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by "McKinsey CEO Shortlist" <publishing@email.mckinsey.com> - 04:43 - 1 Dec 2023

What is the global stocktake?

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Brought to you by Liz Hilton Segel, chief client officer and managing partner, global industry practices, & Homayoun Hatami, managing partner, global client capabilities

On the global stocktake

In the news

•

Five years. If greenhouse gas emissions resulting from human activity continue apace, the world has about five more years before global warming will likely exceed the more stringent limit set under the Paris Agreement, climate scientists said in October. Previous studies have shown that governments aren’t curbing emissions quickly enough to limit the Earth’s warming to 1.5°C. Yet, even though the best pathways for holding global warming to the stricter limit may be gone, humanity still can meet the 2°C limit, the scientists said. [NYT]

•

Focus on fossil fuels. In 2030, countries across the globe are expected to produce roughly twice the amount of fossil fuels than would be allowed under global warming goals set in 2015, according to a new UN report. Phasing out fossil fuels is “one of the pivotal issues” that UN member nations are discussing at COP28, said a scientist and one of the report’s main authors. None of the world’s 20 biggest fossil fuel producers have agreed to limit coal, gas, and oil production to levels consistent with keeping global warming to 1.5°C. [Reuters]

At COP28, UN member states will respond to the stocktake’s findings. One possible outcome is the creation of pathways to involve the private sector on climate action.

On McKinsey.com

•

Falling short of climate goals. COP28, which began November 30 in the United Arab Emirates, will include a discussion of the first-ever global stocktake, a comprehensive assessment of progress since the 2015 Paris Agreement. An early look at the findings from the global stocktake indicates that the global community is not on track to achieve the goals set out in the Paris Agreement. The highest-level goal is to keep global warming under 2°C while pursuing efforts to stay within 1.5°C.

•

Cutting greenhouse gases. The global stocktake report outlines four areas in which progress is necessary. One area, mitigation, highlights the need to reduce greenhouse gas emissions by 43, 60, and 84% from 2019 levels by 2030, 2035, and 2050, respectively, to limit global warming to 1.5°C. See our McKinsey Explainer to connect with McKinsey experts—such as senior partner Cindy Levy and colleagues—on the global stocktake and discover what could happen now as UN member states consider the stocktake’s recommendations.

Understand the global stocktake

— Edited by Belinda Yu, editor, Atlanta

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by "McKinsey On Point" <publishing@email.mckinsey.com> - 01:19 - 1 Dec 2023

The path to net zero, family-owned businesses, public–private–philanthropic partnerships to address climate change, and more: The Daily Read weekender

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World leaders have begun to convene this week at COP28, the UN's annual conference on climate change. As we head into the final month of the year, take some time to catch up on the week’s highlights on paving a successful path to net zero, how family-owned businesses can capitalize on their potential, middle managers, and more.

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A successful net-zero transition will require achieving four interdependent objectives: emissions reduction, affordability, reliability, and industrial competitiveness, write Humayun Tai, Daniel Pacthod, Sven Smit, Tomas Nauclér, and coauthors.

Follow 7 principles

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Family-owned businesses account for more than 70 percent of global GDP. And those that combine four critical mindsets with five strategic actions have an opportunity to quadruple their value over the next five to ten years, according to Acha Leke and coauthors.

4 critical mindsets

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An affordable, reliable, competitive path to net zero

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An affordable, reliable, competitive path to net zero

A successful net-zero transition will require achieving not one objective but four. We offer a guide to getting it right.

Follow 7 principles

Related Reading

The net-zero transition: What it would cost, what it could bring

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From poverty to empowerment: Raising the bar for sustainable and inclusive growth

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While there’s been undeniable headway in reducing emissions, the world is not transitioning quickly enough to achieve the goals that societies, governments, and organizations envision. The transition must not only reduce emissions but do so affordably, reliably, and while enabling countries to remain competitive, according to new McKinsey Global Institute research led by Mekala Krishnan , Sven Smit , Humayun Tai , Daniel Pacthod , Tomas Nauclér , Blake Houghton, Jesse Noffsinger , and Dirk Simon. On the kick-off of COP28—two intense weeks to bring our world one step closer to net zero—explore the report and other recent insights on achieving a well-managed transition.

Join our virtual COP28 program to watch live, in-depth, inspiring discussions that drive climate action and growth, and bookmark the Sustainability Blog for daily conference highlights.

by "McKinsey & Company" <publishing@email.mckinsey.com> - 02:12 - 30 Nov 2023

COP28: Driving climate action and growth

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New from McKinsey & Company

Driving climate action and growth

An affordable, reliable, competitive path to net zero

A successful net-zero transition will require achieving not one objective but four. We offer a guide to getting it right.

Follow 7 principles

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The net-zero transition: What it would cost, what it could bring

Governments and companies worldwide are pledging to achieve net-zero emissions of greenhouse gases. What would it take to fulfill that ambition?

Build a green future

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The energy transition: A region-by-region agenda for near-term action

What practical actions could countries take now to ensure that the energy transition both accelerates and proceeds in an orderly fashion?

Make the transition

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Toward a more orderly US energy transition: Six key action areas

The US drive to decarbonize is at an inflection point. Critical actions could accelerate the transition while enhancing energy affordability and supporting inclusive economic growth.

Act now

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Five key action areas to put Europe’s energy transition on a more orderly path

To fulfill its ambitious net-zero agenda, the European Union would need to significantly increase the speed and scale of the transition while ensuring affordability, security, and growth.

Seize the benefits

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Striking the balance: Catalyzing a sustainable land-use transition

Without a step change in action to increase land-use efficiency, growing demand for food, fuel, and natural capital may require additional land equivalent to the total cropland of Brazil by 2030.

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A new way to decarbonize buildings can lower emissions—profitably

An AI-informed approach makes it faster, easier, and cheaper to decarbonize real estate. Here’s how.

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For daily insights on COP28, visit our McKinsey Themes series.

— Edited by Eleni Kostopoulos, managing editor, New York

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What is COP?

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Considering COP28

In the news

•

Clean-energy revolution. The speed at which America is transitioning to renewable-energy sources such as wind and solar power is startling even to experts. Renewable sources of energy will provide 23% of the nation’s electricity this year, compared with 13% ten years ago. Around the globe in 2023, clean-energy technologies (including electric cars and batteries) are expected to reap a record-breaking $1.7 trillion in investment, according to the IEA. Roughly $1 trillion in investment will likely go to fossil fuels this year. [NYT]

•

CFOs’ carbon-cutting efforts. Managing climate risk has climbed to the top of C-suite agendas, and many organizations are aiming to cut greenhouse-gas emissions to net zero by 2050. CFOs must ensure that sustainability initiatives are doable from a financial and operational standpoint, and are folded into companies’ greater business plans, according to the senior vice president and CFO of a global energy company’s North American arm. About 30% of CFOs are leading their organizations’ low-carbon transition strategies, a recent UN report has found. [Fortune]

At COP28, McKinsey will host a series of in-person and virtual events featuring business, government, and nongovernmental-organization leaders.

On McKinsey.com

•

Key themes at COP28. The Conference of the Parties (COP) is an annual meeting where UN member states convene to assess progress in dealing with climate change. The first COP was held in Berlin in 1995; its 28th meeting is scheduled to begin November 30 in Dubai. This year’s event will feature the first “global stocktake,” which will provide a comprehensive assessment of progress since the Paris Agreement. COP28 will also spotlight climate adaptation initiatives, as well as mitigation. These will fall under four key themes: health, water, food, and nature.

•

What happened last. Each year, McKinsey convenes global leaders alongside COP to discuss how to implement ambitious climate goals. Based on conversations with leaders and delegates from COP27 last year, McKinsey attendees saw ten main takeaways to accelerate the net-zero transition. The first is that the private sector has a critical role to play, particularly with cross-business collaboration, global coleader of McKinsey Sustainability Daniel Pacthod and colleagues note. See our McKinsey Explainer “What is COP?” for all ten takeaways.

See what to expect at COP28

— Edited by Belinda Yu, editor, Atlanta

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Generative AI can get a boost from boards

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FRESH TAKES ON BIG IDEAS

ON BOARDS AND GEN AI
What are a board’s responsibilities regarding generative AI?

Frithjof Lund

Boards are increasingly discussing generative AI (gen AI), but they tend to focus more on the risks than on the business opportunities. The risk side of gen AI is important, of course. In addition to the fundamental risks of business model disruption, there are multiple regulatory, compliance, and governance risks relating to intellectual property, privacy, and data security. There are concerns about the “AI black box”—that is, the lack of transparency around how gen AI arrives at results—and about social biases that may be perpetuated in the data used to train AI algorithms. Accountability for accuracy, the potential for gen AI to stoke misinformation, and even the environmental impact of gen AI’s energy use for data processing all pose additional risks. Given these wide-ranging concerns, boards need to be satisfied that management continually reviews, measures, and audits gen AI activities.

However, it’s even more important for boards to understand the opportunities gen AI presents. This technology has the potential to affect every industry and every part of a company’s operations, including finance, marketing, and strategy. While I do see that some management teams want to move faster on gen AI opportunities than their boards are prepared to, that’s not the case everywhere. Today, boards can catalyze change in the institutions they govern. Often, managers have grown up in one industry or even one company, which gives them a certain view. The board can bring perspectives from other sectors or parts of the world that encourage management to be bolder. By asking the right questions—without crossing the boundary into operational issues—boards can raise management’s aspirations.

Key questions include the following: How will gen AI affect your industry and your company? What is the value at stake? There are already proven, bankable use cases, such as programming, customer engagement, and content creation, in which we see significant productivity increases. Board directors need to understand how this technology affects the competitive environment, because being a front-runner can deliver sustainable advantages.

Another important question boards should ask management is, how will the organization scale gen AI? Here, we can learn from past experiences with technology adoption. In earlier digitization efforts, including process automation and advanced analytics, for example, only one in ten use cases were implemented at scale. This was largely due to people ultimately finding it easier to perform certain tasks the traditional way. We believe the number of scaled applications of gen AI will be even lower. So how do you identify them? How do you organize the leadership structure to guide these initiatives?

“In earlier digitization efforts, including process automation and advanced analytics, only one in ten use cases were implemented at scale. We believe the number of scaled applications of gen AI will be even lower.”

The board needs to understand whether an organization has the necessary capabilities, talent, and culture to embrace the changes gen AI requires. This technology will eventually become a commodity. It’s in the organizational capabilities—the change management and cultural adjustments needed to integrate new tools and processes into daily operations—where work has to be done.

Ultimately, directors have to balance the trade-offs between business opportunities and risk management. In numerous discussions with boards, I find only nascent understanding of this technology. To provide oversight and management support, boards will need to build their own capabilities. They can hold deep dive sessions with experts from within or outside the organization. Some boards are testing immersion sessions wherein they work with gen AI tools and explore use cases.

There are also implications for board composition. In the early days of digitization, every board wanted to have one digital director—ideally young, with experience at a major tech company. Most boards have since realized that they actually need a critical mass of directors with digital expertise. Boards also need to consider how to approach oversight. Some are creating technology advisory boards or board committees. Our view is that gen AI will be so fundamental that you will need the entire board to be at least literate in it—you can’t fully outsource it to an advisory panel or a committee.

The question I personally find fascinating is how boards will incorporate this technology into their own work. I can envision directors using gen AI to prepare for meetings or to answer questions they have between them. I think we will see more proprietary, gen AI–powered assistants that help board directors get instant answers. At least one company in Asia has gone so far as to give AI a seat on the board and a vote. That seems extreme to me—until the board gains a high level of trust in the technology, that vote may be challenged—but maybe I’m too conservative.

ABOUT THIS AUTHOR

Frithjof Lund is a managing partner in McKinsey’s Oslo office.

MORE FROM THIS AUTHOR

Four essential questions for boards to ask about generative AI

Boards are responsible for how generative AI is used at the companies they oversee. Asking company leaders the right questions will help unlock the technology’s value while managing its risk.

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Five ways to increase your board’s long-term impact

Directors are spending more time on their work, yet few say their boards are better at creating long-term value. Survey data highlight the operating models that correlate most with value creation.

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UP NEXT

Ari Libarikian on business building

Now more than ever, CEOs are making the creation of new revenue streams their top strategic priority. Generative AI is a big part of the reason why.

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by "McKinsey Quarterly" <publishing@email.mckinsey.com> - 03:15 - 29 Nov 2023

Not all employees are productive. Do you know how to motivate them?

On Point

TODAY’S NEWS. TOMORROW’S INSIGHTS.
A daily newsletter from McKinsey & Company

Brought to you by Liz Hilton Segel, chief client officer and managing partner, global industry practices, & Homayoun Hatami, managing partner, global client capabilities

Stars and slackers

In the news

•

Not enough quitters. After job-hopping reached historic levels in recent years, US bosses now say that attrition is too low—and they’re having to consider delaying projects and cutting more jobs as 2023 draws to a close. Since it’s become harder for staffers to advance into new positions, some executives are concerned that a lack of internal vacancies will make it more difficult to motivate star workers. Senior HR leaders say that delivering more stringent performance reviews can persuade workers to leave, as can offering cash incentives. [WSJ]

•

Feeling invisible. Employees who think they matter to an organization give their best at work, contributing powerfully to a workplace’s productivity and creativity. But in the era of hybrid work, there’s a risk that workers might instead perceive themselves as anonymous faces on a video screen. Roughly a third of US employees say they feel invisible in the workplace, according to a 2023 survey. One strategy to help employees feel affirmed and recognized is to provide opportunities for workers to form friendships with colleagues. [HBR]

Employee disengagement and attrition could cost a median-size S&P 500 company between $228 million and $355 million a year in lost productivity.

On McKinsey.com

•

What lost productivity costs. With the COVID-19 pandemic forcing big changes in how, when, and where people work, companies are struggling to find objective ways to gauge employee effectiveness. It’s a critical challenge as labor costs have increased and worker productivity has declined. Employee disengagement and attrition could cost a median-size S&P 500 company at least $1.1 billion in lost value over five years, McKinsey senior partner Aaron De Smet and coauthors explain.

•

Looking for the exit. In a typical organization, about 10% of the workforce is made up of employees who are either headed for the door or already gone. These employees aren’t necessarily the lowest performers in a company, but they may be some of the least satisfied and committed. Strong people leaders can help make workers feel valued and ensure that the company’s compensation packages and benefits are on par with the market average. They can also ensure that career paths are clearly designed. Discover six types of workers who are present in every organization.

Learn how to reengage workers

— Edited by Belinda Yu, editor, Atlanta

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YOUR FIVE-MINUTE BRIEFING—OR A DEEP DIVE IN FIFTY

by "McKinsey On Point" <publishing@email.mckinsey.com> - 01:05 - 29 Nov 2023

Is your middle manager stuck in the menial?

Five Fifty

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Rethinking the role of the middle manager

Companies need to uplift their much-maligned middle managers. Not merely a midpoint to the top, they are the true center of the organization.

Get your briefing

Bogged down by administrivia, middle managers are unable to perform their most crucial task: managing people. Dated assumptions add fuel to the fire, forcing people into roles they aren’t good at and don’t enjoy, say McKinsey’s Emily Field, Bryan Hancock, and Bill Schaninger. It’s time to reenvision the middle tier.

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Get moving on middle managers

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by "McKinsey Quarterly Five Fifty" <publishing@email.mckinsey.com> - 04:27 - 28 Nov 2023

What business books are on your bookshelf?

On Point

TODAY’S NEWS. TOMORROW’S INSIGHTS.
A daily newsletter from McKinsey & Company

Brought to you by Liz Hilton Segel, chief client officer and managing partner, global industry practices, & Homayoun Hatami, managing partner, global client capabilities

Best-selling business books

In the news

•

Ending the bestseller lists. One of America’s leading newspapers, The Wall Street Journal, has ended its longstanding run of publishing weekly lists of best-selling books. The daily newspaper printed six lists of fiction and nonfiction books, in addition to hardcover business titles. While the business list focused on adult titles only, the paper’s fiction and nonfiction booklists presented a mix of adult, young adult, and children’s titles. The newspaper’s editorial page editor noted that, other than this change, its coverage of books should “continue as usual.” [Publishers Weekly]

•

AI book bot. Publishers are exploring the use of chatbot versions of books. Like a book club’s smartest member, these chatbots can converse with readers about all aspects of any type of book. One start-up has recently launched an AI-based app that can analyze key themes, summarize content, and answer readers’ questions. Chatbot editions of textbooks can be particularly helpful, since the platform can explain material that readers might need clarified, the start-up’s CEO said. [Wired]

Explore the latest rankings of best-selling business books in the United States, prepared exclusively for McKinsey Publishing by Circana.

On McKinsey.com

•

Where to find business books. When you’re looking for your next thought-provoking business book to read, McKinsey—through the media company Circana, which develops the lists—offers the most comprehensive resource available to explore the business books currently most popular in the US. McKinsey is unique in offering a variety of business booklists. Our eight top ten lists are divided into business overall, hardcover, decision making, economics, organizational behavior, workplace culture, diversity and inclusion, and sustainability.

•

Timely management issues. In addition to our monthly lists of best-selling business books, on our McKinsey on Books collection page, you can also find books by McKinsey authors on the management issues that matter. These include our takes on topics from leadership and talent to digital transformation, corporate finance, and more. Discover the business books leaders were reading in October 2023, and for our series of interviews with authors of books on business and beyond, visit Author Talks.

See the business bestsellers

— Edited by Belinda Yu, editor, Atlanta

Introducing Insights to Impact
Be among the first to subscribe to this free newsletter delivering a weekly roundup of analysis that’s influencing decision makers. Each Friday, we’ll offer insights across geographies, industries, and capabilities to help leaders identify new opportunities to spur innovation and growth, sustainably.
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Or send us feedback—we’d love to hear from you.

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