(Paris) McKinsey, the world’s largest consulting firm, is using its influence in the preparations for COP28 to defend the interests of its oil and gas clients, undermining efforts to exit fossil fuels, according to several sources and documents consulted by the ‘AFP.
Behind the scenes, the American McKinsey
An “energy transition narrative,” written by the firm and seen by AFP, forecasts a reduction in oil consumption of just 50% by 2050 and speaks of trillions of dollars of continued investment each year in “high-emitting assets” by then.
McKinsey, whose major hydrocarbon clients range from the American ExxonMobil to the Saudi national company Aramco, is one of the many firms providing free advice to the United Arab Emirates, the oil and gas powerhouse hosting the crucial negotiations of nearly 200 countries at COP28. , which will begin on November 30 in Dubai.
These will be chaired by Sultan Al Jaber, also head of the Emirati oil and gas company Adnoc.
The year 2023 is likely to be the warmest on record and greenhouse gas emissions continue to rise at unprecedented levels, despite the alarm sounded by scientists and the increase in climate disasters.
Meanwhile, McKinsey is “openly and unapologetically calling for lowering ambitions on eliminating oil from within the COP28 presidency,” said a source who attended confidential meetings with summit hosts.
“Sustainable development is a key priority” for McKinsey, responded to AFP a spokesperson for the group who said it was resolutely committed to supporting the decarbonization of the companies it advises.
“We are proud to support COP28 by providing strategic information and analysis, as well as sectoral and technical expertise,” he added.
Some of McKinsey’s competitors also operating in Dubai are working to find real climate solutions, report three participants in high-level COP28 preparatory meetings, who asked to remain anonymous.
“But it was very clear from the start that McKinsey had a conflict of interest,” said one of these sources who took part in the confidential COP28 presidency discussions.
“They were giving advice at the highest level that was not in the interest of the COP president in his capacity as responsible for a multilateral climate agreement, but in the interest of the COP president in his capacity as CEO of one of the largest oil and gas companies in the region,” she added.
Confidential documents consulted by AFP confirm this.
The transition plan prepared by McKinsey for the presidency of COP28, which AFP was able to see, “gives the impression of having been written by the oil industry, for the oil industry”, believes the oil expert. Kingsmill Bond financial markets.
“This is clearly not a credible trajectory towards the objective of net zero emissions,” analyzes this expert from the Rocky Mountain Institute think tank.
Contacted by AFP, a spokesperson for the COP28 presidency confirms that “McKinsey supports COP28 by providing expertise and analysis free of charge.” But to say the cabinet presented scenarios inconsistent with global climate goals “is simply incorrect,” he adds.
Structured like a law firm, McKinsey employs around 35,000 people worldwide, including 2,500 partners, for revenues of around $15 billion in 2022.
Through the Paris Agreement in 2015, nations committed to limiting global warming to well below 2°C and if possible 1.5°C. According to IPCC climate experts, the world economy must be carbon neutral by 2050 to hope to stay below this more ambitious threshold.
“On average, 40 to 50 million barrels per day of oil are still expected to be used in 2050,” compared to around 100 million today, says the McKinsey scenario.
These volumes would constitute double the maximum quantities recommended by the net zero emissions roadmap of the International Energy Agency (IEA), underlines Jim Williams, specialist in decarbonization strategies at the University of San Francisco.
According to the IEA, negative emissions technologies, by capturing CO2 from the atmosphere, should be multiplied by 100,000 by 2050 to achieve the goal of a carbon neutral world, a colossal challenge with no guarantee of success.
But McKinsey’s scenario would probably require at least double that, according to experts.
This plan “implies achieving a much greater scale of deployment of technologies” for capturing CO2, “or a much faster exit from coal and gas”, according to Mike Coffin, a former geologist at BP turned expert at the group of reflection Carbon Tracker.
McKinsey’s plan for COP28 calls for $2.7 trillion per year in new investments in “high-emission assets”, including those linked to oil and gas, but also to other sectors such as heavy industry and agriculture, until the middle of the century.
“Even in the current situation and in the absence of new climate policies, we expect global oil demand to peak during this decade,” Fatih Birol, executive director of the IEA, said recently.
But many majors – encouraged by the high profits earned thanks to the rise in prices due to the war in Ukraine – have gone back on their commitments to transition to renewables… or even redoubled their investments in hydrocarbons.
“We will continue to do what we do best,” replied Darren Woods, CEO of ExxonMobil, in an interview published in September on the McKinsey website, in which he explained why the company held away from wind and solar power.
In 2021, McKinsey’s work with the fossil fuel industry has sparked a rebellion within its own ranks.
More than 1,100 employees signed an internal letter, seen by AFP, warning of the existence of a “significant risk for McKinsey and for our values to continue on the current path”.
“Our inaction (or perhaps support) regarding customer emissions poses a serious risk to our reputation” and “to our customer relationships,” they write.
“For several years we have been telling the world to be bold and align with a 1.5°C emissions trajectory; it’s high time we applied our own advice,” they continue.
According to the McKinsey spokesperson, the firm is committed to helping clients achieve net zero emissions by 2050 and that includes working with “high-emissions sectors.”
“Divestment from these sectors would do nothing to solve the climate problem,” adds McKinsey.
Many companies call on consulting firms to prepare for climate risks and the opportunities of the ecological transition.
“We need help from consultancies because we need to take action, and very quickly,” says Bob Ward of the Grantham Research Institute on Climate Change at the London School of Economics.
“But it is essential that they actively work on the transition rather than trying to slow it down due to the interests of existing actors, such as the fossil fuel industry,” he adds.
The big players in the market – McKinsey, Boston Consulting Group and Bain – hire top graduates with six-figure salaries to strategize for their clients.
A 2022 McKinsey document promoting private carbon markets, seen by AFP, identifies several of its major clients, including oil companies Chevron and BP, electrician Drax and mining giant Rio Tinto.
The world’s largest oil company, Aramco, did not wish to respond to AFP on its relations with McKinsey.
McKinsey says it has helped healthcare clients expand their solar fleet, wind turbine manufacturers become more competitive and at least one developing country produce more renewable electricity, but does not name these clients. .
“If we want to ensure a controlled decline in fossil fuel production, we can’t do it if those who help (companies) make money from it continue to sit at the table,” he told l ‘AFP Pascoe Sabido, of the Corporate Europe Observatory think tank.
There is a legal “blind spot” on the role of consultancies in the climate crisis, he adds: “lobbying and backroom arrangements […] are much more dangerous there because there are many less accountability.”
McKinsey’s policies have led it to make headlines several times.
Over the past two years, the firm, which denies any wrongdoing, has been forced to pay hundreds of millions of dollars to settle lawsuits, after being accused of fueling the opioid crisis through its advice to pharmaceutical companies.
Numerous investigations have shown that the oil giants were aware of the impacts of global warming as early as the 1970s, thanks to the work of their own scientists, while attempting to undermine confidence in the work of climate scientists who reached the same conclusions.
McKinsey is “capable of doing a good job helping clients navigate the energy transition, but that work pales in comparison to what it does for oil and gas,” said a former consultant at the firm, who requested anonymity because of a non-disclosure agreement.
“They serve the biggest polluters in the world,” he asserts. “The best way to understand this company is to consider it as the most powerful oil and gas consultancy on the planet, which presents itself as a player in sustainable development while advising its polluting clients on all possibilities to preserve the status quo.”
