Navigating America’s net-zero frontier: A guide for business leaders - Highlighted Article

From: McKinsey Sustainability

By: Rory Clune, Laura Corb, Will Glazener, Kimberly Henderson, Dickon Pinner, and Daan Walter

Date: May 5, 2022

Navigating America’s net-zero frontier: A guide for business leaders

With the United States’ announcement of targets to halve US greenhouse-gas (GHG) emissions by 2030 and reach net-zero emissions by 2050, the world’s largest economy (and second-largest emitter) has joined some 130 nations in its intention to act on climate change.1 Some 400 large US-based companies have also committed to net-zero targets of their own, many of which have set ambitious emissions reductions targets for 2030 or sooner.2 In our experience, few have yet turned those pledges into detailed plans for adjusting their business models to thrive in a net-zero economy.

Creating an effective business plan for the net-zero transition won’t be easy, for uncertainty surrounds the pace and scale at which this transition will progress in America and in other countries. That uncertainty has been compounded by the conflict in Ukraine, which has increased the world’s attention to energy security, creating both tailwinds and headwinds for the energy transition. In light of this uncertainty, US companies may wish to assess the business risks and opportunities and the socioeconomic impacts associated with the transition. We believe the companies that understand these factors can better position themselves for long-term success and positive impact. Those that delay action may miss out on growth prospects that should arise as institutions in America and elsewhere strive to eliminate GHG emissions in pursuit of national and corporate targets.

This article is intended as a guide to America’s net-zero transition. It examines four topics critical for business leaders as they shape strategies for this defining decade. First, we describe America’s starting point and trace a pathway that we modeled for achieving federal net-zero targets. Next, based on this pathway, we identify five areas in which climate solutions could offer enormous potential for both emissions abatement and economic growth through 2025: renewable power, electrification, operational efficiency, clean fuels, and carbon capture. We then examine several macro trends that business leaders should anticipate. Finally, we suggest how executives might define their company’s approach to the transition. Even if the transition plays out differently from what our scenario envisions, it appears that a time of climate-focused innovation, investment, and change has arrived—and that leaders would do well to prepare for it. (continue reading)

Navigating America’s net-zero frontier: A guide for business leaders