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Tuesday, March 21, 2023

McKinsey has a widespread furore over dealing with the planet’s largest pollutants

As world leaders prepare to meet in Glasgow next week to address the devastating effects of wildfires, floods and extreme weather caused by rising greenhouse gases, a riot is brewing within the world’s most powerful consulting firm McKinsey & Company over its support for the largest pollutants of the planet.

More than 1,100 employees signed an open letter to the firm’s top partners urging them to report how much carbon their customers are emitting into the atmosphere. “The climate crisis is the defining problem of our generation,” wrote the letter’s authors, nearly a dozen McKinsey consultants. “Our positive influence in other areas will mean nothing if we do not act the way our clients irrevocably change the land.”

Several of the authors have resigned after a never-before-reported letter was published last spring – one of them sent out a widely circulated email, citing McKinsey’s ongoing work with companies working for fossil fuels.

McKinsey has publicly stated that it is “committed to protecting the planet” and has been helping its customers with environmental concerns for over a decade. On October 15, the company held Climate Change Day, during which employees were informed about the progress towards achieving the goal of zero carbon footprint by 2030. However, McKinsey’s own carbon footprint is paltry compared to many of the companies it advises.

Until now, McKinsey has largely avoided scrutiny of its relationships with oil, gas and coal companies because it has carefully guarded the identity of its customers. But internal documents reviewed by The New York Times, interviews with four former McKinsey employees, and public records such as lawsuits shed new light on the extraordinary volume of this work.

Among the top 100 corporate polluters over the past half century, McKinsey has advised at least 43 in recent years, including BP, Exxon Mobil, Gazprom and Saudi Aramco, generating hundreds of millions of dollars in royalties for the company.

Around the world, from China to the United States, McKinsey’s work with these companies is often focused not on reducing their environmental impact, but on reducing costs, increasing productivity and increasing profits.

In 2018, these customers alone – among many other pollutants recommended by McKinsey – were responsible for more than a third of global carbon emissions, according to the Climate Accountability Institute, a nonprofit that tracks corporate emissions and the fossil fuels burned by customers. these companies.

DJ Carella, a McKinsey spokesman, said in a statement that reducing emissions globally “requires engaging with high-emission sectors to help them transition.”

Moving out of these sectors could reassure absolutist critics, he said, “but it won’t help solve the climate problem.”

McKinsey is not the only consultancy company dealing with large pollutants. The Boston Consulting Group has also advised major carbon emitters, including Angola’s state oil giant Sonangol. BCG notes that it is a “Consultant Partner” for the UN Climate Summit in Glasgow.

But McKinsey stands out with its 95-year history and leading position in the consulting world. A corps of consultants, spiced up by Rhodes Fellows and distinguished Harvard Business School professionals, could focus their talents on helping the company’s oil, gas and coal clients reduce their emissions. But these well-funded clients such as Chevron, Shell and Canada’s Teck Resources are hiring McKinsey to pursue business goals that often have little to do with global efforts to curb greenhouse gas emissions.

McKinsey has deep ties to the fossil fuel sector. More than half a century ago, Mobil, Shell and Texaco helped propel McKinsey to the top of the consulting firm.

A few weeks after stepping down as managing partner at McKinsey in 2018, Dominic Barton was named chairman of Teck, a Vancouver-based company that blasts mountains in the Rocky Mountains in search of coal for steel mills. Teck is one of the world’s largest exporters of steelmaking coal and in 2019. the carbon footprint – including the coal consumed by consumers – was equivalent to one tenth of Canada’s greenhouse gas emissions.

In the first year after Mr. Barton joined Teck, McKinsey’s work there skyrocketed. Among his projects was the Coal Processing Optimization project at a mine in British Columbia. Another assignment was simply labeled “Drill and Blast,” as McKinsey reports show. In his 2019 annual report, Donald R. Lindsey, CEO of Teck, said the project, which McKinsey consulted, helped “increase productivity and reduce costs.”

In Asia, McKinsey circulated a video bragging that it helped increase the coal company’s output by 26 percent, according to a 2019 memo written by Eric Edstrom, McKinsey’s outgoing consultant, concerned about the company’s environmental impact. “It looks like McKinsey has helped our client extract more, pollute more, presumably for the long term,” he wrote.

Mr Barton, who left Teck in 2019 when he was named Canada’s ambassador to China, did not respond to a request for comment made through Canadian government officials. Teck spokesman Chris Stannell said in a statement that the company is “committed to supporting global action to combat climate change and we are taking action to reduce greenhouse gas emissions, including our goal of achieving zero carbon emissions in all of our operations. 2050 “

Carella said it was “deeply misleading” to focus on one company, Teck, “as proof that McKinsey’s work is contributing to climate change,” although The Times provided the consulting firm with a list of 43 major carbon pollutants that have recently been clients.

He said the company is investing in efforts to promote sustainable development and that until the world moves away from fossil fuels, “billions of people around the world, especially in emerging economies, will rely on jobs, energy and materials. provided by the companies you specify. … “

McKinsey’s ability to influence the decisions of many of the world’s largest polluters is the reason why a group of about a dozen consultants sent out an open letter last spring. It has amassed over 1,100 collaborators as it spread throughout the firm’s global operations, according to three former McKinsey employees.

The authors stated that McKinsey’s failure to address its customers’ emissions “poses a serious risk to our reputation, our customer relationships and our ability to” build a great firm that attracts, develops, inspires and retains great people. ” But at the moment they also provided McKinsey with “a significant opportunity,” they wrote.

They asked McKinsey not only to cut its own emissions, but to publicly disclose the amount of carbon pollution generated by its customers in aggregate, and to commit to helping them do their part to limit the global temperature rise to 1.5 degrees Celsius. Beyond this threshold, the danger of global warming will increase dramatically, scientists say.

McKinsey has a “moral obligation to take action to influence our customers’ emissions and demonstrate the leadership our stakeholders expect from us,” the authors said.

On April 5, the firm’s managing partner, Kevin Snyder, and his designated successor, Bob Sternfels, responded to an open letter. In a memo, they said they “share your view that climate is fundamental to our planet and all generations,” and that they will discuss the firm’s direction on climate change on Earth Day, April 22, across the company “ask me something. “

Prior to the event, Mr. Snyder announced that McKinsey will help its customers cut emissions to meet the 1.5-degree target. “Our goal is to be the largest private decarbonization catalyst,” he said.

Mr Snyder and Mr Sternfels, who succeeded him in July, made it clear in the Earth Day call that McKinsey will continue to serve major polluters. Their message: McKinsey must continue to work with them to stay relevant, according to a summary received by The Times.

A McKinsey spokesman said the firm has already addressed the issues raised in the letter when it was sent and created a new platform to help customers reduce emissions. But the steps taken by McKinsey have not satisfied everyone.

At the end of July, Rizwan Navid, one of the letter’s authors whose work at McKinsey has focused on energy and decarbonization, sent an email to hundreds of colleagues. According to former employees, he is leaving McKinsey – one of several such departures in recent months.

“After looking at the actual hours exposed to the world’s largest polluters, it is very difficult today to argue that McKinsey is“ the greatest catalyst for the decarbonization of the private sector, ”he wrote. “It may well be exactly the opposite.”

World Nation News Desk
World Nation News Deskhttps://worldnationnews.com/
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