There may be no honour among thieves, but things can be pretty fierce among consultants too. The credibility and credentials of global consultancy giant McKinsey&Co
(known to its staff as ‘The Firm’) have been taking a battering
lately and it has not taken long for competitors to sniff the opportunity.
McKinsey has been the leading provider of advice on how to reduce carbon emissions from deforestation and degradation of forests (REDD
), retained to advise on national plans for Indonesia, Papua New Guinea and the Democratic Republic of Congo
But The Firm’s dominance of the REDD advice market has recently been rocked
by serious allegations from Greenpeace
and the Rainforest Foundation
. According to the two leading environmental organisations, McKinsey influenced REDD plans for rainforest nations are fundamentally defective and could actually lead to significantly increased deforestation, as well as biodiversity loss and mass human rights violations.
, so far McKinsey’s public response has been subdued. But things are getting harder for The Firm, with major commercial rivals publically distancing
themselves from McKinsey’s controversial approach.
This fortnight has marked the resumption
of the United Nations’ climate negotiations in Bonn, and with the urgency of reducing emissions from deforestation high on the agenda, the suite of allegations about McKinsey was sure to be of interest in the corridors.
Your correspondent was in Bonn to join a panel at an official side event
covering the McKinsey controversy. Also part of the discussion was Richard Gledhill
from PriceWaterhouseCoopers (PWC) in London.
Naturally, the immaculately courteous Mr Gledhill did not comment on McKinsey directly, but in a report
recently provided to the UK Government (which along with Australia, Norway and other is among the key donor nations to the emerging international REDD scheme) PWC have already warned against heavy reliance on ‘external consultancy support’. It is hard not to read these words as a thinly veiled reference to the ubiquitous McKinsey.
Even more significantly, the PWC report repeatedly emphasises the need for safeguards on biodiversity and the rights of forest peoples – marking a striking contrast with the problems associated with the McKinsey influenced plans reviewed by Greenpeace and the Rainforest Foundation.
Speaking in Bonn, Gledhill was at times quite blunt. He warned, for example, that without sufficient community and civil society involvement plans to reduce emissions from deforestation simply ‘ain’t gonna work’.
Gledhill’s observations were supported by the comments of another speaker, Dr Justin Ondopa, Director of Climate Change at Ecoforestry Forum in Papua New Guinea who warned that in his country the rights of traditional land holders were being ignored in the development of the McKinsey influenced national REDD plan. These comments come in the same week that the whistle blower website PNG Exposed
of monies being paid by the Papuan Government to McKinsey. Intriguingly, the website also reports that ‘McKinsey and Co have refused to comply with PNG laws and register with the Investment Promotion Authority and Internal Revenue Commission’.
PWC’s explicit recognition of the need for proper safeguards on biodiversity and the rights of forest peoples for proper engagement is in welcome and stark distinction to the problems associated with the McKinsey influenced plans reviewed by Greenpeace and the Rainforest Foundation.
Not that one should get dewy-eyed about PWC: like any big business consultancy, the bottom line is always going to remain the bottom line. But it seems apparent that PWC have recognised the fundamental methodological failings in the McKinsey influenced plans and see commercial prospects in their rival’s shortcomings.
What makes this doubly commercially dangerous for McKinsey is that the Firm’s advice is known to have influenced a number of national plans for reducing deforestation which have then in turn been criticized by multilateral funding institutions (as set out here
). The clear implication is that when rainforest countries employ McKinsey to advise on their REDD prospects they may be at risk of their wasting money on a product that is unfit for purpose.
No wonder PWC can sense the opportunity.