Sustainability in Action is our monthly blog series, featuring a curated selection of new and relevant sustainability insights and actionable recommendations for leaders to drive climate action and growth. In this edition, our McKinsey Sustainability expert Mark Patel discusses climate tech.
A utility using gen AI to improve predictive maintenance planning. A manufacturer creating a digital twin to design products with lower costs and carbon emissions. A startup predicting how scaling enhanced rock weathering could store carbon across geographies. A private equity firm using a digital platform to monitor its portfolio companies’ Scope 3 emissions compliance.
In my work for McKinsey Sustainability, I come across numerous unique examples that share a common thread: the strategic harnessing of technology to drive climate action and growth.
But I also see the challenges that organizations face, especially when a highly hyped new technology comes along. The fact of the matter is, only 30% of tech investments deliver on expected revenue. Technology only truly delivers on its transformative promise – like in the examples above – when strategy, culture, and capabilities meet execution and delivery.
For real value beyond the hype, it’s never just tech.
I‘ve had the opportunity to work with many companies and talk to even more executives, and I’ve learned that to reach their net-zero goals, their investments need to be driven by smart sustainability strategy, the thoughtful application of technology, and above all, have the right talent to scale. Those that do it well also embrace acceleration, increasing the rate of change even further.
We have reflected on what can leaders do to better harness technology to drive both climate action and growth.
Three principals for using technology to meet sustainability goals:
- Develop a technology-enabled decarbonization plan. Take the opportunity to align the decarbonization plan and the technology enablement to closely synch their objectives .and combined.
- Understand the potential of new technologies for each decarbonization initiative. Companies will need to identify the initiatives where each technology can have the biggest carbon and cost impact to accelerate their transition.
- Develop an investment and implementation plan combined across technology and decarbonization goals. By developing a carefully sequenced plan, companies can maximize decarbonization through effective investment in critical technologies.
We’re all looking for the decarbonization success stories that will help jumpstart momentum. The application of the right technologies can supercharge the small victories into widespread adoption.
This is the core of how we’re working at the intersection of sustainability with our clients, and we believe we’ve developed unique capabilities in that respect. Our deep sector and functional expertise help companies reduce emissions, ensure affordability of energy and materials, provide reliable and secure energy systems, and strengthen competitiveness for companies and countries.
I’m excited to share the following selected insights that reflect the themes above. And I’d love to hear your feedback and engage further in the discussion.