Increased focus on environmental, social, and governance (“ESG”) investing is changing the landscape for the environmental services industry and its investors. In the U.S., environmental services is a ~$400 billion industry with stable and steady growth that’s expected to continue through the next decade. Growth is driven by a dynamic regulatory landscape, increased corporate commitment to sustainability, and a continued emphasis across the U.S. on recycling and reuse.
As we describe in our new report (download below), the industry’s subsectors have a varying level of attractiveness and fragmentation. Water-related services is the largest subsector, followed by solid waste management and recycling. Of comparable size to waste management is specialty services, where growth is projected to be greater than industry average.
While there are distinct characteristics and important nuances to each subsector, all are well positioned to benefit from a number of favorable end-market, regulatory, and ESG trends:
- Diverse end market exposure. Environmental services are integral to companies operating in the largest markets of the U.S. economy. While demand for services varies across water, air, and solid and hazardous waste disposal, each is critical to maintaining regulatory and market-driven ESG compliance.
- Strong regulatory and investor-driven tailwinds. The industry is supported by a robust framework of environmental regulations, in addition to growing investor appetite for firms that are environmentally and socially responsible.
- Fragmented market landscape. The environmental services market remains fragmented, with market participants ranging from highly specialized technical players to diversified national players offering a large suite of complementary services.
- Sustained acquisition appetite among strategic and financial buyers. There is a highly active group of sponsor-backed strategic acquirers, plus significant M&A activity in the sector.
In our new report, “Opportunities in Environmental Services,” we provide an overview of the North American environmental services market, explore trends and areas of focus in M&A, and provide a framework for exploring investment opportunities in the sector.
Download the full report to learn more.