McKinsey&Company
Eleven big value pools
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A ticking clock. The latest report from the Intergovernmental Panel on Climate Change makes it clear: time has nearly run out to meet the 1.5°C warming target of the Paris Agreement. To do so, global emissions would need to top out before 2025, then drop by 43% before 2030. Getting there will require doing many different things—from switching to renewables and electric vehicles to planting more trees—to stop greenhouse-gas emissions and to pull carbon dioxide from the atmosphere. What’s more, all those things would have to happen at once. [Economist] |
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‘Ecopreneurs’ wanted. The drive toward net-zero greenhouse-gas emissions is spurring fresh demand for climate technologies—a trend that investors are getting behind. In March, a record number of start-ups pitched ideas for climate-saving products or services during a high-profile fundraising event. One of the start-ups is creating an algae-based feed additive that might lower cows’ methane burps by 80%. Climate-tech start-ups based in the US raised $40 billion of funding in 2021. As one founder put it, “People are no longer questioning whether there’s a market.” [Wired] |
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A moment to ‘play offense.’ History’s largest reallocation of capital may already be under way. However, many companies are spending more on mitigating emissions from their current operations when they should be pivoting to building new green businesses. Some net-zero plans only show how companies will keep up with stakeholder expectations and regulatory requirements. This is playing defense—trying to prove that a company will survive. Playing offense means showing that your business model is built to outperform during the net-zero transition, with a free cash flow that grows relative to expectations. |
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Four moves to create value. Risk won’t disappear, but leaders in the net-zero transition can create value by making bold plays. For example, our research suggests that green leaders in one chemicals sector have seen their enterprise multiples increase by a factor of two to five, while laggards’ multiples have stayed flat. Learn four complementary moves—such as building green businesses and transforming operations—for creating value in the net-zero transition. |
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| — Edited by Josh Rosenfield |
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