis has also seen its local businesses impacted by additional stormwater regulations.
“Complying with storm water regulations for existing businesses, construction sites, and by cities has ramped up as the California Regional Water Quality Control Board has increased enforcement and inspections,” Nicolay said.
State pressure
California’s policies are likely to continue affecting the way businesses around the country manage their environmental impact, UCLA’s Delmas said. For example, car manufacturers will likely still comply with the state’s emissions standards and make investments to make their vehicles cleaner because California is a huge market.
While regulations are one factor that drives businesses to be more eco-friendly, cultural factors are another influence on this behavior. The implementation of environmental regulations created a movement among consumers to shop at businesses that tout being ecologically conscientious, Delmas said.
“I can see the new generations coming in care much more about the environment and want to make a difference in their purchasing choices,” she said. “Now there is a demand, beyond regulations, for firms to be more responsible.”
Some of the environmental consulting firms said they even see businesses going beyond what is legally required to be more environmentally friendly.
Ramboll’s Arslanian said companies can benefit from making their business greener, even if there are other costs associated with this. Businesses are conscious about the public’s perception of them and are aware of the PR they receive globally.
“Some clients are being more proactive and go beyond what regulations require,” he said. “Ultimately, it does make sense for their bottom line.”
