Roland Berger has successfully completed its acquisition of Amane Advisors, a strategic consulting firm specializing in water, and resource and energy recovery.

With the acquisition of Amane Advisors, Roland Berger strengthens its expertise and offering in water consulting and builds a leading position in this field. The two consulting firms are a strategic and geographic fit, with complementary offerings in water and waste management. Amane Advisors becomes an integral part of the dedicated water consulting team at Roland Berger and will be fully integrated.

Stefan Schaible, Global Managing Partner at Roland Berger: “We are delighted to have the team of Amane Advisors joining our Roland Berger family. With our new colleagues, we welcome experts with a strong network and many years of experience in the industry. Together, we will be able to develop even more comprehensive and tailored solutions for our clients. The acquisition is in line with our strategy of embedding sustainability in all our projects and is another step on our way to achieving EUR 2 billion in revenues by 2028.”

Geoff Gage, Senior Partner at Roland Berger and former Managing Partner at Amane Advisors: “Studies show the financial impact of climate change will primarily be felt through the water cycle, meaning the demand for strategic advice on water has never been greater. We believe we have found the ideal place, in Roland Berger, to empower and support a wide range of businesses, utilities, and municipalities across the globe in developing, optimizing, and scaling water-related solutions to meet the challenges and capture the opportunities ahead. We look forward to leveraging our passion and expertise to demonstrate water as the critical enabler that it is and to benefit Roland Berger clients around the world.”

Headquartered in Oxford, UK, and with c. 50 professionals in seven offices worldwide, Amane Advisors leads more than 100 strategic projects across the water, waste and energy recovery sectors each year. The company has extensive industry expertise and proprietary water and waste knowledge assets. Blue-chip companies, public organizations, and investors in the water industry based in Europe, North America, and the Middle East make up the majority of Amane Advisors’ clients. Historically, Europe has been Amane Advisors’ strongest market, but the company has experienced particularly strong growth in North America in recent years.

Against the backdrop of progressing climate change, water management has become a top priority for business and governments. Relevant actors in the water ecosystem, such as investors, suppliers and utilities are facing complex business and environmental challenges and increasingly require in-depth knowledge and timely insights on diverse end markets, niche sectors and emerging technologies. This leads to an increasing need for advice. Roland Berger’s water consulting team will provide insight and support decision-makers that need to navigate these strategic challenges.

 

Welcome to 2024! It’s a new year, filled with new opportunities, as well as all too familiar challenges. 2023 was the hottest year on record, but if current trends continue, it could be the ‘coldest’ year from here on out.

Amane Advisors’ Bill Malarkey

Climate change continues to stress existing water resources and infrastructure, new regulations and emerging contaminants are upping the stakes for businesses to act, and the number of investors eager to increase their exposure to water-related opportunities outnumbers the availability of attractive water deals.

In essence, it’s a risky business environment and leaders must be proactive in seeking out new solutions and strategies to get ahead. This ‘risk ready’ issue of currents looks at risk from a number of angles.

Businesses face both ‘upstream’ and ‘downstream’ water risks – many of which can have a material impact on operations. In our lead article, Ida Johansson and Mairi Dean explore the need for a holistic approach to water risk and why the quality of the water businesses take in is just as important as the wastewater they push back out.

Investors are thirsty for quality water deals but face ample competition and soaring valuations. Our Partner Bastien Siméon offers how investors are likely to uncover the best opportunities.

Millions of Americans are being exposed to contaminants in their drinking water. US-based consultant Mairead Helmes looks at three communities grappling with different water pollution challenges.

Corporate disclosure of water risks promotes transparency, but does it result in more businesses taking meaningful action? We’ll hear from Radhika Mehrotra, Associate Director, Capital Markets at CDP about the changing attitudes toward water risk.

We’ve got all that plus the latest events and company updates – including the exciting announcement that Amane Advisors will soon become part of Roland Berger, specifically to grow its water consulting capabilities.

This combination is a testament to the trust and extensive expertise and networks we’ve built in water over the last decade as well as the growing urgency for businesses, utilities, and government organizations to develop robust water strategies, implement and scale innovative climate adaptation solutions , and embed sustainability in their operations and practices. The deal is set to be finalized in the first quarter and we look forward to sharing more details about what’s ahead!

As always, we wish you happy reading and welcome your ideas, input and feedback!

Sincerely,
Bill Malarkey


Quick links to this issue’s stories

Professionals from across the waste management industry descended on London in November to discuss the latest trends and technologies impacting the refuse-derived fuel (RDF) sector. The annual RDF Conference brought together industry leaders and experts to explore key policy changes, market dynamics, technological innovations, and the future landscape of waste management in the UK and EU.

From advances in waste sorting and pre-treatment, to sustainable waste shipping logistics and the international importing and exporting of waste, the conference covered many of the opportunities and challenges facing the sector.

The UK is reliant on exports to manage its waste, shipping out around 10 million tons of “Green List” waste and another 2.1 million tons of notifiable waste. Experts say, however, that illegal exports result in more than £17 million in environmental and social costs overseas a year and undermine the legitimacy of the waste sector.

Regulatory changes will take effect from April 2025, including ushering in new charges and a ban on plastic exports to non-OECD countries, among other updates. Attendees also discussed the need to view waste incineration not just as a solution for waste disposal but also as a means of energy production, (especially in light of growing concerns over energy security) as well as the latest efforts to decarbonize waste shipments ahead of new regulations under the EU ETS 2024.

Amane Consultant Phoebe Thomas attended the event to learn more about the latest developments.

“Most of my waste experience to date has been focused within the energy-from-waste (EfW) sector, so it was fascinating to learn more about the variety of applications for RDF, including dimethyl ether (DME) within the LPG industry and cement; with ~23% of thermal energy for cement production coming from SRF/RDF currently in the EU,” said Thomas.

“The current ‘market crunch’ is predominantly driven by the looming UK and EU ETS, coinciding with an increase in country self-sufficiency; with ~ 19 EfW plants under construction in the UK between 2023-2027 set to increase capacity to ~20.7Mt.”

“It’s clear the future of RDFs is multifaceted, and the key will be how the industry adapts and scales solutions to cope with the changing regulations and market dynamics; with growing competition for waste feedstock and an unlikely UK export ban, despite great lobbying efforts.”

In a time marked by an unprecedented surge in global water demand, coupled with expanding urban populations and the overexploitation of freshwater resources, the threat of water risk looms as a critical challenge with far-reaching consequences. Here, we outline some of the potential threats and highlight the urgent need for sustainable water management practices.

Clean, high-quality water is on track to become an increasingly scarce commodity. At the current pace of industrial activity, we can expect a 53% shortfall in global water supply by 2050. Simultaneously, many cities are dealing with the effects of climate change, including increasingly frequent and intense weather events. These problems are not only a concern for individuals and communities but pose a profound threat to business operations worldwide.

Water risk is not confined to arid regions or distant future scenarios; it is a pressing issue that has the potential to disrupt businesses across industries here and now. From manufacturing and agriculture to technology and hospitality, enterprises face multifaceted risks stemming from inadequate access to a steady supply of clean water and the effects of unpredictable weather. The business impact will manifest in various ways, ranging from operational disruptions and increased production costs to reputational damage and regulatory challenges.

Here, we outline the key risk categories with the goal of highlighting the urgent need for sustainable water management practices and the pivotal role businesses must play in securing a resilient future.

For businesses, water risk manifests in a variety of ways across several key categories:

Physical Risks

  • Drought and Water Quality Concerns: Water scarcity due to prolonged droughts can lead to reduced water availability for operations – affecting agricultural processes and energy generation. Declining water quality poses health risks to employees and communities, potentially leading to increased healthcare costs and reputational damage.
  • Flooding & Severe Weather Impacts: Beyond the immediate damage to your infrastructure and operational equipment, flooding can also disrupt supply chains; leading to production delays and increased recovery costs. It may also necessitate investments in resilient infrastructure and flood defenses to mitigate future risks.

Financial Risks

  • Price Volatility: Fluctuations in water availability can lead to price volatility for goods and services. Companies relying heavily on water-intensive processes may experience increased production costs – affecting profit margins and competitiveness.
  • Insurance Challenges: Water-related damage may pose challenges for businesses in obtaining insurance coverage, especially in regions prone to floods or other future water-related disasters.
  • Investor Relations Risk: Investors are increasingly considering water-related risks and sustainability in their investment decisions. Poor water management practices can negatively impact a business’ standing in Environmental, Social, Governance (ESG) evaluations and hinder efforts to raise capital or finance new opportunities.

Operational Risks

  • Supply Chain Vulnerability: Dependency on suppliers in water-stressed regions increases the vulnerability of the supply chain. Inconsistencies or reductions in the availability of raw materials or ingredients due to water scarcity can result in increased costs and cause production or shipping delays.
  • Production Zone Changes: Shifting weather patterns or water availability may necessitate changes in production zones. This could result in increased transportation costs, the need for new infrastructure investment, and potential disruptions to established production processes; affecting overall operational efficiency.
  • Stranded Assets: Investments in water-intensive assets may become stranded due to changing environmental conditions or regulatory requirements. This poses financial risks as companies may need to write down the value of stranded assets or invest in costly retrofits.
  • Business Continuity Risk: Inadequate contingency planning for water-related disruptions may result in extended downtime and exacerbate near-term financial losses.
  • Innovation Risk: Failure to adapt and invest in innovative, water-efficient technologies or infrastructure may lead to increased operational costs and resource inefficiency and can hinder future growth.

Regulatory Risks

  • Government Action: Failure to anticipate and adapt to changing regulations related to water use, allocation, or quality standards may result in legal and financial repercussions, including potentially losing the license to operate.
  • Legal Consequences: Non-compliance with water-related regulations can lead to legal action, fines, and sanctions.

Reputational Risks

  • Consumer Perception: As corporate sustainability commitments become increasingly important, consumer concerns about a company’s water management practices can negatively impact brand image and loyalty.
  • Community Opposition: Resistance from local communities to projects perceived as water-intensive or environmentally harmful can lead to broader reputational damage.

Workforce Risks

  • Employee Productivity: Water scarcity can affect employee well-being and productivity, especially in regions facing water stress. Implementing water conservation measures and ensuring access to clean water for employees can contribute to a healthier and more engaged workforce.

 

Radhika Mehrotra, Associate Director, Capital Markets at CDP

New government regulations are expanding efforts to protect water resources and improve resilience, but given the scope and increasing severity of water risk, it’s clear that strong private sector leadership is critical to accelerating action and scaling impact. CDP operates a global disclosure system to help investors, companies, cities, states, and regions manage their environmental impacts; promoting greater transparency and accountability.

We spoke with Radhika Mehrotra, Associate Director, Capital Markets at CDP about changing attitudes toward water risk, how businesses are striving to get a handle on their risks, and key drivers for action in the year ahead.

Amane: CDP’s latest Global Water Report (2022) noted an 85% increase in disclosure of private sector water data over the last five years. What role have investors been playing in encouraging further disclosure from across the private sector?

Ms. Mehrotra: Investor interest in water security has expanded, reflected in part, by the private sector call-to-action during the 2023 UN Water Conference, the growing focus on nature-related impacts and dependencies, and its role in meeting net zero ambitions.

Disclosure numbers are also continuing to grow. In 2023, a little over 4,800 companies disclosed water-related data through CDP, including 43% of the FTSE 100 and 41% of the S&P 500.

Source: CDP

Investor intervention ranges from direct engagement to financial innovations through sustainability-linked loans. In 2022, CDP’s Non-Disclosure Campaign, through which financial institutions can directly engage with non-disclosing companies on providing transparency through CDP’s water disclosure, saw a 50% increase in companies engaged.

Amane: What types of data are proving to be the most useful to investors in assessing water risk in investment opportunities?

Ms. Mehotra: The CDP questionnaire takes a comprehensive view of corporate water management across risk exposure, water-related targets, governance and strategic integration and water-related opportunities. The companies that we engage with are identified based on a materiality assessment that ranks industrial activities according to their potential impact on water quantity and quality. Investors that are at early stages of building their awareness use this assessment to identify priority sectors and companies for more targeted engagement and analysis.

For a deeper company and sector analysis, investors typically look at a range of quantitative and qualitative indicators to assess companies’ resiliency – primarily water accounting metrics such as withdrawals including facility level disclosures, localized water risk assessments, and water-related opportunities across the business. Financial products linked to water efficiency are also emerging. In 2022, Spanish Power Utility company Iberdola signed a sustainable credit facility for €2.5 billion through a syndicated loan led by BBVA. Two sustainability criteria assigned for this loan included a) Iberdola meeting its reduction targets on water consumption; and b) disclosing its water strategy and metrics annually through CDP while maintaining its evaluation score.

Amane: What’s the relationship between disclosure and companies acting on water?

Ms. Mehotra: CDP’s best practice questionnaires and standardized annual disclosure process build discipline and accountability. The insights from the annual dataset enable not only investors but also companies themselves to benchmark against their peers and monitor their progress.

From our 2022 dataset we can already see growing ambition – 58% of companies reported that they are maintaining or reducing their water withdrawals and 63% completed a water related risk assessment. This is also aiding corporate decision making and financial benefits with up to US$79 billion of investment identified to reduce water risks.

For instance, in 2022, Nissan Motor Corporation identified water related financial risk of US$190 million from water stress at specific facilities in Mexico and India. The company set and met targets to reduce water withdrawals by 23% per vehicle produced that prompted investments in wastewater recycling and rainwater harvesting, which also contributed to lower annual water bills of approximately US$4 million per year.

Amane: What tactics are you seeing corporates adopt to improve water efficiency, reduce pollution or to better integrate water into their strategy?

Ms. Mehotra: Improving water efficiency in both processes and products is the most common business opportunity, identified by 53% of companies across all sectors in 2022. This is driven by consumer expectations, regulatory oversight and business resiliency in the face of extreme weather events.

For example, Fujifilm is leveraging technological innovations to expand into water filtration using their ion-exchange membranes that are designed to contribute to the treatment of 35 million tons of water per year by 2030.

L’Oreal recognizes consumer’s preferences as a key driver of product innovation such as their ‘Waterless’ program designed to reduce the end users’ water footprint by 25%. The company is also developing labels that carry the environmental and social impacts of their products, such as water stress and ecotoxicity. Water-efficiency labels are expected to be introduced in some markets such as the U.K. by 2025 to help drive down water-related costs.

Amane: Many businesses tend to limit their water strategy by focusing solely on their internal operations. Do you see a need for more businesses to think ‘beyond the fence’ and work more collaboratively with external stakeholders on water issues?

Ms. Mehotra: Absolutely. Companies are beginning to look more outwardly at water strategy, particularly in two specific areas. First, companies are increasingly aware that the health of the river basin is synonymous with the health of their business, and that collaborating with others who rely on river basins may be the most efficient and effective means by which to achieve positive change. This is also acknowledged in the TNFD recommendations on stakeholder engagement and Science Based Targets for Nature guidance.

Second, from a supply chain perspective, companies are realizing that it is in the early stages of the value chain where most impacts, dependencies and risks lie. Early analysis from CDP’s 2023 Water dataset indicates that only half of the companies included their supply chains in water risk assessments. The bottom line is that enhanced collaboration between companies, supply chains and local actors including indigenous peoples, smallholders and other local communities, will be critical for securing water access, reducing water security risk, enhancing reputation and contributing to wider environmental and social goals.

Amane: From severe heat and drought conditions to historic flooding, 2023 was a harsh reminder of the ways in which water can and will continue to impact businesses. What are some of the more positive headlines or milestones that give you hope for the future?

Ms. Mehotra: There were several market signals that reinforced the mainstreaming of water management. Some of these include the 2023 UN Water Conference, where for the first time in 46 years, Heads of State met to discuss international water policy. Also, water was included on the official agenda at COP27 for the first time.

In the financial sector, we saw the Network for Greening the Financial System (NGFS) acknowledge and make recommendations on nature related economic and financial risks, and the launch of the TNFD framework – both of which are valuable to further drive integration of water security within risk management.

Amane: What are some of the key drivers or influencing factors you’re keeping an eye on as we move into 2024?

Ms. Mehotra: 2024 has many firsts – the TNFD framework is being driven by companies and financial institutions and will galvanize water, deforestation, biodiversity, ocean health disclosures and support the transition to net zero. Also, the Corporate Sustainability Reporting Directive (CSRD) comes into effect in Europe requiring disclosure on climate change as well as water, biodiversity and circular economy.

We are excited to work with our stakeholders on streamlining these disclosures through the CDP questionnaire to further build on our water and deforestation programs. And, of course, please keep an eye out for the CDP 2024 Global Water Report, due out this Spring.

In the United States, the expectation of clean and safe tap water is, unfortunately, not always the reality. A complex combination of factors is exposing millions across the country to drinking water contaminants – many with the potential to cause significant health problems. In this article, we spotlight three different regions that are grappling with different drinking water pollution problems.

In most parts of the United States, there is an expectation that clean, safe water comes out of the tap. Consumers trust that water is suitable for drinking, washing dishes, or showering – and that it’s safe for their children and pets. But in some areas, however, that expectation does not meet reality. A complex combination of factors – including chronic underinvestment, aging infrastructure, population growth, pressure from changing weather patterns, and socioeconomic issues – has resulted in conditions in which industrial discharge, agricultural runoff, and sewage overflows pollute clean water sources and threaten public health in locations across the country.

The potential impact of these contaminants can be devastating – ranging from acute symptoms to chronic, irreversible health problems. Without significant investment in our nation’s water infrastructure, Americans are likely to experience increasing threats from existing and emerging contaminants.

We’re shining a light on three regions grappling with different drinking water pollution problems to highlight the challenges being experienced across the country, and some of the potential solutions.

Lead contamination in Buffalo, New York

When you think about the issue of lead contamination, the city of Flint, Michigan often comes to mind. But while this is one of the most well-recognized recent examples in the United States, the reality is that many cities struggle with elevated lead levels in water. The problem is especially prevalent in older urban and industrial centers such as New York City, Chicago, Detroit, and Los Angeles, or areas in which houses were built before the ban on lead pipes in 1983.

One lesser-known example is Buffalo, New York, where a report by the National Resources Defense Council stated that more than half of the city’s 68,000 water service lines were projected to contain lead.

Old lead pipe in need of replacing

Lead is a neurotoxin, and while it’s harmful to everyone, children are particularly at risk. Early exposure to lead is shown to disrupt organ development, including brain, bone, and cardiovascular development, potentially leading to permanent cognitive deficiencies, behavioral issues, and chronic illnesses. The New York State Health Department says just under 6% of Buffalo children tested for elevated blood lead levels between 2000 and 2014 – that’s three times the rate in Flint.

Ten to twenty years later, it seems authorities are yet to make much progress in replacing potentially harmful water lines. Census data found that Buffalo had the oldest housing stock of any major city in America as of 2019, and news reports dated from last June state that only 1,700 of the more than 40,000 potentially problematic water service lines had been replaced so far. Water authorities estimated that replacing the remaining lines could take 20 years and cost up to $500 million.

With lead service lines being the main culprit behind lead contamination, total replacement of impacted lines is the best solution. However, this comes with its own challenges. Replacing outdated infrastructure is expensive and time-consuming and it’s not always easy to tell which lines are most impacted, especially if some lines are privately owned. The city has recently partnered with BlueConduit to use data analytics and machine learning to map its pipes and has been actively working to replace them. Still, as authorities have suggested, significant funding will be required.

Buffalo is not alone in this challenge. Today, more than nine million American households connect to water through lead pipes and service lines and children, toddlers, and teenagers in 400,000 schools and childcare facilities are at risk of exposure to lead in their water. Recent legislative action may help accelerate the transition.

In 2021, the Environmental Protection Agency (EPA) allocated $3 billion in Bipartisan Infrastructure Law funding for lead service line replacement. Furthermore, in November, the EPA announced a proposal to strengthen its Lead and Copper Rule, which would require water systems across the country to replace lead service lines within 10 years.

High nitrate levels in Southeast Minnesota

Minnesota is known as the ‘Land of 10,000 lakes’ but while its bodies of water may look pristine, experts have found widespread evidence of a potentially dangerous contaminant. In the state’s Karst region, authorities have found high levels of nitrates in the public water systems and underground drinking water sources, such as wells – potentially impacting up to 390,000 people.

Nitrate is not an emerging contaminant; it is a naturally occurring compound from processes such as plant decay and can be present at healthy levels in food such as carrots. When produced in nature, the levels are usually less than 3 mg/L, however, in Minnesota, authorities have found levels exceeding the maximum contaminant level of 10mg/L.

Consuming too much nitrate impacts oxygen levels in the body and can cause methemoglobinemia (also known as blue baby syndrome), which can lead to illness, cramps, vomiting, and even death. Those with compromised immune systems are most at risk.

Photo: Water flowing across a farm field after heavy rain

Nitrates are also harmful to the environment, resulting in algal blooms that can kill off fish and other marine life. In Minnesota, algal blooms have impacted more than 900,000 lakes and 93 coastline miles. These blooms also impact tourism, with an EPA study finding that algal blooms resulting from nutrient pollution cost the tourism industry $1 billion a year in losses.

High nitrate levels (above 10mg/L) are often the result of discharge from sewage systems, runoff from agriculture or fertilized soil, wastewater, landfills, animal feedlots, and septic systems. Therein lies the challenge of removing or preventing excess nitrates in water; it can be difficult to pinpoint the exact source of the problem. In Southeast Minnesota, the problem is exacerbated by the area’s porous geology; the region is uniquely vulnerable to groundwater contamination produced by agricultural runoff. This “non-point source pollution” is the leading cause of water quality problems.

Since the EPA does not have any regulations to enforce here, they rely on economic incentives to landowners such as subsidies to promote pollution mitigation efforts as well as a volunteer monitoring program. For Minnesota, the EPA has recommended additional measures such as modifications for the state’s Nutrient Management guidelines to change the land application of fertilizer as well as the NPDES permits for concentrated animal feeding operations such as pig farms.

As always, new regulations help drive change but they’re not a silver bullet. It’s worth considering how new technology could also help track and reduce nutrient and sediment runoff from agricultural lands. There is a long road ahead, however, as other funding and solutions are needed; voluntary monitoring programs will not be strong enough to change the tide.

PFAS in Brunswick County, North Carolina

Per- and polyfluorinated alkyl substances, better known as PFAS, have garnered global attention in recent years. Initially created in the 1940s for use in fire and water repellants, these “forever” chemicals have been used for decades in household products, non-stick cookware, firefighting foams, food packaging, and cosmetics.

Over time, the chemicals have slowly infiltrated natural environments and inside human bodies. They have even been found in infants, due to in utero exposure. Overexposure to this chemical has been linked to health problems such as kidney and testicular cancer as well as reproductive, liver, and thyroid issues, with more ailments being discovered yearly.

Discharging waste into the Cape Fear River Credit: Jeremy Lange

While PFAS is found across the country, Brunswick County in North Carolina has some of the highest rates of PFAS in water, including the presence of GenX, a man‐made chemical used in manufacturing nonstick coatings and for other purposes, in the Cape Fear River. Samples taken in 2019 showed PFAS concentrates of 185.9ppt, with the EPA recommended limit being 4 ppt. Unfortunately, the impact of this increased exposure may be evident in the region’s cancer rates, which at 276 cancer deaths per 100,000 are much higher than the national average of 149.4.

Since the initial discovery of GenX in 2016, Brunswick County has taken action to mitigate the contamination by partnering with CDM Smith to implement advanced reverse osmosis water treatment into its water treatment plant to reduce PFAS to near undetectable levels. The plant is expected to be finished in December 2024. Until then, point-of-use water systems can be used, although this may be cost-prohibitive for many households.

The EPA is in the process of setting up a National Primary Drinking Water regulation for six PFAS chemicals, but residents in many towns, cities, and states across the country already have been exposed to high PFAS levels for years.

More immediate investment is needed for utilities to mitigate the damage, especially in high PFAS areas, but with the EPA estimating it will cost $772 million a year for drinking water systems to comply with proposed new guidelines for “forever chemicals” in drinking water, the question remains, where will that money come from, and who is footing the bill?

The multifaceted nature of water pollution demands a comprehensive and collaborative approach that involves governmental bodies, communities, and private entities. Addressing these issues requires innovative technological solutions, sustained financial investment, stringent regulations, and a collective commitment to safeguard the fundamental right to clean water for all citizens.

When did you know you wanted to work in the water sector?

I first became interested in the water sector after studying Civil Engineering at university. There, I was afforded the opportunity to undertake a summer research placement in Chile, where I explored sustainable means of saving water in the Chilean mining industry. However, my passion for water and sustainability deepened once I started working as an Engineer in Buro Happold’s Water Group. There, I was exposed to a range of challenging projects relating to both flood risk and water resource management – topics that I find particularly interesting, particularly in the context of climate change.

What do you like best about your job and why?

At Amane, I benefit from having an excellent peer group with diverse backgrounds. The people I work with are great at what they do. We all get along and support one another, which fosters a really positive work environment.

I also love having the opportunity to work on impactful projects with sustainably-minded clients, including on topics related to water risk. This type of work is critical in the context of growing water scarcity and climate change and it’s been rewarding to support organizations in better understanding how water impacts their strategic operations – or how it will in the future – and develop strategies to mitigate their risk.

What has been the biggest surprise about working at Amane Advisors?

I am surprised that a relatively small team is able to so effectively serve clients globally across such an extensive range of projects – both in terms of topic and scale. The commitment that we have to solving client problems is really quite impressive!

What three words would you use to describe Amane Advisors?

I would describe Amane as:

  • Client-oriented: We are passionate in our dedication to meeting and exceeding client expectations.
  • Dynamic: We’re always adapting to meet the needs of our projects.
  • Accessible: As a small team, we work closely with colleagues at all levels – from Intern to Partner, which creates lots of opportunities to learn and grow.

Photo: Mairi swaps the hustle and bustle of Paris for a stroll in scenic Fontainebleau.

What three words would your colleagues use to describe you?

To answer this one, I decided to ask around the office, and the words that came up included:

  • Considerate
  • Sharp
  • Solution-oriented

I think these probably emerge because I enjoy working as part of a team, and take a very collaborative approach to working with my colleagues. I like to ensure that each member of the team is having a positive experience on the project, taking both their personality and expertise into account. My foundation in engineering has also influenced how I think, and helps me to cut through the noise and focus on solutions; rather than dwelling on problems.

Name something about you that most people would find surprising.

This question has made me realize that I should probably build more mystery into my character, as I don’t consider myself to be particularly ‘surprising!’ I’d say I’ve always been surprisingly strong…I was even born with wee baby-biceps!

What are your favorite activities outside work?

I love being outdoors and, in particular, enjoy swimming, hiking, and cycling – especially home in Scotland, where I can easily access nature. Since moving to Paris, my main hobby has been (indoor) bouldering. I love it because its really sociable, with options for any level, and it is satisfying to problem solve how to get to the top!

Investor interest in the water sector continues to grow, but 2023 saw a drop in the total number of water deals, and fierce competition with high valuations for the ones that were on the table. In this article, we’ll look at some of the reasons behind this competition and highlight where opportunities can be found in the year ahead.

In 2023, the M&A market was significantly hindered by recession concerns, the rising cost of capital, and general economic uncertainty. While the overall number of water deals declined significantly compared to previous years, we still saw circa 300 transactions through October of this year, likely buoyed by a growing demand for environmental, social, and governance (ESG) initiatives and the availability of ‘dry powder’ investment capital. Several mega-deals were closed in 2023 – most notably the acquisition of Evoqua by Xylem in an all-stock transaction that reflected an implied enterprise value of approximately $7.5 billion. The merger aims to address global water challenges by combining Xylem’s expertise in water solutions with Evoqua’s advanced treatment capabilities.

In Europe, Veolia continued to divest part of its activities as part of the Suez acquisition agreement, with Italgas acquiring its interests in long-term concession companies running water services in Lazio, Campania, and Sicily for more than €100m. Moreover, Veolia sold SADE, its subsidiary specialized in the construction and rehabilitation of water and infrastructure networks.

Whether seeking to invest in corporates or operating infrastructure assets, strong investor appetite for the water sector translated into fierce competition in 2023, particularly in more mature markets such as the United States of Western Europe, as many investors focus more on OECD countries.

Particularly for infrastructure assets, we noticed that the attractiveness of opportunities, coupled with the significant availability of capital to be invested, and an illiquid secondary market resulted in a shortage of opportunities and higher valuations across the board.

Let’s look at a few reasons behind this trend and explore the potential implications for investors as we move into 2024, with a specific focus on infrastructure assets.

The competition heats up

One of the factors driving increased competition to invest in infrastructure assets is that they are appealing to a wide group of investors. They yield long term predictable cash flows, are a natural hedge against inflation, and tick many of the ESG criteria asset managers increasingly need to meet – especially if the assets can be linked to a more efficient use of resources (e.g. leakage reduction or treated wastewater reuse).

And while they might not be the star performers in terms of ROI, infrastructure assets are far less affected by global shocks such as COVID-19, rapid inflation or energy and supply chain disruptions caused by the Russia-Ukraine war. In particular, unlisted infrastructure equities provide better downside protection and present risk-return characteristics similar to bonds. In 2022, listed equities overall provided negative returns of -18% while unlisted infrastructure equities still provided a positive return of 6% (See chart).

Source: Global Infrastructure HubThe length of the investment cycle within water infrastructure assets has also reduced secondary market opportunities and increased investor competition. Owners tend to hold on to their assets and the secondary market in water is far less liquid than for other types of infrastructures (such as energy). Strategic corporate investors often remain for the full contract term and will typically have a role in the operation and maintenance of the facilities; whilst financial investors will generally rotate after 7 to 10 years (depending on their fund life span). These ‘holds’ limit the volume of activity that can take place in any given year.

Implications for the year ahead

Amidst these conditions, it is not surprising that owners have increasingly begun to organize a competitive process to drive up valuations. As a result, we’ve seen fewer successful bilateral transactions across the market, the exception being when there is a strong strategic rationale for both parties to reach an agreement. For instance, when a buyer brings additional technical or operational expertise or access to new markets, and the transaction allows both sides to leverage synergies and leads to a broader long-term partnership between the buyer and the seller.

Another consequence of this shortage of opportunities is that investors are stretching the definition of infrastructure assets to include anything with a somewhat long-term, predictable revenue stream – even if the opportunity is mostly services-based rather than asset-based. Overall, these dynamics naturally result in higher valuations, especially in more mature markets where the regulatory and economic environment are stable but the opportunities very few. This is typically seen in the contracted O&M market in the United States, where any operator being put up for sale will trigger a bidding frenzy, especially if they are of scale. Examples include New Mountain Capital’s acquisitions of Inframark in 2020 and ESG in 2021 at valuations of c. 13x and c. 15x EBITDA respectively.

Finding new investment opportunities in 2024 and beyond

In this competitive and challenging market, new investment opportunities are more likely to be found resulting from innovative business models and clever partnerships between strategics and financial investors. For instance, most single water assets are small to medium in size, as it’s a very localized and fragmented sector. To reach an attractive scale, asset managers are increasingly looking for platforms they can grow; bundling small assets together and deploying more CAPEX over time. This is an opportunity for strategics to create innovative business models that allow them to tap this available funding market and focus on their core expertise.

One could, for example, imagine a platform to finance add-ons to existing wastewater treatment plants in order to upgrade them and allow the treated wastewater to be reused. The return on investment could come in the form of additional revenues generated by the sale of the treated effluents. Another opportunity could be financing CAPEX to reduce leaks in water distribution networks and getting a return by sharing the revenues from the additional volumes of water sold to end users.

This can result in win-win opportunities for both strategics and financial investors, allowing to meet challenges and evolutions in the water sector (e.g. more stringent regulations requiring higher capex).

Water-related risks have the potential to impact almost every aspect of your business –necessitating a holistic mitigation approach. In this article, we look at the importance of managing both upstream and downstream challenges, and why the quality of the water you take it is just as important as the wastewater you push back out.

There’s an old story with which you may be familiar; recounting a little Dutch boy who saved his city from a massive flood. After noticing a crack in the dike, the boy uses his finger to plug the hole until help arrives, preventing the wall from collapsing beneath the weight of the sea. It may be a children’s tale, but the story also has relevance for businesses today.

The world now faces other water threats – not just from flooding, but from drought and water scarcity, pollution, ageing water infrastructure, growing water demand, and climate change. While the boy in the story was deemed a hero for preventing an imminent catastrophe, businesses that focus only on ‘plugging holes’ in the context of water risk are unlikely to receive similar commendations.

The world of water is growing riskier by the day. More than a third of the world’s largest aquifers are already depleted to the extent that they threaten regional water availability. By 2030 – just a few short years way – experts predict a 40% shortfall in global water supply and by 2050, it’s estimated that 75% of the world’s population may face drought, with the other 25% experiencing direct flood risks.

To succeed in this context, businesses must look beyond their own immediate needs and consider the wider context of water risk for their business and their relationship with the water basins on which they depend. To best understand the potential impact, there are two major factors to consider; first, your business’s ability to ensure the inflow of quality water and second, its ability to mitigate the impact of wastewater effluent it puts back out.

Ensuring your future water security

Water is the lifeblood of countless industrial processes. Securing a steadfast and high-quality water supply is paramount for growing enterprises. Understandably, this is where most businesses start when it comes to water risk; ensuring they have access to a reliable source of fresh water that meets their quality standards. Most primarily focus on ‘on-site’ water issues, such as upgrading aging infrastructure, adopting improved processes or new technologies to optimize the water intensity of products, fixing leaks to minimize losses, and treating intake water to meet process requirements.

But businesses have a misplaced confidence in the continued availability of water as utilities have generally always provided it and the costs have been kept low. The reality is that it might not always be case. Water cannot be taken for granted as a ‘business as usual’ resource.

The current quantity or quality of water you’ve become accustomed to may not be what is available in the future – for a variety of reasons. Drought may cause the feeder rivers or upstream sub-basins from which your source receives water to dry up or pollution may impact the quality of water you receive. New regulations may increase the costs of accessing the water you need or limit how much you can withdraw. In short, even if your individual site’s risk profile appears to be low; the basin on which it relies on could be under high water stress. Leaders who keep their eyes focused ‘inside the fence’ are likely to be caught off guard, particularly when more stringent regulations come into effect.

For instance, China will strengthen its water use efficiency targets as part of its “three red lines” policy for controlling the development and utilization of water resources, referring to the maximum water use per economic value of production. By 2030, water consumption per ten thousand yuan of industrial added value will be reduced to less than 40 cubic meters. This will force the hand of any business that’s not already taking action to increase its water efficiency.

Another example is the ‘double materiality assessment’ under the EU’s Corporate Sustainability Reporting Directive (CSRD), whereby companies reporting on sustainability need to assess how their actions impact people and the environment, as well as the financial impact on its business. This will push companies to establish mitigation actions to lessen the potential financial burden of water scarcity, the degradation of water sources, or flooding.

In this landscape, water security (in terms of access to adequate water supplies) demands that leaders look ‘outside the fence’ to consider the needs of, and the stressors placed on, the water basins on which they rely. With a full picture of the potential risks, both immediate and long-term, businesses can then begin to build true water resilience; ensuring they have the flexibility and redundancies in place to withstand external shocks and adapt to a changing climate and volatile market conditions.

There are many potential solutions companies can explore to ensure the security of the water basins upon which they rely. Anheuser-Busch InBev, a Belgian brewing company, tailors water solutions to local basin needs, using a seven-step watershed management process that starts with stakeholder outreach. In Peru, they have worked to restore 13km of ancestral water channels and infiltration systems (amunas) in the Rimac basin (as of 2021). The move also improves water availability in the dry season, benefiting the local community and their own operational security.

Toyota has defined its water strategy based on conservation, quality, and ecosystems, and has financially supported The Nature Conservancy (TNC) on a number of projects to improve basin health. The company provided $100,000 in funding towards the restoration of the Colorado River Delta to help secure sufficient water and reliable supplies for people and nature through work with local partners, cities, and the agricultural sector.

Managing your wastewater effluent

What goes in, must come out, which is why the challenge of effectively managing your water risk extends beyond mere consumption. Wastewater effluent is a pivotal factor in reducing a business’s overall water risk, yet many companies fail to consider wastewater discharge as a potential risk to their business operations and reputation. Around 80% of the world’s wastewater is discharged back to the environment without any treatment. In fact, of the companies that report to CDP on their water risk, (a critical early step on the pathway to water leadership), 42% don’t monitor their wastewater discharge at all and only 12% set targets related to water pollution in 2022.

Ignoring your wastewater treatment and discharge brings significant risks across various aspects of your business. Untreated discharge can pollute water sources and the surrounding environment; potentially resulting in reputational damage, penalties, fines, or lost shareholder value.

Most importantly, unmanaged wastewater discharge carries serious environmental and health risks, with toxic pollutants capable of harming aquatic life, damaging ecosystems, and potentially threatening downstream communities by reducing water quality and spreading waterborne diseases.

For those who have yet to prioritize managing their wastewater or who are operating in less regulated environments, the focus should be taking responsibility for your effluent – whether you are discharging to the environment or a third-party waste handler. Many companies start by trying to reduce the overall volume of discharge, typically by increasing water recycling and reuse initiatives. It is also important to minimize the pollutants in the effluent, by reviewing your industrial processes, the chemicals used and by sourcing alternative ingredients, where possible.

For those who are compliant with existing regulations, the challenge is maintaining compliance in the face of changing regulations and market conditions. Your sites may be 100% compliant according to today’s wastewater treatment management standards, however, you may face new disclosure requirements and/or regulations in the future relating to emerging contaminants that will require actions to comply. New regulations such as the EU’s Corporate Sustainability Reporting Directive (CSRD) begin to take effect this year and require greater focus and commitment to managing and monitoring both water consumption and wastewater discharge, as specified in the detailed reporting guidelines (European Sustainability Reporting Standards, ESRS).

Given the lack of attention that has been given to wastewater historically, this change presents an opportunity for companies to lead, establish best practices to become role models for others, and initiate collective action to address potential impacts of wastewater on our environment.

There are a few organizations working toward ‘best practice’ standards for wastewater discharge. In its 2030 strategy, fashion retailer H&M Group set its commitment to improving and monitoring discharge quality, including across its suppliers. The plan focuses on the impact of its effluent on receiving water bodies (both direct to nature or via wastewater treatment providers) and more broadly, decoupling its growth from its water use.

Largely driven by significant water use and its commitment to replenishing 100% of the water needed to make its finished beverages, Coca-Cola has developed water management goals that, incidentally, result in strong wastewater management practices and a circular, ‘outside-the-fence’ approach. Water used in its manufacturing process is treated to a quality supportive of aquatic life before being returned to nature or the local municipality.

Supported by a $1bn investment, this has shifted wastewater treatment to become a standard operating requirement at Coca-Cola, with 99% of plants being served by onsite wastewater treatment plants. In addition, Coca-Cola engages in outside-the-fence projects to replenish the water used in its projects to communities and nature, such as via watershed protection and WASH activities.

Companies who are well-informed about their external water risk picture and are ahead of new regulatory requirements, such as the EU CSRD, are well-positioned to not only mitigate water risk and ensure operational continuity but to become leaders in showcasing best practices to counterparts. By considering the full water cycle, both within and beyond the operational boundary, companies can scale their impact and play an instrumental role in collective action to influence our environment positively.

Amane Advisors is proud to announce it will become part of Roland Berger. The move will strengthen Roland Berger’s expertise and knowledge in water consulting, and it will now become one of the largest players in this field.

You can read more about the news below or on the Roland Berger website.


Roland Berger to become major player in water consulting through acquisition of global water strategic consulting firm Amane Advisors

Munich/Oxford, December 2023: Roland Berger has signed an agreement to acquire Amane Advisors, a strategic consulting firm specializing in water, and resource and energy recovery. With this acquisition, Roland Berger is expanding its expertise and offering in line with its strategy to incorporate sustainability into all its projects. By acquiring Amane Advisors, Roland Berger will benefit from in-depth industry know-how and a team of experts with a strong network in the fast-growing water and waste management markets. Roland Berger is thus strengthening its expertise and knowledge in water consulting and will now become one of the largest players in this field. Amane Advisors will become an integral part of the dedicated water consultancy team at Roland Berger and will be fully integrated.

Stefan Schaible, Global Managing Partner at Roland Berger: “Amane Advisors and Roland Berger are a perfect strategic and geographic fit, with complementarities in water and waste management consulting. Combining Amane Advisors’ deep market knowledge and focused expertise with Roland Berger’s strong brand and global presence will create new opportunities for our joint future. The acquisition of Amane Advisors further advances our international growth and propels us towards our goal of reaching two billion euros in revenues by 2028. It is also in line with our ambition to further embed sustainability in all our practices and projects. Together with the team of Amane Advisors, we will accelerate the expansion of our offering and expertise in water consulting and build a leadership position in sustainability consulting.”

Torsten Henzelmann, Head of the Global Regulated Platform at Roland Berger: “Amane Advisors has built a competitive advantage through its extensive expertise, database, and proprietary water and waste knowledge assets. The company has experienced strong growth over the years, responding to the increasing need for consultancy in the water sector. We are very much looking forward to working together with the team.”

Geoff Gage, Managing Partner at Amane Advisors: “Water is not only the world’s most critical resource, it’s a strategic imperative that sits at the heart of sustainability and climate change. Everyone at Amane is passionate about water and we look forward to bringing our expertise and know-how in water and integrating our distinctive waste and energy recovery experience to benefit Roland Berger’s clients around the world.”

Thierry Noel, Founding Partner of Amane Advisors: “Water is now on top of the climate adaptation agenda and society, utilities, businesses, industry, and municipalities need to accelerate in designing and implementing solutions. By joining Roland Berger, a leader in sustainability consulting, we can take the water topic globally, at an accelerated pace to address the growing urgency, and put water at center-stage of sustainability. For our people and for our loyal clients, Roland Berger is the ideal home sharing values, a common vision around the importance of water, and vastly expanding the offering beyond anything that Amane could have ever dreamt of providing.”

Headquartered in Oxford, UK, and with c. 50 professionals in seven offices globally, Amane Advisors drives innovative and forward-thinking solutions in the areas of water, resource, and energy recovery for clients worldwide. The majority of Amane Advisors clients are blue-chip companies, public organizations and investors in the water industry and are based in Europe, North America and the Middle East. While historically Europe has been Amane Advisors’ strongest market, the company has experienced strong growth in North America in recent years.

Climate change has made water management a top priority for business and politics. Relevant actors in the water ecosystem, such as investors, suppliers, or utilities are facing strategic issues that are leading to an increasing need for advice.

This transaction is subject to customary closing conditions and is expected to close in the first quarter of 2024.