Bad Influence at the World Bank

Posted by davidritter - 18 April 2011 at 10:52am - Comments
Deforestation could increase in the Congo due to McKinsey advice
All rights reserved. Credit: © Greenpeace
Deforestation could increase in the Congo due to McKinsey advice

In her blog post last week, my colleague Tracy explained why Greenpeace has taken on one of the big beasts of the corporate jungle: the consultancy firm McKinsey. These guys are at the top of the tree when it comes to advising governments on forests, so we’ve published a report investigating  them called Bad Influence: How McKinsey-inspired plans lead to rainforest destruction. 

McKinsey, aka ‘The Firm’ as some people call them, are helping ministers from rainforest countries draw up plans to help them get money from a UN scheme that aims to reduce deforestation. The problem is, the resulting plans are riddled with errors and inaccuracies, make unproven assumptions, and fail to address the real drivers of deforestation - such as industrial logging.  Is this a coincidence, or is McKinsey the friendly guy whose advice you’d be better off ignoring?

McKinsey’s work wouldn’t stop forest destruction or degradation in any of the cases we investigated.  Indeed, the plans could actually help pay for forests to be chopped down and increase emissions - which is hardly what the UN was aiming for. And to make matters worse, McKinsey refuses to reveal their assumptions and reasoning behind the advice, which means that their analysis is shielded from scrutiny inside a secret black box.

It is pretty clear that Bad Influence has struck a chord. The French daily newspaper Le Monde, led the international coverage with a page feature on the report, headlined Mauvais génie de la forêt (‘The Evil Genius of the Forest’). In international business title Bloomberg, Congolese Environment Minister Jose Endundo confirmed the pervasive influence of McKinsey, acknowledging that the DRC Government had simply ‘adopted the McKinsey scenarios’.  Bad Influence has also brought out other detractors in to the open, including McKinsey’s direct competitors KPMG, who have criticised the McKinsey approach. 

Last Thursday, McKinsey was put under even more pressure when I joined a panel of speakers at the Civil Society Policy Forum of the Spring Meeting of the World Bank in Washington DC. (The same day Greenpeace Africa held a press conference to launch Bad Influence in Kinshasa in the Democratic Republic of Congo - one of the case study forest nations featured in the report).

My fellow speakers were Fabian Kesicki from the University College, London, who has written a report on McKinsey which contributed to our work. Patrick Kipalu from the Bank Information Center was also there to talk about how the World Bank should be keeping tabs on this area.  The focus of the panel was entirely on McKinsey‘s bad influence over national forest plans. I concluded my presentation with what I hope was a clear enough message:

"Greenpeace has a certain track record in publicly challenging the environmental credentials of leading corporations, whether it is because they have been sourcing cattle products from the Amazon, palm oil from recently deforested lands in Indonesia, or tuna caught via fishing methods with unacceptable rates of bycatch in the Pacific.

Our campaigning work around McKinsey is in its essence no different.  McKinsey does not sell timber, palm oil or fish, its product is the advice that it gives.  …

McKinsey’s advice needs to change if The Firm wants to remain a market leader and to avoid otherwise inevitable reputational damage."

Among the large and lively audience was Benoît Bosquet, Coordinator of the Forest Carbon Partnership Facility (FCPF) at the World Bank.  At the end of the presentations, Mr Bosquet admitted that the concerns over McKinsey’s secrecy about their method were widely shared, noting that ‘the blackbox is a problem for everybody’.  Mr Bosquet also emphasised that forest plans should be informed by good economics – presumably in contrast to the false assumptions and mathematical errors that characterise the ones McKinsey have a hand in.

Conspicuously, there was nobody in the audience who was prepared to defend the McKinsey approach.

So what are McKinsey thinking? Why haven’t they contacted us since Bad Influence was published or answered any of the specifics of our criticism?  Given McKinsey’s statement that their ‘credibility depends’ on ‘doing what is right’ rather than ‘what is right for … profitability’, you would think that they might be a bit quicker about responding to our recommendations

It is not too late: McKinsey can make amends, salvage its reputation and help rainforest countries to protect forests and safeguard their economies at the same time.

You can help: please write to McKinsey and ask Jeremy Oppenheim, the Global Director of McKinsey's Climate Change Special Initiative, to rethink their advice so that it helps to protect the earth’s last remaining rainforests >>

Initiative;

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