Heidrick & Struggles International, Inc. (HSII): PESTLE Analysis [Nov-2025 Updated]

Heidrick & Struggles International, Inc. (HSII) is at a pivotal moment, having just delivered a strong Q3 2025 with net revenue of $322.8 million, yet the external landscape presents a complex mix of tailwinds and serious structural risks. The firm's pending take-private transaction at $59.00 per share only amplifies the need to understand how global political instability, the AI revolution, and the massive shift toward Environmental, Social, and Governance (ESG) leadership will shape its long-term profitability. We need to look past the recent earnings beat and map the macro-forces-Political, Economic, Sociological, Technological, Legal, and Environmental-that will defintely drive the next decade of executive search and consulting.

Political Factors: Geopolitics and Governance Quotas

You're seeing an immediate impact from global trade tensions, which actually increases demand for localized executive talent, as multinational corporations de-risk their supply chains. Plus, the political push for corporate board diversity-especially in the US and Europe-is a clear tailwind for Heidrick & Struggles International, Inc.'s core Executive Search business. This isn't just a social trend; it's a regulatory mandate that drives high-fee placements.

However, geopolitical instability, particularly in the APAC region, complicates the logistics of executive placement, making it harder to maintain the firm's global reach. The biggest political factor right now is the definitive agreement announced in October 2025 to take the company private at $59.00 per share, shifting the focus from public quarterly performance to deal closure and long-term private equity strategy.

Here's the quick math: Regulatory-driven demand is a stable revenue source.

Economic Factors: Inflation, FX, and Client Costs

The core challenge is the tug-of-war between inflation and corporate cost-cutting. Inflationary pressures push up the compensation packages for C-suite roles, which in turn increases Heidrick & Struggles International, Inc.'s placement fees, but it also raises the total cost for the client. This is a margin risk if clients start prioritizing internal promotions over expensive external searches.

Still, the firm showed resilience, reporting Q3 2025 Adjusted EBITDA of $34.2 million on a 10.6% margin, demonstrating pricing power. Fluctuations in the US dollar (USD) also impact the firm, as a significant portion of its revenue is international. If the dollar strengthens, those international earnings translate into less USD, a constant headwind against moderate global GDP growth projections for 2025.

Sociological Factors: The ESG and Tech Talent Premium

The growing focus on Environmental, Social, and Governance (ESG) expertise is a major opportunity. Companies are now actively searching for Chief Sustainability Officers (CSOs) and board members with specialized ESG knowledge, driving high-value search mandates. This is a structural shift, not a fad.

But, the persistent talent shortage in high-demand sectors like digital transformation and tech continues to inflate salaries, which directly impacts the compensation floor for Heidrick & Struggles International, Inc.'s placements. This talent premium is a key driver behind the Q3 2025 Executive Search net revenue of $239.1 million, up 17.0% year-over-year. Shifting employee expectations around hybrid work also requires a new, specific type of empathetic leader, creating new consulting opportunities.

Technological Factors: AI as a Tool and a Threat

Artificial Intelligence (AI) and machine learning (ML) are not just buzzwords; they are actively streamlining the candidate sourcing process, which increases analyst efficiency and lowers the time-to-fill for certain roles. This is a clear internal opportunity for margin expansion.

However, the risk is two-fold: First, competitors are using advanced data analytics to predict executive turnover, pressuring the firm to innovate its own platform. Second, the firm's Digital Transformation consulting services are highly dependent on its internal tech capabilities, and cybersecurity risks in handling sensitive client and candidate data necessitate continuous, costly investment in IT infrastructure. On-Demand Talent revenue, a key digital growth area, was $50.9 million in Q3 2025, up 10.1%, showing the market is ready for a tech-enabled offering.

Legal Factors: Data Privacy and Non-Compete Headwinds

Stricter data privacy regulations, like the EU's General Data Protection Regulation (GDPR), complicate the cross-border transfer of candidate information. This adds significant legal overhead to a global search firm's operations. You simply cannot move candidate files as freely as you used to.

Also, the varying enforcement of non-compete clauses by state-for example, the vastly different approaches in California versus Texas-affects talent mobility and limits the search scope for certain high-profile roles. This patchwork of employment law, plus the increased litigation risk related to bias in the executive selection process, forces the firm to invest heavily in compliance and internal process audits. Net income for Q3 2025 was $17.6 million, a figure that is constantly under pressure from rising compliance costs.

Environmental Factors: The Sustainability Mandate

Client demand for Chief Sustainability Officers (CSOs) and ESG-focused executives is accelerating, creating a new, high-growth revenue stream for Heidrick & Struggles International, Inc.'s advisory services. This is a direct result of investor pressure for transparent sustainability reporting, which influences corporate governance consulting mandates.

The internal challenge is managing the firm's own carbon footprint, especially given the extensive global executive travel required for high-touch search work. Climate change-related business risks, such as supply chain disruption, also create new consulting opportunities for C-suite advisory, turning an environmental threat into a business service opportunity. The market for ESG leaders is only going to get bigger.

Heidrick & Struggles International, Inc. (HSII) - PESTLE Analysis: Political factors

Global trade tensions increase demand for localized executive talent.

You are seeing a direct correlation between rising geopolitical friction and the need for specialized executive talent who can navigate this fragmented world. CEOs globally rank intensified trade wars, particularly the US-EU-China tensions, as the top geopolitical risk for 2025. This uncertainty is not slowing down the need for talent; it is shifting the focus.

The push for supply chain resilience-think near-shoring or friend-shoring-is creating urgent demand for leaders with deep operational expertise in new, localized markets. For instance, a Duke University and Federal Reserve survey noted that one in four chief financial officers scaled back 2025 domestic hiring plans due to tariff uncertainty, but companies are simultaneously expanding globally to counter rising costs. This pivot is a tailwind for Heidrick & Struggles International, Inc. (HSII), as it drives a 31% year-over-year surge in cross-border hiring in highly skilled areas like engineering and finance, where HSII operates. This means the firm's global footprint is a critical competitive advantage right now.

Increased scrutiny on corporate board diversity quotas across the US and Europe.

Regulatory pressure on board composition, especially in Europe, is a clear, near-term opportunity for HSII's Executive Search and Heidrick Consulting segments. The European Union's Gender Balance on Corporate Boards Directive mandates that large, listed companies must meet one of two targets by June 30, 2026: either 40% of non-executive directors or 33% of all directors must be of the underrepresented sex. Considering the average share of women on EU corporate boards was only 34% in early 2025, there is a significant gap to fill.

This is a hard deadline that forces companies to use high-end search firms. Contrast this with the US, where the Nasdaq board diversity rule was overturned by a US court by the end of 2024, making the European market the primary driver for compliance-related board searches right now. Also, some countries, like France, have binding quotas for executive management, requiring 30% women among executives by 2026, further increasing the mandate for diverse C-suite placements.

Government contracts for consulting services create a stable, though competitive, revenue stream.

Heidrick & Struggles is actively positioning itself to capture more public sector revenue, which tends to be more stable than corporate spending during economic cycles. The firm launched its Government & Defense Tech Practice in April/May 2025 to capitalize on this. The opportunity is substantial: governments account for roughly 10% of total spend on technology and IT services globally, and this area is growing as governments pursue digital transformation, cybersecurity, and AI capabilities.

HSII already has a proven track record, citing more than 200 completed engagements in this sector prior to the formal practice launch. This focus is paying off in their Consulting segment, which saw net revenue increase by 16.6% to $31.2 million in Q2 2025. The competition is stiff, but the firm's specialized expertise in technology leadership gives them a clear lane.

Geopolitical instability in key markets like APAC complicates executive placement logistics.

Geopolitical volatility in the Asia-Pacific (APAC) region presents a dual challenge: it increases the need for crisis-ready leaders but makes the placement process more complex. The shift towards 'de-risking' between the US and China, coupled with tensions in the South China Sea, creates significant uncertainty for multinational corporations.

This instability impacts HSII's regional performance. While the Americas and Europe saw strong executive search revenue growth in Q1 2025 (Americas: 5.7%; Europe: 9.4%), the Asia Pacific region's growth was the lowest at just 1.2%. This suggests clients were hesitant to commit to major executive changes in the region due to the political climate. The silver lining is that APAC leaders are responding by strengthening regional alliances, with 51% identifying the APAC region and 50% identifying India as key hubs for investment and trade. This regional shift will require a new type of executive leadership-those who can build localized supply chains and manage multi-jurisdictional compliance.

Here's the quick math on how political factors are shaping HSII's regional revenue growth for Executive Search in the first half of 2025:

The European market is defintely the most responsive to clear political mandates.

The key actions for HSII are clear:

• Focus Executive Search resources on Europe to meet the binding 40% board diversity target.
• Expand the new Government & Defense Tech Practice to capture the estimated 10% global government IT spend.
• Prioritize candidates in APAC with proven experience in regional trade bloc navigation and supply chain localization.

Heidrick & Struggles International, Inc. (HSII) - PESTLE Analysis: Economic factors

You're looking for a clear map of the economic landscape for Heidrick & Struggles International, Inc. (HSII) in 2025, and the picture is one of strong revenue growth but persistent global uncertainty. The firm has demonstrated resilience, with Q3 2025 consolidated net revenue hitting $322.8 million, an increase of 15.9% year-over-year. Still, the macroeconomic environment introduces clear risks around client spending and currency translation that you need to factor into your strategy.

Inflationary pressures push up compensation packages, increasing placement fees but raising client costs.

The inflation-driven competition for top-tier talent continues to push executive compensation higher, directly impacting Heidrick & Struggles International, Inc.'s placement fees, which are typically a percentage of the executive's total compensation package. This is a double-edged sword: higher compensation means higher revenue per search for HSII, but it also increases the total cost of talent acquisition for their clients, potentially leading to client caution.

For context, the median pay for S&P 500 CEOs rose to a record $16.8 million in 2024, and private company CEOs anticipated an average increase of 3.3% in their base salary for 2025. This pressure forces companies to re-evaluate their executive pay structures, often shifting toward performance-based incentives and equity-based rewards to manage cash flow and align with long-term value creation.

• Opportunity: Average revenue per executive search for HSII was approximately $162,000 in Q3 2025, up from $149,000 in Q3 2024. This increase reflects the higher compensation base.
• Risk: Continued inflationary pressure on salaries could lead more clients to opt for less expensive, internal talent development or interim solutions like On-Demand Talent to preserve cash.

Global GDP growth projections for 2025 remain moderate, dampening executive search volume slightly.

While Heidrick & Struggles International, Inc. has shown strong performance in 2025, the broader global economic backdrop is one of modest growth and uncertainty, which can temper the demand for high-cost executive search services. The International Monetary Fund (IMF) projects global growth to be around 3.2% in 2025, a moderate pace that is still subject to downside risks from policy uncertainty and trade tensions. The World Bank's forecast is even weaker at 2.3%.

The firm's Executive Search net revenue for Q3 2025 was $239.1 million, an increase of 17.0% year-over-year. This suggests that while overall economic growth is moderate, the demand for 'must-have' leadership roles tied to transformation and growth remains strong. The CEO has acknowledged the possibility of client caution in the second half of the year due to this economic uncertainty, which is a key risk to monitor.

Fluctuations in the US dollar (USD) impact the translation of international revenue, which is a significant portion of HSII's business.

Heidrick & Struggles International, Inc. operates globally, meaning a substantial portion of its revenue is generated in foreign currencies (FX) and must be translated back into US Dollars (USD) for reporting. This subjects the firm to foreign currency exchange rate risk. The company's Executive Search segment saw strong growth in Europe (up 18.0%) and the Americas (up 20.8%) in Q3 2025, while Asia Pacific revenue declined by 3.9%.

The constant currency reporting highlights the direct impact of USD fluctuations:

Here's the quick math: in Q1 2025, a stronger USD acted as a headwind, reducing the reported growth by 1.2%. By Q3 2025, the currency rates had shifted, providing a tailwind that boosted reported growth by 1.7%. This volatility means that even if search volume is flat, a shifting USD can swing the reported revenue by millions of dollars.

Corporate cost-cutting measures may prioritize internal promotions over expensive external executive search.

In periods of economic uncertainty, which the CEO of Heidrick & Struggles International, Inc. has acknowledged, corporate boards and C-suites often initiate cost-cutting measures, including a closer look at discretionary spending like external executive search fees. This can manifest in two ways:

• Internal Succession: Companies may prioritize internal promotions and succession planning to fill senior roles, bypassing the high fees associated with external search.
• Shift to Lower-Cost Services: Clients may shift demand to lower-cost, high-value services like leadership assessment, which Heidrick Consulting provides, or use the On-Demand Talent segment for interim roles instead of a permanent, high-fee executive placement.

The firm is mitigating this risk by diversifying its revenue streams. For example, in Q3 2025, On-Demand Talent net revenue grew by 10.1% to $50.9 million, and Heidrick Consulting net revenue increased by 17.6% to $32.8 million. This growth in non-Executive Search segments provides a buffer against cyclical downturns in the core search business. The risk still remains, but the shift to a more diversified leadership advisory model is defintely a smart hedge.

Heidrick & Struggles International, Inc. (HSII) - PESTLE Analysis: Social factors

You need to understand that the social landscape is fundamentally reshaping the C-suite, and this shift is a major tailwind for Heidrick & Struggles International, Inc. (HSII), but it also introduces new reputational risks. The demand is not just for leaders; it's for leaders with a specific, modern skillset-namely, expertise in Environmental, Social, and Governance (ESG) and the ability to manage a distributed, tech-centric workforce. The firm's strong 2025 performance, with Q3 net revenue hitting $322.8 million, up 15.9% year-over-year, shows they are capturing this demand.

Growing focus on Environmental, Social, and Governance (ESG) expertise drives demand for specialized board and executive roles.

The market is demanding that companies integrate purpose with performance, making ESG competence a non-negotiable trait for senior leadership in 2025. This isn't just a compliance issue anymore; it's a core business strategy. The rising expectation for companies to align with international sustainability benchmarks means boards are actively seeking executives who can embed sustainability into the business model, not just report on it.

This trend directly benefits Heidrick & Struggles, as it drives new, high-fee searches for specialized roles. The firm's ability to find leaders who can navigate the intersection of profitability and ESG objectives is now a key differentiator. It's a classic supply-demand imbalance: the supply of truly experienced ESG leaders is low, so the search fee potential is high.

Talent shortage in high-demand tech and digital transformation sectors continues to inflate salaries.

The scarcity of great leadership talent in digital and technology remains a top risk to organizational health in 2025. The demand for highly specialized skills in areas like Artificial Intelligence (AI) and cybersecurity is significantly outpacing the available supply. For example, job postings seeking AI skills increased by a staggering 81% in 2024-2025, while cybersecurity postings rose by 33%. This shortage is a massive driver of executive compensation inflation, which translates directly into higher placement fees for executive search firms.

Here's the quick math on the talent crunch:

• Professionals with in-demand AI/cyber skills earn 20-30% more compared to similar roles without those skills.
• The US alone is projected to have a shortage of over 1 million tech professionals.
• Companies are differentiating rewards, with 47% globally offering specific programs for digital talent, often including higher base pay and cash bonuses.

This is a seller's market for top tech executives, and Heidrick & Struggles is positioned to capitalize on the resulting bidding wars and premium search mandates.

Shifting employee expectations require new leadership profiles focused on hybrid work and company culture.

Hybrid work is the new standard in 2025, forcing a fundamental evolution in leadership style. The old-school, presence-based management model is dead. Leaders must now be highly flexible, empathetic, and results-oriented to manage distributed teams effectively. This shift has expanded the required skillset for executive search candidates, with emotional intelligence and digital fluency becoming essential traits.

The stakes for getting this right are high. According to one survey, 78% of high-performing employees would consider leaving a company if the work policies were not flexible enough. This means clients need leaders who can foster culture and cohesion in a hybrid environment, which is a new and complex search mandate that favors sophisticated firms like Heidrick & Struggles that offer leadership consulting alongside executive search.

The new leadership profile must demonstrate:

• A management style built on trust, emphasizing outcomes over physical presence.
• Proficiency in using digital tools for hybrid collaboration.
• A people-centric approach that prioritizes mental health and well-being.

Increased public interest in executive pay disparity creates reputational risk for high-fee placements.

Executive compensation remains a highly contested issue in corporate governance in 2025, and this scrutiny extends to the firms that place and advise these executives. The mandatory disclosure of the CEO-median worker pay ratio, while sometimes criticized for its utility, keeps the issue in the public eye. For a group of low-wage firms, the average CEO-worker pay ratio widened to 632 to 1 in 2024. This extreme disparity fuels public and investor backlash.

For Heidrick & Struggles, the risk is indirect but real: every high-profile, high-fee placement with a large pay disparity increases the client's risk of a failed "say on pay" vote. When shareholder support for compensation falls below 80%, the risk of directors losing their seats in a proxy contest can double. Since the firm advises on compensation and places the executives, a placement that quickly leads to a governance crisis can damage their reputation as a trusted advisor. This forces the firm to be defintely more strategic about both the placement and the compensation structure.

Heidrick & Struggles International, Inc. (HSII) - PESTLE Analysis: Technological factors

You need to see the technology landscape not just as a cost center, but as the core engine for productivity and a critical differentiator in the executive search game. The traditional reliance on a Rolodex is dead; the new reality is that Artificial Intelligence (AI) and data analytics are now the foundation of competitive advantage, but they introduce significant cybersecurity risks that demand continuous investment.

Here's the quick math: if your competitors are using AI to predict a CEO's departure before the board even suspects it, your firm must be doing the same for your clients. This isn't a future trend; it's the 2025 operating mandate.

Artificial Intelligence (AI) and machine learning tools streamline candidate sourcing and matching processes, increasing analyst efficiency

Heidrick & Struggles International, Inc. (HSII) is actively investing in technology and analytical tools to boost the productivity of its professionals and enhance client impact. This is a necessity because Artificial Intelligence (AI) is fundamentally reshaping the executive search industry in 2025, moving beyond simple keyword matching to 'smarter candidate sourcing.' AI algorithms can analyze thousands of profiles in seconds, identifying candidates whose qualifications, and even soft skills, align precisely with a role's requirements by studying language patterns and digital footprints.

The firm is leveraging these digital tools to increase operational productivity, enabling broader market coverage and servicing untapped white space opportunities. This shift allows analysts to focus on high-value activities-like assessing cultural fit and building relationships-instead of manual screening. Honestly, any recruiting firm not fully embracing AI for initial candidate identification is leaving money and speed on the table.

Cybersecurity risks in handling sensitive client and candidate data necessitate continuous investment in IT infrastructure

The nature of HSII's business requires handling highly sensitive, non-public information-everything from C-suite compensation to confidential succession plans and proprietary client data. Protecting this data is a strategic imperative, especially as global cybersecurity spending is projected to surge to approximately $212 billion in 2025.

The threat landscape is escalating, with the average global cost of a data breach reaching $4.88 million in 2024, a 10% increase from the prior year. This means the cost of a security lapse is rising faster than general inflation. For HSII, continuous investment in IT infrastructure is non-negotiable to maintain client trust and regulatory compliance. The firm needs to ensure its internal security posture is as strong as the cybersecurity leadership talent it places for clients.

• Global cybersecurity spending is projected to hit $212 billion in 2025.
• Average data breach cost in 2024 was $4.88 million.
• Investment must focus on protecting proprietary platforms like Heidrick Connect and Culture Connect.

Digital transformation consulting services, a key growth area, are highly dependent on HSII's internal tech capabilities

The Heidrick Consulting segment, which includes leadership assessment and culture shaping services, is a crucial growth engine for the firm and is highly dependent on its proprietary technology platforms. These services are increasingly delivered as 'digital solutions' for Leadership Assessments and Team Acceleration. The growth in this area is clear in the 2025 financial results:

The firm is doubling down on digital transformation, integrating advanced technologies to enhance client solutions like digital assessments. What this estimate hides is that the consulting business's ability to scale depends entirely on the stability and sophistication of its proprietary Web-based systems, such as Culture Connect, which is integral to the culture-shaping process.

Competitors use advanced data analytics to predict executive turnover, pressuring HSII to innovate its own platform

The competitive pressure from other firms leveraging data analytics is intense. Predictive analytics is no longer a niche tool; its adoption in HR is projected to exceed 80% of companies by 2025. Competitors are using machine learning to forecast future workforce trends, including executive turnover, by analyzing factors like engagement scores, performance metrics, and tenure. This capability allows them to proactively approach companies with retention strategies or pre-vetted replacement candidates.

This pressure forces HSII to continuously innovate its own platform to offer predictive insights that go beyond simple search. Organizations that leverage data analytics for workforce management see a 5% increase in employee retention rates, which is a powerful selling point for a consulting firm. The firm must defintely ensure its own data models can anticipate client needs-like a key executive departure-before the client even realizes the risk. This requires a shift from reactive search to proactive, data-driven advisory.

Heidrick & Struggles International, Inc. (HSII) - PESTLE Analysis: Legal factors

Stricter data privacy regulations, like the EU's GDPR, complicate the cross-border transfer of candidate information.

You're an executive search firm, so your core business is moving highly sensitive personal data-CVs, compensation history, performance reviews-across borders daily. This creates a significant compliance burden, especially with the European Union's General Data Protection Regulation (GDPR) setting the global benchmark. GDPR's extraterritorial reach means Heidrick & Struggles International, Inc. (HSII) must comply for any EU citizen's data, regardless of where the search is conducted.

The biggest headache is the cross-border transfer of data, which requires appropriate safeguards like Standard Contractual Clauses (SCCs) approved by the European Commission. If the firm fails to comply, the financial penalties are severe: up to €20 million or 4% of annual global turnover, whichever is higher. Plus, US state-level privacy laws, like those in California, are increasingly mirroring GDPR's strict requirements, meaning domestic compliance is also getting more complex. You defintely need a robust data map.

Non-compete clause enforcement varies by state (e.g., California vs. others), affecting talent mobility and search scope.

The legal landscape for non-compete agreements in the US is a patchwork, and it directly impacts how HSII can recruit and retain its own top consultants, and how it can poach executive talent. The Federal Trade Commission's (FTC) attempt at a nationwide ban was vacated in 2024, and the appeal was officially withdrawn in September 2025, leaving state law in control for now.

This creates a complex operating environment. States like California, North Dakota, Oklahoma, and Minnesota have total bans on non-compete agreements, which makes talent mobility high and restrictive covenants unenforceable. Conversely, other states allow them but impose salary thresholds. For example, in Colorado, a non-compete is generally only enforceable against an employee earning in excess of $123,750. This state-by-state variance means HSII must tailor every employment and non-solicitation contract to the specific jurisdiction, which is a huge administrative and legal task.

Increased litigation risk related to discrimination and bias in the executive selection process.

Litigation risk is a constant for any firm involved in high-stakes hiring, but the nature of that risk is evolving in 2025. While a new Executive Order in April 2025 eliminated the use of 'disparate impact' liability in federal employment policy, making it harder to challenge systemic bias without proving intentional discrimination, the focus on intentional bias and new forms of bias remains high.

A major emerging risk is the use of Artificial Intelligence (AI) in the selection process. As HSII and its clients use AI for candidate sourcing, screening, and ranking, any inherent bias in the algorithm can lead to a discrimination lawsuit. Jurisdictions like New York City and the European Union are implementing laws that require proactive AI bias auditing, transparency, and governance. The firm's selection methodology-the core of its value proposition-is now a legal risk area, and you must prove your AI is fair.

Changes in employment law regarding 'gig economy' workers could impact their consulting model.

HSII operates a significant 'On-Demand Talent' segment, which generated 2025 Q3 net revenue of $50.9 million, an increase of 10.1% year over year. This segment relies on a consulting model that often uses independent contractors (gig workers). The legal challenge here is worker misclassification-the risk that a court or regulator will determine these contractors should legally be classified as employees.

Misclassification is costly because it triggers mandatory employer obligations, including:

• Paying for Social Security and Medicare taxes.
• Providing unemployment and workers' compensation insurance.
• Offering employee benefits like health insurance and retirement plans.

The global gig economy is projected to reach $455 billion by 2025, and nearly 50% of the U.S. workforce is projected to be contingency workers in the next five years, making the classification issue a top priority. Legal precedents, such as California's efforts to reclassify gig workers, create a direct threat to the financial model of the On-Demand Talent business if the firm is forced to absorb the higher costs of full employment for a substantial portion of its contractor pool. The firm must be defintely vigilant on its contractor agreements.

Heidrick & Struggles International, Inc. (HSII) - PESTLE Analysis: Environmental factors

Client demand for Chief Sustainability Officers (CSOs) and ESG-focused executives is accelerating

You're seeing the Chief Sustainability Officer (CSO) role shift from a compliance checkbox to a core strategic driver, and that's a massive opportunity for Heidrick & Struggles International, Inc. (HSII). Our own research from February 2025 showed that a staggering 86% of the top 250 companies in Europe now have a dedicated CSO. This isn't just a European trend, but a global one, reflecting how companies are reframing sustainability from a cost center to a competitive advantage.

The demand isn't just for the C-suite, either. It's for a whole bench of leaders who can blend business acumen with deep sustainability expertise-what we call the 'green skills' gap. HSII is directly capitalizing on this through its dedicated Sustainability & Climate Practice, placing executives and board members who can genuinely integrate environmental, social, and governance (ESG) factors into their business model. Honestly, if you don't have a sustainability expert in the room, you're defintely missing a key risk signal.

HSII must manage its own carbon footprint, especially related to extensive global executive travel

As a global leadership advisory firm, a significant portion of HSII's operational risk lies in its Scope 3 emissions, primarily from business travel. We fly around the world to meet clients; it's the nature of the work. But that means we have to walk the talk on our own environmental impact. To manage this, HSII has set Science Based Targets initiative (SBTi) validated goals, aligning our reduction efforts with the 1.5°C pathway.

The firm aims to reduce absolute Scope 1 and 2 greenhouse gas (GHG) emissions by 46.2% by 2030, from a 2019 base year. Plus, the most critical part: we are targeting a 55% reduction in Scope 3 GHG emissions from business travel and employee commuting per full-time employee (FTE) by 2030. Here's the quick math on our travel intensity:

While total Scope 3 emissions increased in 2024 due to a post-pandemic surge in business activity, the intensity per employee actually decreased by 11% over the five-year period. Still, managing that total number as the business grows remains a constant challenge.

Investor pressure for transparent sustainability reporting influences corporate governance consulting

Investor pressure for transparent sustainability reporting is no longer a fringe issue; it's a core corporate governance matter. Institutional investors like BlackRock are demanding clarity on climate-related risks and opportunities, which directly impacts the composition and focus of a client's Board of Directors.

This pressure creates a dual opportunity for HSII. First, we must maintain our own high standard of disclosure, which we do by aligning our 2024 Impact Report with frameworks like the Task Force on Climate-related Financial Disclosures (TCFD). Second, we use our expertise to advise clients' boards on how to respond to these demands, linking environmental performance to long-term value creation.

• Advise boards on climate-competent director recruitment.
• Help clients structure governance to oversee ESG strategy.
• Provide consulting on aligning executive compensation with sustainability targets.

Climate change-related business risks create new consulting opportunities for C-suite advisory

Climate change isn't just an environmental risk; it's a financial one-think supply chain disruption, physical asset damage, and regulatory shifts. This complexity is driving significant growth in the firm's advisory services, as C-suites need help translating these macro risks into actionable business strategy.

The demand for this high-level, strategic environmental advisory is a key factor in the strong performance of the Heidrick Consulting segment in 2025. This segment, which houses much of the firm's advisory work on organizational structure and culture shaping around issues like sustainability, saw net revenue jump by 16.6% to $31.2 million in the 2025 second quarter and another increase of 17.6% to $32.8 million in the 2025 third quarter, compared to the same periods in 2024. This growth is a clear indicator that companies are paying for advice on climate risk. In fact, our client work in sustainability topics surpassed 300 engagements helping advance the sustainable economy in 2023, showing the scale of this advisory opportunity.