As the global public and private sectors continue efforts to make good on their pledges to reduce global warming and stave off the worst impacts of human-caused climate change, the resulting market shifts could create massive opportunities for leaders that move quickly, according to a recent report by McKinsey & Company.
The new report, “The net-zero transition: what it would cost, what it would bring,” finds that achieving net zero emissions by 2050 would require investments of roughly $9.2 trillion per year until that date, with $6.5 trillion of the annual spend going to low-emissions assets and enabling systems and infrastructure. The analysis further shows that expanding demand for net-zero products and services could drive more than $12 trillion in annual sales by 2030, across industries such as transport, power, and hydrogen. According to the report, the transformation needed to protect the future of humanity stands to also create a boom in the climate technologies and solutions industries.
McKinsey’s report goes on to lay out the key technologies that will drive the transition to net zero, predicting that in Europe just 15 technologies could drive up to 70% of the emissions reduction necessary to reach net zero in the area. The report further suggests that growing public and regulatory support for net-zero efforts could enable the next generation of green companies to grow more rapidly than their early predecessors. The firm also shares seven keys to scaling green businesses that will be crucial to meet the coming demand, including building capacity with parallel scaling, investing early in talent recruiting resources, and proactively creating business ecosystems to drive change upstream in the value chain.
Successfully capitalizing on the need for climate transformation is no minor task. Business leaders will need to move rapidly, grow ambitiously, and think far ahead as they create and shape markets rather than waiting for the markets to manifest themselves. They will need to embrace the concept of rapid scalability and push far beyond the status quo. Those that commit to being innovative market makers stand to reap the substantial rewards of being at the forefront of climate action.