In this edition:
The Great Reallocation
After years of companies playing defense with sustainability, the landscape has shifted to an emerging growth opportunity—for those savvy enough to seize it.
Average annual spending on energy, mobility, industry, buildings, agriculture, forestry, and other land use, 2021–50, $ trillion
$9.2
New spending
$3.5
low-emissions assets
$1.0
reallocated to low-emissions assets
$2.0
low-emissions assets
$2.7
high-emissions assets
Current spending
Big spender
A shift in spending from high- to low-emissions assets could create the largest reallocation of capital in history—a potential boon for the environment and the economy alike.
Dive deeper
Report – McKinsey Global Institute
The net-zero transition: What it would cost, what it could bring
Addressable market size in 2030, selected categories, $ billion
Transport
2,300 to 2,700
Buildings
1,300 to 1,800
Power
1,000 to 1,500
Water
1,100 to 1,200
Consumer
850 to 1,200
Agriculture and land use
550 to 1,200
Oil, gas, and fuels
650 to 1,150
Hydrogen
650 to 850
Waste
300 to 400
Industrials
250 to 300
Carbon management
100 to 200
More important to employers than employees
More important to employees than employers
+2
Somewhat to most important
+1
Employees
0
–1
–2
–2
–1
0
+1
+2
Somewhat to most important
Employers
Valued by organization
Valued by manager
Sense of belonging
Having caring and trusting teammates
Potential for advancement
Flexible work schedule
Inadequate compensation
Poor health
Looking for a better job
Development opportunities
Ability to work remotely
Poached by another company
Gold rush
Fast-moving companies stand to benefit. Eleven value pools could generate more than $12 trillion in annual revenues by 2030.
Dive deeper
Article
Playing offense to create value in the net-zero transition
Average annual share of GDP spent on physical assets for energy and land-use systems, by region, 2020–50, % of regional GDP
Mixed bag
Fossil fuel– producing regions
18.0%
5.9%
Other economies
9.8%
Developing countries
The opportunities will be uneven. Developing economies and regions rich in fossil fuels will be most financially exposed to the net-zero transition.
Dive deeper
Report – McKinsey Global Institute
The net-zero transition: What it would cost, what it could bring
Projected demand and supply of green materials in 2030, by market
Base scenario
Ambitious
European flat green steel, million metric tons
Global green/secondary aluminum, million metric tons
50
50
43
9
2
33
27
11
41
41
23
22
Demand
Supply
Demand
Supply
Global automotive-grade recycled polypropylene, thousand metric tons
European low-carbon battery, gigawatt-hours
682
85
328
333
597
280
59
72
20
274
260
256
Demand
Supply
Demand
Supply
“
People need to feel valued and supported, even when they’re not entirely sure why they’re feeling so fragile.”
—
Adria Horn, lieutenant colonel, US Army Reserve; executive vice president of workforce, Tilson Technology Management
Pitfalls
And risks abound. For example, companies trying to keep their sustainability promises by using green materials could be stymied by a shortfall in supply.
Dive deeper
Article
It’s not easy buying green: How to win at sustainable sourcing
Ten climate technology families, with examples
Renewables
Solar, wind, grid innovation
Hydrogen
Electrolyzers, fuel cells, methane pyrolysis
Batteries and energy storage
Electric-vehicle batteries, long-duration energy storage
Sustainable fuels
Advanced biofuels, e-fuels
Circular economy
Nature-based solutions
Battery recycling, heat recovery, plastics recycling
Monitoring and verification for forests, mangroves
Building technologies
Carbon removal, capture, and storage
Geothermal heating, heat pumps, electric equipment
Point-source carbon capture, direct air capture
Industrial-process innovation
Electrification of heat sources, green steelmaking
Agriculture and food
Precision agriculture, alternative proteins
Pay to play
Pay to play Restructure compensation packages and consider benefits that help create better work–life balance.
Play to win
Play to win Listen to your workers—anticipate and address concerns, foster psychological safety, and create a supportive culture.
Stack the deck
Stack the deck Seek talent among nontraditional employees and those not in the workforce at all.
Pay to play
Play to win
Stack the deck
Green tech
Climate technologies can help. Scaling them will be a challenge, however, and may require businesses to work together, taking a more cooperative approach than they are used to.
Dive deeper
Article
Delivering the climate technologies needed for net zero
Carbon-neutral capital
“
This train is not reversing, and it’s going to accelerate. We talk about that with leaps forward in technology. It’s also happening with climate and ESG [environmental, social, and governance]. These issues are here to stay and may actually represent the biggest investment opportunity.”
—
Charles Emond, CEO, Caisse de dépôt et placement du Québec (CDPQ)
But smart companies recognize the opportunity in sustainability investments, particularly as more stakeholders demand net-zero commitments.
Dive deeper
Interview
CEO Interview: CDPQ invests in climate action
Now that you’ve read the Five …
Take a fifty-minute deeper dive
Report – McKinsey Global Institute
The net-zero transition: What it would cost, what it could bring
Article
Playing offense to create value in the net-zero transition
Article
It’s not easy buying green: How to win at sustainable sourcing
Article
Delivering the climate technologies needed for net zero
Interview
CEO Interview: CDPQ invests in climate action