Open Secrets report: How big consulting firms are cashing in on the climate crisis

Coal mining and coal-fired power stations, such as this one in Mpumalanga, have taken their toll on the environment and human health. Now multinational consultancy firms, who work for fossil fuel giants, are taking international grant money to advise the government on transitioning away from coal to meet international carbon reduction commitments. Photo: Steve Kretzmann

• Investigative non-profit organisation Open Secrets has launched a new report on how international consulting companies are benefiting from the climate crisis.
• Some of these consultancies were implicated in state capture but now advise the government on how to transition to a sustainable, carbon-neutral economy.
• At the same time, these firms work for the world’s fossil fuel giants.

A new investigative report released on Thursday by non-profit social justice organisation Open Secrets lays out how multinational consultancy firms are cashing in on the climate crisis.

Titled The Climate Consultants: How management consultants cash in on the climate crisis, the investigation, led by Zen Mathe, Michael Marchant, Ra’eesa Prather and Ariella Scher, describes how technocrats in the private sector, paid from the public purse, are influencing government climate change policy, while continuing to consult for the very fossil fuel companies exacerbating the crisis.

Using public documents, interviews and responses to questions, the authors make a case that the government’s increasing reliance on consultants to formulate responses to the climate and energy crises undermines state capacity in the long run and puts democracy at risk by side-lining the voice of the public.

The report points out the massive size of the global management consulting market, which passed the US$1-trillion mark in 2023.

The report notes there was a surge in demand for climate change consultancy in the wake of the 2015 Paris Agreement, which saw 195 countries commit to keeping global warming below 1.5 degrees above pre-industrial levels.

(World temperatures exceeded 1.5 degrees above pre-industrial levels in 2024 — a stark warning that we are on track to break the Paris Agreement target, which refers to long-term warming over a 20 year period.)

As part of their commitment, countries have to submit Nationally Determined Contributions every five years, which detail the actions being taken to reduce greenhouse gas emissions. This is where consultancy firms have been used to provide modelling and advice.

Yet these firms, three large multinationals known as the Big Three – McKinsey, Bain and Boston Consulting Group (BCG) – and the consulting arms of the Big Four multinational accounting firms – Deloitte, EY, KPMG, and PwC – also continue to do “lucrative work” for fossil fuel companies.

“While consultants will argue that they are a key part of trying to get fossil fuel companies to change, there is little evidence of them doing so. Instead, the evidence is that their clients are steadfastly engaged in misinformation, greenwashing, and lobbying to slow down reforms needed to address the climate crisis,” argues the report.

The report claims there is no “corporate wall” between the consultants working for fossil fuel clients and those advising the government on climate mitigation and adaptation strategies. “They inevitably meet at the same water cooler … (and) chase the same goals of position and profit.”

The report gives examples of how large consultancy firms promote oil and gas production in the short and medium term, which ignores scientific consensus that any further investment in fossil fuel will destroy any attempts to reduce carbon emissions to net-zero by 2050.

The authors claim there is also evidence the consultancy firms “actively facilitate new deals to pursue new fossil fuel developments”. These may be catastrophic for human life in the long term, but are good for profits in the short term.

Just transition compromised

The Climate Change Act defines “just transition” as “a shift towards a low-carbon, climate-resilient economy and society and ecologically sustainable economies and societies which contribute toward the creation of decent work for all, social inclusion and the eradication of poverty”.

A just transition is essential, argue the authors, if South Africa is to undo the damage to human health and the environment caused by our fossil-fuel and mining-based economy, along with the inequality it has created.

The report describes how much of South Africa’s Just Energy Transition (JET) plan is being financed by a US$12.8-billion pledge from France, Germany, the United Kingdom and the European Union. Most of the money so far provided is in the form of concessional loans, which means it still has to be paid back, albeit at favourable rates. The terms and conditions of these loans are not made known.

“According to the JET Grants Register, around 65% of the committed grant funds have gone to private corporations and organisations as implementing entities,” the report says. “Less than 25% of the grant monies go to local implementing entities, such as non-governmental organisations, public sector entities, and universities. More often than not, there is also a direct link between where the money comes from (the donor country) and where the money goes (the implementing entity).”

One example is the money paid to PwC’s consulting arm, which is the implementing entity for four Just Energy Transition projects worth more than R130-million.

These projects are funded by the UK government. On two large projects in Mpumalanga, PwC is working with Adam Smith International, a UK firm which has been involved in several scandals.

While the UK government will count all its grant funding as a contribution to South Africa’s just transition, much of it ends up paying consultants’ salaries. “It is likely that money earmarked as grant funding to assist Mpumalanga’s just transition is contributing to the rent for Adam Smith International’s swanky offices in central London,” note the authors.

The report says that PwC was the external auditor for SAA and looked the other way when executives Dudu Myeni and Yakhe Kwinanan led the state airline to financial ruin.

Similarly, Open Secrets describe how Deloitte, which was the external auditor for Steinhoff for 20 years until it collapsed, and is implicated in the possible audit failure at Tongaat Hulett, received R145-million from US grants to be the implementing agent in a number of Just Energy Transition-related projects.

State capture’s legacy

Open Secrets also dig into the Boston Consulting Group (BCG). The report notes that unlike McKinsey and Bain (which was banned in 2022 by National Treasury from doing business for the state for ten years), BCG was not found to be involved in South Africa’s state capture. The scrutiny and mistrust of McKinsey and Bain has been an opportunity for BCG to land numerous contracts, “especially in the climate and energy space”, with the result they are “playing a large role in many important public policy processes, with little scrutiny or public outcry”.

The Open Secrets report reveal a “revolving door”, allowing consultants to move across firms, often to avoid accountability for wrongdoing. Several members of the team at Bain who helped gut SARS during state capture “moved to BCG within a short period of time after the full extent of Bain’s role in the attack on SARS was revealed”.

While BCG has scored R30.2-million from grant funds for the Just Energy Transition Plan in South Africa, Open Secrets names a partner at BCG who they claim was one of a number of former Bain consultants involved in the SARS scandal. One of BCG’s largest corporate accounts is Standard Bank. Adam Ikdal, who Open Secrets states had a 25-year career with BCG, including a stint as managing partner, joined Standard Bank in 2022 as chief of strategy.

“The relationship is noteworthy,” remark the authors, given that Standard Bank announced a year ago that it would finance the controversial US$5-billion East African Crude Oil Pipeline project despite massive criticism.

This is but one example of why consultancy firms such as BCG should be “viewed with caution”, state the authors, who with this report attempt to shine a light on opaque operations that maintain a ‘business as usual’ status quo, while profiting from the crisis this approach has caused.

Open Secrets sent requests for comment to the parties mentioned in the report

• BCG responded, on behalf of its partners, that it is committed to the law and regulations, and that it cannot provide details on its individual projects due to confidentiality agreements.
• Standard Bank said that it had contracted BCG prior to Ikdal joining the company.
• Adam Smith International said it had “implemented comprehensive governance and leadership reforms, strengthened our compliance processes, and introduced robust ethical and transparency policies”.
• PwC did not respond to questions, says Open Secrets.
• Deloitte said: “[W]e were unable to make a direct link between the grant payments listed in the Registry and Deloitte Africa’s records .. other Member firms within the Deloitte network may have been involved in the delivery of these projects … The information provided in the Registry was fairly limited, and at a specific point in time. Accordingly, we are unable to comment on the other questions raised related to these grant payments specifically.”

The report by Open Secrets can be downloaded here.

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