McKinsey, BCG and Bain bar consulting work for Russian government

28 February 2022 7 min. read

The world’s three largest strategic consulting firms have publicly denounced Russia’s invasion of Ukraine. McKinsey & Company, Boston Consulting Group and Bain & Company will no longer work for government entities in Russia, following what has been described as the “criminal aggression” of Moscow.

Russia’s imperialist exploits in Ukraine stretch back centuries, but the latest chapter of this long history has its roots in a dispute which unfolded in 2021. Early last year, Ukraine’s President Volodymyr Zelenskyy cracked down on pro-Russian Ukrainian oligarchs, including Viktor Medvedchuk, a close friend of Russia’s President Vladimir Putin.

Over the following months, Putin deployed an increasing numbers of troops to the Ukrainian border. By December, tens of thousands of Russian troops were deployed to the borders, with Putin issuing demands to NATO and the US.

McKinsey, BCG and Bain bar consulting work for Russian government

Among the demands put forward is that Ukraine never be admitted to NATO – a military alliance between 28 European countries and two North American countries – a request rejected by the administration of US President Joe Biden.

Following this breakdown of relations with NATO and the West, Putin recognised the territories of Donetsk and Luhansk as independent states – they broke away in 2014, and have since been under the leadership of Russian-backed separatists – and sent troops in to “keep the peace.”

On February 24th 2022, Russia launched a full-scale invasion, expanding east, first through the Donbas territory, but fighting has since reached the capital of Kyiv and many other Ukrainian cities.

The actions of Russia’s military and government have been globally condemned by the international community, and a raft of sanctions have been deployed, with the hope of deterring further aggression by destabilising the country’s economy. Businesses have also joined the denunciations, with some of the world’s largest companies now declining work from Russian entities.

International condemnation

Over the course of the weekend, the growing number of voices have been joined by the leaders of the largest strategy consultancies – known collectively as the MBB. This began with McKinsey & Company’s Ukraine boss accusing Moscow of ‘criminal aggression’ against the country.

Oleksandr Kravchenko said in a post on LinkedIn that “it should be clear to any unbiased observer that the current Russian government is not simply reckless – it is criminal”, adding it had “committed a military crime by launching an overt direct aggression against a sovereign state,” and “committed crimes against humanity by consciously shelling and bombing civilian targets…”

Bob Sternfels, Christoph Schweizer, Manny Maceda

The Ukraine Managing Partner for McKinsey added he did not feel the sanctions imposed by the nations of the world would be “sufficient to stop this criminal madness quickly enough”, and called upon companies and organisations to also act immediately.

In this case, firms should “immediately cease any business with any Russian government entity” or any organisation with “even 1% of Russian government interest in it”; “freeze to the maximum extent possible (meaning anything short of violating human rights or endangering human life) any business in or with Russia”; and “inform your employees in Russia openly and honestly why you do it.”

The consultancy’s Global Managing Partner announced plans to limit work for Russian entities around the same time. Bob Sternfels stated on LinkedIn that the firm would no longer work for government entities in Russia, while labelling Russia’s actions in Ukraine “indefensible”. McKinsey has around 400 staff in Russia.

Sternfels noted, “Our firm has worked 24/7 to ensure the safety of our Ukraine-based colleagues and their families, and they remain front and center in my thoughts. The global McKinsey community, including our Russian colleagues, has been supporting relief efforts.”

“In addition to abiding by our own stringent client service policies, and further international sanctions that are enacted, our firm will no longer serve any government entity in Russia. We have always been thoughtful about our work in Russia, and we currently do not serve the central government, but after the indefensible actions its government has taken, we have taken this further step.”

By the end of the weekend, Boston Consulting Group Chief Executive Officer Christoph Schweizer had also condemned Russia’s actions. He said that in light of the ongoing war, the company – which recently announced it was open to recruiting “climate activists” – would now be “thoroughly evaluating our entire portfolio of work in Russia” and is “not working for the central government in Russia.”

Schweizer added, “Consistent with our long-standing partnerships, we are committed to working with the World Food Program and Save the Children to support the people of Ukraine. We are also committed to supporting governments in nearby countries with their humanitarian efforts.”

“Regarding our work in Russia: The business context in the country is unique and complex. We see this clearly. We have strict guidelines regarding all client work to ensure it is fully in line with our purpose and values. We have always applied these diligently in Russia, including rigorously respecting international sanctions.”

Not much later, the Global Managing Partner of Bain & Company Manny Maceda followed suit with a statement. Bain had however already last year decided to “not work for the Russian government at any level – central, state, or departmental – and also not to work with companies in specific industries, including military and intelligence.”

As a result, the firm’s client base in Russia is a mix of multinationals and Russian companies. “Some of our Russian clients are partially state-owned. At Bain, we have high standards and clear processes to ensure our work around the world is consistent with our mission and values. Given the current events, we are re-evaluating our work in Russia to ensure it meets that standard and to adhere to international sanctions,” stated Maceda.

“We stand with the people of Ukraine and call for a swift and peaceful end to this devastating event. Everything we will do – from our decision-making to our communications – will be guided first and foremost by ensuring the safety and security of our local teams in Kyiv and Moscow.”

Other commitments?

The three announcements were a watershed moment for the professional services industry, which has mostly dodged comment on Russia’s actions in Ukraine to date. However, it does place the firms in a peculiar position, having been quick to condemn the actions of military aggression in Ukraine while having also been so doggedly determined to maintain a lucrative relationship with the Saudi Arabian government.

Domestically, human rights abuse of government critics is widely documented – something which took on an international element in 2018 with the assassination of journalist Jamal Khashoggi. While the Saudi regime bitterly denies its involvement, US intelligence reports have since insisted that Saudi Crown Prince Mohammed bin Salman approved the murder of Khashoggi at the Saudi consulate in Istanbul.

In the fallout of this, many public and private entities distanced themselves from Saudi Arabia – but Bain, McKinsey and BCG all maintained their engagements with the Kingdom.