Two giant, mirrored walls are set to rise out of the sands of the Arabian desert. They will run parallel for more than 100 miles from the coast of the Red Sea through arid valleys and craggy mountains. Between them, a futuristic city which has no need for cars or roads will be powered completely by renewable energy.
This engineering marvel, its creators say, will usher in “a revolution in civilization”. It’s the jewel in the crown of a $500bn Saudi government project known as Neom, turning a vast scrubland into a techno-utopia and world-class tourist and sporting destination. Perhaps a harbinger for the end of oil, it will supposedly put the powerful petrostate at the forefront of the energy transition. For American consulting giant McKinsey & Company, its advising on this project appears to be making good on the firm’s green promises.
But behind closed doors, it has also helped the Saudi kingdom find lucrative ways to keep its oil industry afloat. While the identities of the firm’s clients and how much they pay for its advice are closely guarded secrets, documents analysed by the Centre for Climate Reporting (CCR) and the Guardian reveal that Neom accounted for at least 5% of McKinsey’s revenue in the United Arab Emirates in 2023. Meanwhile, state-owned Saudi Aramco, the world’s biggest oil company by output, accounted for between 1% and 5% of McKinsey’s UAE revenue in the same period. (McKinsey’s operation in the UAE is a major hub for its work across the Middle East.) Aramco’s CEO earlier this year described the phase-out of oil as a “fantasy” that should be abandoned.
McKinsey has even quietly worked on a government program which aims to keep poorer nations hooked on Saudi oil, sources alleged. It’s just one example of the firm claiming to help the world move to cleaner energy while quietly advising its clients on boosting fossil fuel production or sales.
McKinsey’s managing partner Bob Sternfels has said working with high-emitting clients is necessary to help them decarbonise. “Companies can’t go from brown to green without getting a little dirty. And if that means some mud gets thrown at McKinsey, we can live with that,” he wrote in 2021.
Though little is publicly known about the vast scale of the US consultancy giant’s work, a cache of US court records filed by McKinsey – as it applied to represent clients in bankruptcy proceedings – offers a glimpse into this secretive world. A dataset compiled with the support of non-profit research group Aria and investigative data analysts Data Desk reveals the identities of thousands of entities connected to the firm and previously unknown details about how lucrative some of them are. Entities the firm identifies as having “client connections” with McKinsey include the operator of one of the world’s largest open pit coalmines; companies exploiting Canada’s dirty oil sands; and Koch Industries, the wealth generated from which has been used to thwart action on the climate crisis for decades, critics say, through the creation and support of thinktanks and climate-denial groups.
“In a year set to be the hottest on record, it is unconscionable to have a clientele list that reads as the ‘whodunit’ of the climate crisis,” said Rachel Rose Jackson from campaign group Corporate Accountability. “The more [McKinsey] continues to partner closely with and profit from the very actors condemning people and the planet, the more complicit it becomes.”
Just 57 fossil fuel producers have been responsible for 80% of all global CO2 emissions since the signing of the Paris agreement in 2016, when countries pledged to aim to limit global heating to 1.5C above preindustrial levels. Almost two-thirds of those are among the list of entities connected to McKinsey in the disclosures, according to an analysis of the court records. The firm, which has 45,000 employees in 65 countries, has repeatedly promised to become “the largest private-sector catalyst for decarbonisation”. But some climate scientists now believe the 1.5C Paris goal will be impossible to achieve.
‘Capitalism incarnate’
Many simply call it “the Firm”, an appropriately mysterious moniker for the world’s biggest and most prestigious management consultancy. Non-disclosure agreements hold many of the more than a dozen former insiders the CCR spoke with to secrecy. “I do not discuss or comment on my work at the Firm,” one person wrote in a message.
But McKinsey has faced a series of negative headlines over the past several years – including about its alleged role in a corruption scandal in South Africa and how it allegedly helped fuel an opioid addiction epidemic in the US (the firm has said it would defend itself from charges in South Africa and is reportedly close to settling with US prosecutors over its opioid work). The scrutiny means that despite pulling in $16bn in revenue last year, a record in its storied history, the firm is emerging from perhaps its most difficult period to date.
McKinsey goes where the money is, former consultants told the CCR. “It’s capitalism incarnate,” one said. Another, who says they petitioned senior figures at the firm to curb some of its more damaging fossil fuel work, said he was told: “If we don’t do it, a competitor will.”
The firm has increasingly pushed the importance of its climate work in public, advising companies and governments around the world on the transition. In 2021, after the launch of its sustainability practice, it announced aspirations to be “the top destination for the best sustainability and climate talent everywhere”.
But tensions have risen within McKinsey about some of its worst-polluting clients. An internal memo written by a consultant to the consultancy’s senior leaders in 2021 took aim at its coal work. The firm was “complicit in the harms [coal] creates”, a copy of the memo seen by the CCR stated. Failing to address its coal work risked continuing the “cycle of reactive response to accusations of ethics indiscretions”, such as those about its work on opioids.
The firm should “immediately suspend global client service related to the expansion or sustainment of coal energy and coal mining”, the memo said, but stopped short of recommending severing ties with these companies entirely. “Any client service related to the transition of coal to renewable energy and the support of coal workers/communities is highly encouraged.”
At times, these tensions have spilled over into public view. An internal open letter reported by the New York Times in 2021 called on McKinsey to do more to address client emissions. It was signed by more than 1,100 people at the firm.
“Our positive impact in other realms will mean nothing if we do not act as our clients alter the earth irrevocably,” a copy of the letter seen by the CCR stated. Rather than asking the firm to drop its fossil fuel clients, the signatories called for ways of holding the firm publicly accountable for its promises on decarbonisation.
Yet former McKinsey consultants who spoke to the CCR said they felt the letter did little to move the needle on the issue. Some expressed frustration that while one team might be striving to reduce emissions, another could continue to work with a fossil fuel company to boost production.
A statement on McKinsey’s website in response to the New York Times report in 2021 said: “After this letter was sent, our leaders engaged with our colleagues to address their questions and explain our firm’s ongoing commitments on sustainability.”
A spokesperson for the firm told CCR and The Guardian: “We have been open about our work with fossil fuel clients and hard-to-abate sectors, and see no contradiction with our commitment to the energy transition. In decarbonisation scenarios consistent with Paris agreement levels, fossil fuel use is projected to decline, but will continue to be a part of the energy mix to meet the world’s energy needs.”
‘Like it or not’
Since 2019, McKinsey has submitted hundreds of pages of conflict of interest declarations while acting in five bankruptcy cases. Each one offers a snapshot into the firm’s vast Rolodex of current and former clients.
During the course of the bankruptcy proceedings, McKinsey is given a list of companies identified as “interested parties” in the case to ensure it can work with the “debtor” without conflict. It then looks at all of the interested parties’ “corporate affiliates” – such as subsidiaries, holding companies and joint ventures – sometimes generating a list with several thousand names on it, the court filings detail. The firm then compares this to its “client list” and discloses any matches to the court. McKinsey refers to these matches as “clients in matters unrelated to the debtor”.
The client disclosures include some of the world’s biggest polluters, a sharp contrast to McKinsey’s public ambition to be the “largest private-sector catalyst for decarbonisation”. The CCR and the Guardian asked McKinsey about examples in which the firm’s work had fuelled the climate crisis as it helped clients find new markets for fossil fuels and boosted their production and use.
A McKinsey spokesperson said: “Much of your reporting on these matters is misleading or inaccurate. The use of court filings and disclosures, many of which are outdated and serve a different purpose, is a flawed basis on which to make conclusions about our client work.”
The spokesperson added that the firm takes a “conservative approach” to the process and the “disclosures go beyond our client list”. He said that the filings also include organisations the firm may have pitched for work from and “umbrella organisations with ties to our clients”, but these are all referred to in the court records as “clients”.
The CCR and Aria analysed only entities McKinsey itself identified as “clients” in these filings, which included the firm’s broader definition. But the filings also reveal scores of clients that have been significant sources of revenue for the firm. This includes about 30 clients in the fossil fuel and mining industries, such as Aramco and oil majors Shell, BP, TotalEnergies and Eni.
Although most of the bankruptcy cases are unrelated to fossil fuels, together the filings offer an unprecedented look at the extent of McKinsey’s work for big oil and reveal the firm’s influence at state-owned fossil fuel entities at a level far beyond what was previously known.
The firm has worked with state-linked ventures in 19 countries that are referred to as “clients” in the disclosures, including five of the top 10 oil-producing nations, the disclosures show. This includes two Chinese state-owned oil firms – Sinopec and the China National Offshore Oil Corporation. Sternfels told a congressional hearing earlier this year: “We do no work, and to the best of my knowledge never have, for the Chinese Communist party or for the central government in China.” But Republican lawmakers said in a letter last month the firm had “misrepresented” its work in China, citing press reports and the bankruptcy court filings, some of which confirm that McKinsey’s Shanghai office had received significant revenue from Chinese state-owned entities. In a statement to the CCR and the Guardian, McKinsey maintained that it believed it had never worked with the central government of China or the Chinese Communist party.
The court records also reveal the oil refining and petrochemical giant Koch Industries as another lucrative client. In 2020, it accounted for between 1% and 3% of gross revenue for an arm of McKinsey that helps with company restructurings. Critics say funds from Koch Industries enriched its owners, the billionaire Koch brothers, who in turn funnelled money into a network of organisations that have resisted efforts to address the climate crisis. The company, which recently changed its name to Koch Inc, was dubbed “a financial kingpin of climate science denial and clean energy opposition” by Greenpeace in 2010. A McKinsey spokesperson declined to comment on the nature of its work with Koch Industries.
“Like it or not, there is no way to deliver emissions reductions without working with these industries to rapidly transition,” Sternfels wrote in 2021 after criticism of McKinsey’s fossil fuel work. He pointed to how the firm was already helping some of the biggest emitters reach net zero, such as “working with a global oil major to pivot its portfolio”.
But he omitted details of other parts of McKinsey’s business – like the raft of former petroleum engineers it has hired over the past several years who are dedicated to helping often old, emissions-intensive oilfields become more productive and profitable.
Since 2021, some of the firm’s major fossil fuel clients have also reportedly been slowing their push into cleaner energy. At times between 2019 and 2023, the oil company Shell has contributed significantly to McKinsey’s revenues in several countries, the CCR’s analysis of the bankruptcy filings reveals. But Shell’s investment in its renewables and energy solutions division reportedly dropped from $3.5bn in 2022 to $2.7bn last year. Recently, oil company BP, another significant client, reportedly ditched a target to cut oil and gas production by 2030 and now plans to scale back its energy transition strategy.
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McKinsey is “turning huge profits at the expense of the climate and the energy transition, thanks to its lucrative contracts with many of the world’s biggest climate criminals, including BP, Shell and Koch Industries,” said Pascoe Sabido, a campaigner at Corporate Europe Observatory. “It’s time to start holding McKinsey to account.”
A McKinsey spokesperson said: “Looking at a limited subset of fossil fuel clients does not give a full picture of the nature of our sustainability work across industries. McKinsey has been helping our clients decarbonise, build climate resilience and address sustainability challenges for more than a decade.”
A spokesperson for Shell said: “Shell is committed to becoming a net zero emissions energy business by 2050, a target we believe supports the more ambitious goal of the Paris agreement.”
‘Climate change wasn’t an issue at all’
As the world moves towards cleaner energy, the Saudi government has developed a secretive program with one simple aim: find new markets for the kingdom’s oil. Known as the oil sustainability program, today it is marketed as a sustainable development solution to Africa and Asia’s infrastructure problems. In reality, from the very beginning, the program has been a vehicle for protecting Saudi Arabia’s oil revenue, undercover reporters from the CCR revealed last year.
Until now, McKinsey’s past involvement in the controversial program has not been publicly known. But two people with knowledge of the oil sustainability program told the CCR that the Saudi government turned to the firm for advice.
“McKinsey had done a shitload of work in the buildup to the design of the program,” said one person who worked on the project and was granted anonymity to discuss confidential matters. When the program began in 2018, the source alleged that “dozens” of consultants advised on “what they should do and where they should look and what information they needed to make decisions going forward”. McKinsey experts in various fields would call in for workshops to share insights into what was happening in different markets.
The firm’s work was “very extensive and very impressive”, the source said.
Among the ideas raised during early discussions was the possibility of building airports in Africa, which would in turn boost the need for oil on the continent. “It costs you X million dollars and you’ve got a guarantee of however many flights, [and] you’re the guy that’s supplying the fuel oil,” the source said. Other ideas generated by the oil sustainability program, though not necessarily by McKinsey, include working with an automaker to produce a cheap car that can be sold in emerging markets to give “an oil uplift for the kingdom” and to fast-track commercial supersonic air travel, explicitly because it consumes three times more jet fuel than normal aircraft, according to presentations obtained from program officials as part of the CCR’s undercover reporting. It’s unclear specifically what ideas McKinsey’s consultants advised on.
During a speech at an oil industry event in Cape Town last year, the head of the program said Saudi Arabia could help increase access to energy and facilitate investment in roads, airports, and the cars and planes that make use of them. The team had developed 46 “opportunities” and hundreds of pages of business development strategy.
These 46 projects were picked from an initial batch of 80, based partly on how much they could boost oil demand, a program official later told undercover reporters. Asked if the aim was to artificially stimulate demand to offset declines due to efforts to tackle the climate crisis, the official replied: “Yes … It’s one of the main objectives that we are trying to accomplish.”
A McKinsey spokesperson declined to answer questions about the firm’s role in the oil sustainability program, including when this work ended. One partner allegedly involved in the work has engaged with a number of posts about it on social media over the past year.
The firm’s “fingerprints” were “all over” the program, the former insider said. “Climate change wasn’t an issue at all. Just not even on the radar … They didn’t care.”
‘India’s century’
In 2022, McKinsey released a major report laying out an ambitious pathway for India to reach net zero. It included limiting oil refining capacity to marginally above its current level and slowly reducing the amount of gas – along with other fossil fuels – that is used to power the country.
But privately, McKinsey has been working with the country’s state-owned companies on efforts that run against its own advice in that net zero report. It won a four-year contract worth 289m rupees (roughly $3.5m) in 2019 to develop an expansion project for the state-owned oil refinery at Numaligarh, publicly available company records published on the refinery’s website show. Construction is under way at the refinery, which will soon be able to process three times the amount of crude oil it can process today. McKinsey was one of at least three consultancy firms working on “performance improvement plans” at 15 state-owned refineries across the country in 2021, Indian government records show.
The country is one of the biggest developers of new crude oil pipelines, and the Numaligarh refinery will be served by the longest – at 1,600km (1,000 miles) in length. It will help the government of Narendra Modi realise its extraordinary ambitions to increase oil-refining capacity nationally from about 250m metric tonnes each year to 450m.
India’s prime minister also wants India to become “a gas-based economy”, increasing the proportion of gas in the energy mix from 6% to 15% by 2030. McKinsey worked on a long-term strategy with the country’s largest gas distributor, according to its 2020 annual report. The strategy it developed would see the state-owned company invest in gas infrastructure projects, such as “laying important sections of National Gas Grid … aligning with [government] priorities”, the annual report stated.
Dr Nandini Das, an energy economist at Climate Analytics, said investing in oil and gas infrastructure in “a resource-limited country like India” risked locking it into a fossil fuel-dependent future. That investment would be better directed towards renewable energy projects, she said.
Meanwhile, Sternfels has set his sights on growing McKinsey’s influence in the country. He recently told the Economic Times that it is “India’s century” and has plans to double the firm’s workforce there. Exactly what this means for the role it will play in helping or hindering the country’s energy transition remains to be seen.
The firm now has internal committees tasked with judging what projects might be considered reputationally risky, sources familiar with the processes said. A spokesperson for McKinsey said: “We are setting the standard for accountability and compliance in our profession. Today, we follow our industry’s most rigorous client selection policy.”
But just like the rest of the consultancy’s work, that process remains hidden from the public, too. McKinsey declined to answer questions about what fossil fuel projects it would no longer take on.
It was still willing to bid on a contract worth roughly $1.5m to develop Oil India Ltd’s “2040 strategy” last year, according to company records. The project targeted “enhanced and expedited domestic exploration and production”. While the “intended objectives” included scoping out a plan for “alternative fuels”, this should be “in line with India’s vision of a gas based economy”, a scope of work stated. The state-owned company also asked the consultancy to devise “an outreach strategy” to international oil companies.
India’s oil and gas minister recently invited international oil companies to work with Oil India to help the government extract as much oil as possible before the world transitions to cleaner fuels. He described it as “a race”, the Financial Times reported.
“I was with Exxon yesterday. I was with BP a few days earlier. I have had meetings with Chevron … I went to Brazil and had a discussion with Petrobras,” the minister, Hardeep Singh Puri, said. “I said you come, join Oil India prospecting off the Andaman waters … We will incentivise them.”
McKinsey ultimately lost out on the Oil India project to rival Boston Consulting Group.
One former insider said the individuals deciding what projects can go ahead have a vested interest in the financial success of the firm. They are “making choices about a project based on multiple factors”.
“Risk,” she said, “is only one of them.”
