«The greatest challenge in this new century is to adopt an idea that seems abstract: lo Sustainable Development» With this declaration the seventh secretary general of the United Nations Kofi Annan inaugurated the third millennium. The challenge has been an imperative for all countries on the planet for almost 30 years: to reduce CO2 emissions they must all do the same things. Sustainability instead has become a very concrete obligation, with the adoption of less impactful production models, more conscious consumption, recycling of raw materials, environmental protection, etc. Those who have to find the balance in the adoption of responsible and long-term practices are governments, who however have to deal with the resistance of the major polluters, with businesses that must adapt to virtuous standards, and those of citizens accustomed to consuming as if there were no tomorrow. It is therefore crucial that every decision is made following rigorous and independent studies, also because we are already late and nature is indifferent to our miseries. To indicate objectives and strategies to the countries of the Union, it is the European Commissionwhich must be studied to set practicable standards impacts on emissions of all production sectors, on resource consumptionon the reuse of raw materialson the production of fossil fuels, on agriculture. To do this, highly specialized personnel are needed, which the European Commission does not have. This is why Europe, like all international institutions, turns to external consultants, which however are not only, as it would be logical to think, universities or research centres. So let’s see how this machine that is supposed to take us works towards a greener future.
Rising costs and the “foot in two stirrups”
For consultancy of all types, in six years the EU has spent over 5 billion. Among the areas in which consultancy is used the most is that of environmental protection and the fight against climate change: since 2014 the General Directorate for Environment has distributed assignments for over 200 million euros (80 in the three-year period 2017-2019 alone), while to the Climate Agency (Cinea) – born in 2021 to manage projects closely linked to the fight against climate change – external experts cost in one year 52 million euros.
The issue, writes the European Court of Auditors, is that most consultancy firms work not only for those who write the rules (in this case the EU) but also for those who must respect themas they provide companies with advice to achieve sustainability objectives and obtain certifications, including environmental ones.
The political and private roles
The EU assures: consultancy is important to have a technical contribution, but we make the decisions in total autonomy. However, most of the consultancies end with advice on which policies to adopt. For example, in 2021 the Ramboll Management Consulting is paid over 200 thousand euros to produce a report on the adaptation of buildings to climate change (as part of the Life program). As explained in the presentation, the study contains “strategies for policy makers” such as setting standards to prevent overheating in buildings and suggests what the best solutions are to create buildings resistant to extreme climate events. At the same time, through its website, Ramboll is proposed to private individuals for the construction of buildings that are sustainable and resilient “to shocks such as extreme weather conditions”. The same thing applies to the project to evaluate the environmental impact that automated driving systems will have on European public transport: the project was called to coordinate the project (at a cost of 720 thousand euros) Bable GmbHwhich in the meantime collaborates with companies in the mobility sector such as Mercedesand that of automotive components Thinkz and Mahle. But the network of connections woven by consultants is not always so obvious. An example is the Task Force on Climate-related Financial Disclosures (Tcfd), the group of experts who developed the criteria through which companies can measure their environmental impact and which Europe has made mandatory for listed companies and those with more than 500 employees. The Tcfd – which dissolved after having fulfilled its task – included members of the big global consultancy companies (Deloitte, Kpmg, Pwc, Ernst&Young), who immediately launched services to assist businesses that need to adapt to the reporting system.
Environmental strategies and certified financial statements
In recent years, the most important companies in the sector they make the fight against climate change a flag also because – according to a study released by Kpmg – this year the market for consultancy on zero emissions is already worth 5.5 billion dollars And in 2028 it will break the 15 billion mark. But their main source of assignments is certainly not the EU, but large private companies, including the biggest polluters on the planet. An investigation by the New York Times on October 27, 2021 highlighted how the McKinsey has earned hundreds of millions of euros by advising on how to cut costs and increase profits at least 43 among the 100 companies that pollute the most, especially in the oil and gas sector. The same could be said for collaborations with fast fashion multinationals, whose disposable production system is generating a serious environmental impact (see Dataroom of 10 January): the Spanish group Inditex – which owns brands such as Zara, Stradivari and Oysho – reports according to the Tcfd recommendations and entrusts the audit to Ernest ad Young; while Deloitte audits the accounts of H&M, to which it also certifies the compliance of the sustainability disclosure.
«One-way» skills
There is not nothing illegal in all this, and the consultancy firms ensure they follow rigid protocols to keep interests distinct of their customers, whether public or private. But the Court of Auditors underlines that the contracts signed with Europe provide standard clauses which are reduced to «formal controls, which alone they cannot guarantee management of the risks of conflicts of interest». Furthermore, by entering the “button room”, external consultants acquire information and therefore new skills. But this works one way: none of the contracts examined by the accounting judiciary include «a specific condition for the transfer of skills from consultants to Commission staff». The result is that a addiction mechanism by these companies which forces them to continually renew the tenders, which are then always won by them: 53% of the money spent on consultancy by General Directorate of the Environment they ended up with just 10 subjects (out of the 117 who work with the DG), i.e. those who have become more competent in the meantime.
The Commission does not systematically evaluate the performance of its external consultants
The revolving doors
Once inside the European buildings, the consultancy giant they take away the best managers, offering salaries that are not comparable with public ones. Every year 400 employees of the EU, immediately after resigning, they ask for authorization to carry out a professional activity potentially at risk of conflict of interest. This is what the European Ombudsman says, urging the Commission to do so “more decisive approach” (therefore saying a few more “nos”) also because there is “no measure (…) to monitor former employees’ compliance with their obligations”. The Court of Auditors also says something else: «The Commission does not systematically evaluate the performance of external consultants», and therefore it is difficult to say what their true added value is. Only time will tell if the goal of achieving a zero climate impact Europe by 2050 will be respected, thanks to the policies developed also with their advice. However, in recent weeks the first major report from the European Environment Agency has been released which highlights “critical gaps” and “inconsistencies in existing policies” in the fight against climate change. Finally, the Court notes that the E.U he overestimated his investments within the climate action budget, including initiatives that have nothing to do with sustainability objectives.
The paradoxes and the repercussions
In 2022, the Budget Control Committee of the EU Parliament will task the Center for Strategy & Evaluation Services (CSES) in Dublin with analyzing how the Commission uses consultancy firms. The conclusions of the CSES (which over the years received orders from the European Commission for 4.4 million euros) are as follows: «There is scope for improvement in some aspects» but overall «the systems developed by the Commission for the use of consultants to support policy making they seem to work well». That is, for the innkeeper the wine is always excellent. A mechanism that is leading to a continuous impoverishment of skills within the EU public administration, in the large international institutions, up to the ministries of individual countries. The best managers are certainly not incentivized, on the contrary spoils system imposes continuous turnover, and the recruitment criterion is the level of loyalty to this or that party, almost never the degree of experience and knowledge in the sector they will have to manage. There’s always a long line of consultants telling you what to do anyway. Just pay them. If the indications are contrary to the public interest, but the lack of competence does not allow us to notice it, it is no one’s fault.
