Tauw: the unsung European environmental consulting contender

This article is published in the Environmental Analyst on April 24, 2019.

The Dutch player - and founding member of the international CAT Alliance JV - is increasingly emerging from under the radar to claim its stake in the European environmental consulting sector with EC revenues nudging €100m. Environment Analyst gets the lowdown on the release of its latest financial results for 2018.

Back story

Technisch Adviesbureau van de Unie van Waterschapsbonden, almost certainly better known as Tauw Group BV, is a multidisciplinary consultancy with a history stretching back some nine decades. Translated, its full name translates as Technical Consultancy of the Union of Water Boards.
Founded in 1928 in Haarlem, the firm came into being - as its name suggests - on the back of a rising need for independent and technical advice on water management issues just as Dutch water utilities were negotiating the transition from steam pumping stations to electrical powered plants.

Since those early days, the now Deventer-headquartered firm’s expertise has expanded far beyond the water sector and far beyond the Netherlands too; today it describes itself as "an independent European consulting and engineering company" with a strong focus on the environment, servicing the industry, private equity, real estate and government sectors. With a total workforce of over 1,200 across 27 locations in six countries, it looks to address environmental issues, from strategic consultancy to environmental monitoring, and from on-site technical support to transaction services.

In fact, with a broad array of EC services - including environmental monitoring, environmental due diligence and compliance, soil and groundwater, infrastructure, sustainability, site development services - Tauw claims to hold "a top three position" in Europe’s environmental consulting sector. With around 650 environmental consultants and EC revenues accounting for around three-quarters of total €129m ($148m) revenues, it’s perhaps not an empty claim.

EC revenue is reported to have been climbing steadily in the past few years and was approaching €100m last year.
There have been some significant milestones along its journey including the establishment of a laboratory in The Hague in the 1950s, and the addition of engineering consultancy services - focused on construction, hydraulic engineering and environmental hygiene - in the 1960s. Then during the 1970s it played a central role in the emergence and development of Dutch environmental policy, and the 1990s saw the company’s expansion across the continent with the opening of branches initially in Germany, Belgium and France and later (from 2000) in Italy and Spain.

An active M&A strategy too has helped it achieve its current position. In the last five or six years notable purchases have included: German consultants, Lubag and Dr Stupp, Dutch housing consultancy, Atrivé; Italian environmental and energy consultant, Steam (EA 22-Oct-13); Belgian environmental consultant and soil expert, Geosan NV (EA 16-Aug-16); and Pro Monitoring (formerly part of Eurofins) adding air related areas, including emissions measurements, air quality measurements and workplace measurements (EA 23-Jan-18).
But getting to this point hasn’t necessarily been straightforward; recent years saw the firm severely challenged by the wider downturn impacting much of Europe, its core stomping ground. Region-wide recession and austerity began to bite just as Annemieke Nijhof took up the role of Tauw CEO back in 2012, notably in the firm’s domestic Dutch market when group revenues were that year squeezed by 8%.

Undaunted, Nijhof set in motion a recovery strategy (including redundancies), whilst crucially securing the financial help of a local venture capital firm, Wadinko, which took a 25% minority stake in Tauw in 2013. Buffered by Wadinko’s backing, the rewards of these efforts quickly began to be felt. In fact, just four years later the firm was sufficiently confident to buy back the minority share held by Wadinko, bringing Tauw once again fully back into the hands of its employees and management.

Employee ownership model

Now, under its ‘employee participation: participatory leadership’ structure, all permanent Tauw employees are given five certificates with at least 50% of them independently purchasing additional share certificates. It’s a model the firm feels strongly underpins its success: "In our view, this participatory leadership is a very logical choice. Our employees have always felt strongly committed to the Tauw organisation. We achieve our results together and everyone has an equal stake in them."
And, building on an 8% revenue hike in 2017, Tauw’s most recent financial results are further evidence of the strategy’s success with 2018 full year turnover up 9% again to €129m, its best result in its 90-year history. Tauw’s domestic Dutch market represents around two-thirds of the total, whilst its wider European operations take the remainder. EBITDA rose to €7.2m in 2018 from €6.0m the prior year, whilst the net result stood at €3.8m up from €3.0m. The FTE staff total at year-end stood at 1,062, up from 1,003 the previous year.

With Tauw once again a "proud people-owned company" with a renewed sense of self-belief (bolstered by strengthening financial results), Annemieke Nijhof decided last year to step away from the top role for a well-deserved break. The firm is now looking to the future under the joint CEO leadership of Henrike Branderhorst and Ralph van Roessel who share management responsibility and the company portfolio.

International EC standing enhanced through CAT Alliance

Environmental consultancy, as already highlighted, represents a defining part of the firm’s activities. The c650-strong EC contingent offers expertise on a broad range of areas, including transformation of energy systems, climate change resilience for water management systems, circular economies, biodiversity, environment quality within the built environment, and much more besides. Services around ESG considerations, compliance management and site development are said to have seen an increase in client demand in recent years.

What has also grown of late is the EC team’s geographic reach and whilst still firmly rooted in Europe (and with no desire to change that in the near future), it does undertake projects on a worldwide basis.

Pivotal to achieving that global reach has been Tauw’s founding role in the CAT Alliance joint venture established in 2001, together with partners COWI of Denmark and the then Enviros-owned Aspinwall (which has long since disappeared having been itself acquired under several more guises), with the aim of providing environmental due diligence services to multinational clients globally. The alliance was expanded with the addition of US-based Geosyntec in 2014 (EA 10-Jan-14), increasing its scope to 13,000 staff in 50 countries and notably increasing opportunities in the US. And the range of services offered through the Alliance too has grown over the past 15 years including EHS management systems and compliance and related consulting services.
As Tauw outlines: "The CAT Alliance has enabled us to quickly assist our customers worldwide, across a range of sectors - including chemicals, energy, food & drink, manufacturing, waste and infrastructure - offering extensive knowledge of environmental laws and regulations."

In fact, the Tauw team has worked as far afield as Iran where it helped to design and construct a drinking water installation for the city of Birjand; Surinam where it has undertaken hydrological studies for the Surinaamsche Drinkwatermaatschappij (SWM); and Vietnam where it has assisted the UN Development Programme in the clean-up of pesticides contamination.

Last year the team worked on a series of urban climate maps on key regions of South Africa in response to the increasing impact of climate change-related urban flooding and thermal stress in urban areas (EA 17-Jan-18). The firm hopes the initiative will assist local urban planners in the design of sustainable cities in South Africa, whilst drawing on the lessons learnt from pilot studies in three cities Taiwan (Tainan), Thailand (Ayutthaya) and Netherlands (Groningen).
Tauw also has strong links with Brazil having formed a partnership with Brazilian environmental services firm, Grupo EPA, last year to further develop a range of environmental services in the country (EA 23-Apr-18).

Clear objectives and technological solutions

Looking ahead the firm has a clear set of objectives for its core EC operations, in line with its 2020 Tauw Group Strategy, the core thrust of which is to further strengthen its position in Europe.
In a nutshell, the firm is aiming for a "sustainable and healthy market position" in Europe’s environmental consultancy sector, and its key strategy is based on the following:

  • Focus on the market opportunities in its current six European home countries. [With no intention of opening offices in new countries, projects in the rest of the world will be steered and executed from Tauw’s existing locations];
  • Services must contribute to the spatial quality across urban and industrial environment. All projects must demonstrably deliver sustainable solutions which lead to a better environment;
  • Exclusive focus on those projects which can add value for its clients eg through product leadership, operational excellence or bespoke offerings. A move away from markets where services are seen as commodities and undervalued through fee erosion. Engineering services will remain part of the portfolio but must be part of projects in which it delivers sustainable solutions;
  • Leadership position in data collection, data enrichment and data delivery and use of information technologies to develop new and better services; and
  • Strengthened position in Europe’s soil market, across both private and public sector clients, whilst broadening the application of its ‘top knowledge and experience’ on soil towards ‘land stewardship’.
    Tauw is quite clear of the opportunities ahead: "There is ample room for innovation, employee development and further growth." However, as with the wider environmental consulting industry, it is also aware that digital technologies will be critical to its future success, and that to acquire and maintain its strong position in Europe, it will need to invest heavily in technological solutions: "We believe such investments are necessary in our radically changing environment, which needs sustainable solutions."

Indeed the firm is already taking steps in this area, with the establishment of Technology Development Board with a strong focus on data management whilst also assisting in the development and application of new measurement methods including machine learning, drones and XRF (x-ray fluorescence[TJ1] ), and the translation of results with VR/AR.
It states: "By adopting a position as business developer, services that are traditionally viewed as consultancy proposals are being transformed into products that combine specialised consultancy with new technologies." It is, it adds, a logical development, given the company’s ambition of digital transformation, which is "certain to play a major role in its business development activities for 2019 and beyond".

Digital disruptor

However, the innovation goes beyond the use of new digital tools and applications, as Tauw is looking to positively disrupt existing business models.
Harking back to those early days as it partnered the Dutch water industry through a period of transformation, Tauw is looking at alternative and innovative business practices to better service its clients. In October last year it launched an independent 80-strong business unit of "technical interim staff" called Syntraal (EA 09-Oct-18), which it hopes will answer a growing need in the market for interim professionals in the field of environment, water, civil engineering and safety.
Headed by managing director Hans Westerhof, the unit calls upon permanent Tauw professionals with key specialisms on an interim, project-by-project basis, and also brings in freelancers as associates when required. As Tauw says, Syntraal is an alternative approach which "takes labour market flexibility seriously, while maintaining high employment practice standards", offering both individual experts and dedicated teams whilst guaranteeing project continuity thanks to the pool of expert staff at its disposal.

Meanwhile, last month the firm launched its Amfius offering. Targeted at local and regional authorities, such as municipalities and water boards, Amfius assists in the extraction of local renewable energy sources and new heating technologies as a replacement for natural gas-fuelled systems, both for heating and cooling public buildings such as swimming pools, schools and care complexes. One project facilitated by Amfius has seen the transfer of residual heat from purified waste water from a local potato processing plant run by CêlaVíta to heat the De Veldkamp swimming pool in the nearby village of Wezep, both cutting gas costs and reducing carbon emissions.

It is, as the firm states, "yet another example of transforming its consultants’ innovative technical thinking power into a new business model, whilst making a substantial contribution to a cleaner and more sustainable world".
So, with a clear innovation-driven strategy and a dominant position in its European home ground with 600+ environmental consultants, who knows where Tauw will be in the next nine years – let alone ninety.