Major consulting companies and some of the big accounting firms in South Africa are cashing in on the climate crisis, a new report has revealed.
Major consulting companies and some of the big accounting firms in South Africa are cashing in on the climate crisis, despite conflicts of interest, and a lack of expertise and ambition, undermining South Africa’s just energy transition, a recent report by non-profit accountability organisation Open Secrets revealed.
The investigation highlighted that management consultants and institutions linked to donor countries are receiving the lion’s share of the grant funding meant for South Africa’s just energy transition projects.
The international financial pledge towards South Africa’s shift from coal to cleaner sources of energy — while ensuring that coal-dependent communities and workers are not left behind — is $12.8 billion and $2.8 billion of pledged funds has actually been committed to projects, according to Open Secrets. A total of $100 billion is said to be needed for the country’s just transition.
“Much of the grant funds are caught in a circular process that sees little money arriving on the ground in South Africa,” the report states.
“Instead, it ‘passes through’ South Africa only to again make its way into the hands of international platers. Where it is paid to South African entities, many of them are private consultants working for international firms.”
The findings show that 65% of the committed grant funds have gone to private corporations and organisations as implementing entities and less than 25% of the grant monies have gone to local implementing entities, including non-governmental organisations, public sector institutions and universities, lead investigator Zen Mathe said.
“We have also found that often there is a direct link where the money comes from — so the donor country — and where the money goes, so the implementing entity and, as a result, consulting firms, are playing a fundamental role in shaping South Africa’s response to the climate and energy crisis,” Mathe told a forum on the report.
“It’s concerning that private consultants have been given this opportunity to corner the market for advice on the climate crisis and a just transition, with little to no scrutiny.”
The report shows that most management consultancies have made fortunes by servicing the interests of fossil fuel companies and some of the world’s largest polluters.
These companies’ climate advice also “routinely lacks the ambition required to push for the systemic change that the climate crisis demands”.
The report questions whether these firms have the necessary skills and expertise to do the work they are contracted to do. The use of consultancy firms to guide policies on the just transition undermines the expertise and capacity within the state and is a risk to democracy, it claims.
“The undermining of state capacity and capture of the policy space by corporate interests closely tied to fossil fuel interests are risks to the democratic process. Where the voices and interests of the public are sidelined, the risk is heightened.”
It added that a lot of these discussions were happening behind closed doors, with little transparency.
The Boston Consulting Group (BCG) has been named as one of the major firms benefiting from the climate crisis, alongside McKinsey & Company and Bain, which were also implicated during an investigation into state capture in South Africa.
“BCG has positioned itself as a leader on climate-related consulting around the world and cemented itself as a key partner in South Africa’s energy space,” the Open Secrets report states.
This is despite having ties with petrostate Saudi Arabia and companies known to be major polluters, including Saudi Aramco, Shell and ExxonMobil, as well as being a consultant for Sasol — one of the world’s worst polluters.
“Despite BCG’s clear conflicts of interest, it has continued to play a key part in global climate negotiations,” the report states.
The consultancy was a partner at the 26th UN climate change conference (COP26) and also played a role at COP27, before it was chosen as the “principal strategy and action partner” for COP28 in 2023, which was held in the United Arab Emirates. According to the report, a record number of fossil fuel lobbyists — 2 456 — were present at the conference that year.
“BCG’s partnerships and choice in clients, who are amongst some of the top polluters in the world, has called into question its role as a strategic partner for the last three global climate conferences,” Open Secrets said.
“If the aim is really to pursue the transition to a low-carbon economy, it should surely be of concern that a firm that applauds fossil fuel companies for supposed ‘innovation’ — all while those companies double down on models incompatible with addressing climate change — should play any lead role in the most important global negotiations to tackle climate change.”
The report said from 2019 to 2021, BCG took on over 750 climate-related projects for over 300 clients and it made around $1.1 billion from climate consulting in 2021, which could account for almost a third of its sales by 2027.
In response to questions from Open Secrets about its work on South Africa’s just energy transition, BCG said: “As is already a matter of public record, our various efforts with multi-stakeholder coalitions (e.g. NBI [National Business Initiative], Busa [Business Unity South Africa], The Energy Council of South Africa) have involved many contributors from many different organisations as part of transparent consultation processes, with BCG providing analytical and technical modelling support.
“We are proud of our contribution to South Africa’s JET,” it added.
Sasol confirmed that it takes consultation from BCG and various other firms on its projects, adding: “We do not publicly disclose the specifics of all our consulting engagements or their ongoing status.”
McKinsey & Company told Open Secrets that it has been open about its work with fossil fuel clients and “hard-to-abate sectors and see no contradiction with our commitment to the energy transition …
“We are proud to work with clients in all of these sectors — including in oil and gas.”
The big four accounting firms, EY, Deloitte, KPMG and PwC, have punted climate-related and environmental social and governance projects, but only two, Deloitte and PwC, are currently working on just transition-related projects and benefiting from the grants portion of just energy transition project funds, according to the report.
These two firms have also been implicated in state capture for audit failures — and their role in these projects need to be “carefully scrutinised”, the authors recommended.
PwC did not respond to questions from Open Secrets, and Deloitte refuted claims of involvement in state capture and corruption in a matter with Eskom.
In July 2024, “just transition” was officially defined under the Climate Change Act as “a shift towards a low-carbon, climate resilient economy and society and ecologically sustainable economies and societies which contribute towards the creation of decent work for all, social inclusion and the eradication of poverty.”
The implementation and interpretation of the Act requires decision-making that considers the needs of the most vulnerable, head of legal at Open Secrets Ariella Scher said.
“It’s from that perspective that this report demonstrates that that doesn’t seem to be what’s happening. What is happening is that the most powerful, and those who have always been in charge of our economies, are just continuing to benefit,” Scher said.
The authors recommended that money for the just energy transition be funnelled to the South African state, not only to private sector institutions, and should be in compliance with the Public Finance Management Act (PFMA).
Additionally, the funds must be monitored and recorded in a publicly accessible repository and “spent in a manner that is determined by the South African state itself”, said Mathe.
“This allows for financial oversight, but also really importantly, democratic oversight because it subjects the spending of state monies to financial audits parliamentary oversight and so we have greater accountability, if we’re following what the PFMA says,” Scher added.
Open Secrets is also calling for more regulation.
“There must be public debate about how we hold these unelected private technocrats to account. We must critically consider the impact on South Africa’s pursuit of an energy transition that is just and benefits the most vulnerable in our society and those that are most immediately affected in our society,” said Mathe