McKinsey under fire for clients' 'rising share' of global emissions

The clients of McKinsey & Company have expanded their carbon emissions, according to an internal investigation of the firm’s clients. Emails reported by the Centre for Climate Reporting and The Guardian show a team of the firm’s consultants had been calculating client emissions since 2020, finding they were far in excess of their 2030 targets.

Since the Paris Agreement, nations around the world have been issuing net-zero targets – with net-zero meaning achieving a balance between the greenhouse gases put into the atmosphere and those taken out – by 2050. In line with this, a raft of professional services firms have set their own net-zero targets within varying time frames. These include the Big Four, and the MBB. However, one thing that has been increasingly made apparent is that while the direct carbon footprint of consulting work is important, it pales in comparison to the amount of emissions firms could cut out of the atmosphere if they worked to help their clients with their own net-zero ambitions.

In 2021, McKinsey & Company responded to this criticism by launching a new practice specialising in sustainability and ESG work. McKinsey Sustainability pledged to act as a “private sector catalyst for decarbonisation”, helping clients to drive a ‘brown to green’ transition of the global economy’s installed base; building new green businesses and innovations; retiring and repurposing the highest carbon intensity assets; and scaling nature-based solutions by scaling voluntary and compliance carbon markets.

Later that year, the firm’s global managing partner Bob Sternfels defended McKinsey’s continued engagements with some of the world’s largest polluters to that same end, writing “it is important to be in the arena, not on the outside looking in.” His statement also contended that “like it or not, there is no way to deliver emissions reductions without working with these industries to rapidly transition”. Sternfels – re-elected earlier in the year after facing a surprise run-off – has been haunted by those words, with an internal report allegedly showing the clients McKinsey is sticking with are not making progress on emissions.

McKinsey has counted many of the world’s leading fossil fuel producers among its sources of revenue for some time – including state oil company Saudi Aramco, and global entities Shell and BP. Speaking to the Centre for Climate Reporting (CCR), a small team of McKinsey consultants began calculating the total emissions such clients were responsible for, beginning in 2020. As reported by The Guardian, multiple people with knowledge of the work confirmed the audit included scope 3 emissions – those released when fossil fuels are burned that are counted against producers.

With this information, the consultants reportedly forecast what emissions from these clients would look like by the end of the decade. What became clear to the ream was that even taking into account its clients’ targets for emission reductions, they were set to fall short of their 2030 goals by some distance.

According to The Guardian, when the analysis concluded in 2021, it does not seem it came to anything. An internal email seen by the newspaper and the CCR alleged that even though they were aware of the situation, no senior members of staff were willing to “push the effort forward”.

Further details from the email seen by the CCR argued, “We are serving a client portfolio that is likely on the 3 to 5 degrees warming trajectory depending on what you believe about the rest of the world’s trajectory – this portfolio contains more than half of the world’s worst polluters. Our clients have a commanding and rising share of global emissions, and knowing what we know today, have a big and widening gap to the Paris aligned pathway.”

The Guardian also reported that the email alleged McKinsey’s sustainability work was preoccupied with helping “launder the Firm’s reputation”. With McKinsey still firmly “in the arena” by Sternfel’s reckoning, the email added that the firm was trying to “wash away the problems posed by our more inconvenient engagements expanding emissions elsewhere”.

McKinsey declined to comment on the findings of the internal emissions forecasting, but a spokesperson told The Guardian, “McKinsey has been helping our clients decarbonise, build climate resilience and address sustainability challenges for more than a decade. Three years ago, we committed to rapidly scale this work to help clients in all industries reach net zero by 2050, and to help the world reach the goals aligned with the Paris agreement.”