Why McKinsey's involvement in Australia's climate policy is raising eyebrows
What's the story
Leading consulting firm McKinsey has been awarded a $1.6 million contract by the Australian government to advise on energy and climate policy over an 11-week period.
The decision has sparked controversy as McKinsey has well-documented ties with major fossil fuel corporations.
The firm was tasked with conducting comprehensive market, economic, and policy analysis for Australia's Department of Climate Change, Energy, the Environment and Water.
Contract details
Role in shaping Australia's climate policy
The Australian government department defended outsourcing this work to McKinsey, saying it lacked the required technical expertise in-house.
However, critics argue that the contract was inappropriate given the firm's private sector clients.
The first payment to the consulting firm was $1,193,500 according to a government procurement document. However, the value of the contract later rose by more than $455,000.
Despite the huge investment, both the Australian department and McKinsey have remained mum on specific policies influenced by the firm's work.
Conflict of interest?
Ties with fossil fuel companies
The Centre for Climate Reporting and Aria, a non-profit research organization, have traced McKinsey to a number of fossil fuel companies in Australia.
The connections were revealed after an analysis of US court documents.
The companies involved include Caltex, Peabody Energy Australia, Santos, Shell Australia, Woodside, Inpex, BHP, Rio Tinto, AGL, and Origin.
However, McKinsey has not confirmed if it worked for these companies.
Firm's stance
Services and conflict of interest procedures
According to McKinsey's website, it helps oil and gas companies achieve sustainable growth and deliver unique results across the energy value chain.
The firm also claims to have set procedures for managing conflicts of interest, which it believes were followed in this case.
"McKinsey's services reflected skills in financial and economic analysis unavailable within the department at the scale required due to a short-term capability gap," a department spokesperson told Guardian Australia.
Public reaction
Criticism and concerns over McKinsey's involvement
The decision to rope in McKinsey to shape Australia's climate policy has drawn criticism.
Greens senator Barbara Pocock raised concerns over possible conflicts of interest considering the firm's private sector clients.
Independent senator David Pocock also echoed the sentiments, calling it "completely inappropriate for a consulting firm that derives so much revenue from fossil fuel companies to be advising the government on its climate and energy policies."
Expert opinion
Experts suggest alternatives to private consultants
Polly Hemming, director of the Australia Institute's climate and energy program, called it "alarming that McKinsey was relied on to 'guide' the development of Australia's climate policy."
University of Adelaide's Stretton Institute professor Fran Baum proposed that public universities could offer independent climate experts for future work.
"Our public universities are full of independent climate experts who could be commissioned to assist the public service and [are] likely much cheaper and better informed," Baum said.