Business insights on growth and societal benefits

You’ve reached an archival page. Please see our newest perspectives on sustainable and inclusive growth here.

Sustainable and inclusive growth: Briefing note #26, December 15, 2022

The rise of electric vehicles could be hampered by a shortage of raw materials. Our weekly digest of McKinsey insights explores that topic and more.

The adoption of electric vehicles (EVs) could be complicated by shortages of crucial materials. Without adequate supplies of components such as nickel and battery-grade lithium, it could be difficult to meet future EV demand. This week, McKinsey research investigates potential bottlenecks in the EV manufacturing process. A separate article examines the M&A landscape in the renewable-energy sector—where competition for deals has been intensifying. And another piece looks at ways for companies’ technology leaders to play significant roles in cutting their organizations’ carbon emissions.

Lithium, nickel, cobalt, and copper account for about 50 percent of an EV battery’s total cost. Prices for both nickel and battery-grade lithium have risen dramatically in the recent past, and constraints on the supply of all four of these materials could complicate EV manufacturing. Senior partner Micah Smith and coauthors say one knock-on effect might be greater-than-anticipated future demand for fossil fuels if EV uptake slows due to an increase in the cost of ownership.

Many renewable-energy developers appear to be making M&A a core element of their corporate strategies, and there has been a steep rise in average deal value since 2018. M&A can help add scale or open new markets for renewables players, and Florian Kühn, Raffael Winter, and coauthors offer a framework for assessing deals in the sector. Among their suggestions: seek local market knowledge when evaluating a target company, and engage with any potential targets to build trust that could function as a differentiator if there is competition for a deal.

Corporate technology leaders can aid their companies’ quests to decarbonize. An important first step is to create digital transparency around an organization’s carbon emissions, using tech-powered data collection techniques and employing detailed analytical spreadsheets. Once transparency is achieved, a search for technological solutions can begin. Senior partner Jeffrey Lewis and coauthors note that in some cases, reducing materials usage can cut not only emissions but also logistics costs.

Here are other recent notable findings from our research:

McKinsey Publishing’s year in review highlights compelling reads and fascinating insights—spanning topics including food, housing, energy, supply chains, inflation, and sustainability—selected from our work in 2022.
Our 2022 year in charts offers data visualizations capturing trends in the macroeconomy, the net-zero transition, workplace dynamics, and more.
The year in images presents compelling visuals illustrating some of the year’s biggest developments.
The year in innovation rounds up our most engaging, interactive content from 2022—including explainers, quizzes, and McKinsey for Kids.
McKinsey’s fourth American Opportunity Survey delves into Americans’ perceptions of the current economy and their thoughts about what’s looming on the horizon. Among other findings, senior partners André Dua and Kweilin Ellingrud and coauthors discover that respondents’ optimism about access to economic opportunity has declined across all income levels.

A recent edition of Author Talks features Columbia Business School professor Hitendra Wadhwa speaking about his new book, Inner Mastery, Outer Impact: How Your Five Core Energies Hold the Key to Success (Hachette Book Group, June 2022). Wadhwa maintains that inner peace can help free us from self-defeating habits and impulses, thereby boosting our effectiveness in the world.

McKinsey is striving to create inclusive growth through collaborations with clients and local communities. By preparing students for the jobs of tomorrow, propelling wealth creation for working families, and supporting racial equity, McKinsey is helping to build an economy that works for everyone. Learn more about McKinsey’s efforts to create an inclusive economy, on McKinsey.com

This briefing note, based on our latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Sustainable and inclusive growth: Briefing note #25, December 8, 2022

Climate targets are beginning to slip out of reach—but there’s still time to get back on track. Our weekly digest of McKinsey insights explores that topic and more.

In the wake of the COP27 global climate conference, concerns have emerged that humanity is still not moving fast enough in its efforts to reduce greenhouse-gas (GHG) emissions. Emissions levels continue to rise, and some climate targets seem no longer within our grasp. This week, a series of data visualizations highlights McKinsey’s research into current climate trends and offers forecasts based on differing scenarios. A separate piece looks at strategies for slowing the depletion of the planet’s stock of natural resources. And an article examines the decarbonization challenges faced by the shipping industry.

Countries that have announced plans to reduce their emissions now account for more than 91 percent of global GDP and roughly 88 percent of global CO₂ emissions. But, say Ole Rolser, Bram Smeets, and coauthor, the window seems to be closing on the opportunity to limit warming to 1.5°C. After declining 5 percent in 2020, global GHG emissions rebounded 4 percent in 2021. Private companies, public institutions, and individual citizens will all need to commit and cooperate if mitigation efforts are to get back on course.

The world’s supply of healthy natural assets is being depleted. Research from senior partner Hamid Samandari and coauthors suggests that human activity is pushing the planet beyond safe limits with regard to issues such as biodiversity loss and pollution. Agriculture has played a prominent role in this development, as have retail sales and services. Corporate action could help ameliorate the situation—and might also, in many cases, provide a positive financial return on investment.

Regulators and other stakeholders are pushing the shipping industry to decarbonize. But shipping executives are fearful of betting on the wrong green technologies—especially given that a ship built today could remain in service for decades. Senior partner Martin Joerss and coauthors suggest three useful actions that shipping companies can take right now: tweak fleets for better fuel efficiency (using, for example, different hull shapes and analytics-driven route planning); connect with a broader array of fuel providers (prepping for a transition to more sustainable fuel options); and capture a price premium from customers who are willing to pay more for green shipping (or are eager to avoid paying potential carbon taxes).

Here are other recent notable findings from our research:

Senior partner Simon Land and coauthors surveyed more than 150 executives at mid-cap consumer companies in Europe. Notably, respondents expected more than half of future growth at their companies to come from outside their core businesses.
Retailers begin this holiday season with high levels of inventory—but are facing dampened consumer demand. Senior partners Becca Coggins and Emily Reasor and coauthors suggest that markdowns might be in order. Successful markdown efforts will require retailers to choose the right discounts, on the right items, in the right locations, at the right times.
A growing number of consumer companies are relying on chief transformation officers (CTOs) to reshape their priorities. To succeed, say senior partners Kevin Carmody and Kristi Weaver and coauthors, CTOs must be given unwavering support from leadership, a license to engage all employees, and the power to accelerate outcomes by deploying a robust incentive program.

A recent edition of Author Talks features Stanford Graduate School of Business professor Jeffrey Pfeffer speaking about his new book, 7 Rules of Power: Surprising—but True—Advice on How to Get Things Done and Advance Your Career (BenBella Books, June 2022). Pfeffer suggests that people who lack power might benefit from breaking established rules—and adds that an effective exercise of power often leads to attaining more power.

This briefing note, based on our latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Sustainable and inclusive growth: Briefing note #24, December 1, 2022

Hydrocarbon-rich countries might play a critical role in the proliferation of clean hydrogen. Our weekly digest of McKinsey insights explores that topic and more.

Clean hydrogen might help abate more than 20 percent of global greenhouse-gas emissions by 2050. Hydrocarbon-rich countries (HRCs) could play a particularly vital future role in its production and transport. This week, McKinsey research examines opportunities—and challenges—for HRCs looking to become hydrogen players. A separate article looks at links between climate change and national security. And a survey of executives investigates how corporate leaders’ environmental, social, and governance (ESG) responsibilities have evolved.

HRCs are especially well positioned to lead the way in producing and transporting clean hydrogen. Nations that are rich in oil and gas (examples include the United States, Canada, and Saudi Arabia) have infrastructure that can be repurposed, strong domestic demand, and experience in establishing global energy markets. Senior partners Tarek El Sayed and Rachid Majiti and coauthors suggest that HRCs should consider where they best fit on the hydrogen value chain. Key areas of opportunity include equipment manufacturing, pipelines, and ports.

The connection between climate change and national security might not always be obvious, but former Netherlands chief of defense Tom Middendorp says it is manifold: climate change can create migrant flows, natural disasters, and geopolitical tensions, all of which can prod militaries into action. Speaking with Axel Esqué, Middendorp also notes that the decarbonization of military equipment can deliver tactical benefits, since battery-powered vehicles make less noise and have less of a heat signature (and thus are stealthier) than vehicles powered by fossil fuels.

A survey of corporate leaders finds that 94 percent say their ESG-related responsibilities have increased in recent years. Roughly 85 percent say they spend at least one day per month on ESG topics. About 84 percent feel their organizations are likely to uphold existing ESG commitments, but nearly a quarter of respondents weren’t exactly sure what those commitments entail.

Here are other recent notable findings from our research:

Large enterprises hope to move 60 percent of their computing to the cloud by 2025. Senior partner William Forrest and coauthors estimate that by 2030 there could be $3 trillion of value at stake in the transition, deriving from sources such as operational cost savings, digital risk reduction, and automation-driven growth.
Lower costs and easier access have made space an increasingly attractive realm for economic activity. Senior partner Ryan Brukardt suggests that industries such as agriculture, mining, and insurance might benefit from the growing capability and affordability of space-based operations such as satellite imaging.
New York City’s comparatively low labor-participation rate and slowing immigration rate are hampering its growth. An interactive from senior partner Jonathan Law and coauthors offers potential solutions. Among them: upskilling local talent and accelerating housing development.

A recent edition of Author Talks features Columbia Business School professor Bruce Usher speaking about his new book, Investing in the Era of Climate Change (Columbia University Press, October 2022). Usher advises those who are looking to invest in assets related to the net-zero transition to take a long view, be wary of greenwashing, and anticipate that human nature is unlikely to change.

This briefing note, based on our latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Sustainable and inclusive growth: Briefing note #23, November 23, 2022

Zero-emissions trucking is on the horizon—what’s the road map for getting there? Our weekly digest of McKinsey insights explores that topic and more.

By 2040, an estimated 85 percent of new trucks will feature zero-emissions (ZE) powertrains running on technologies such as batteries, fuel cells, or hydrogen combustion. This dramatic shift in the world of road freight will likely necessitate upgraded infrastructure and revamped regulations. This week, McKinsey research examines efforts to pave the way for the future of ZE trucking. A separate report finds that though women are active metaverse users, female leaders are scarce in the emerging metaverse economy. Meanwhile, an article investigates ways for organizations to reshape the chief diversity officer (CDO) role.

The decarbonization of trucking will be shaped by three main factors: regulatory inducements, technological developments, and infrastructure rollouts. As the total cost of ownership for ZE trucks falls, demand is expected to rise sharply. But senior partners Bernd Heid and Philipp Radtke and coauthors suggest that high up-front capital costs involved in this transition could lead freight companies to increasingly rely on leasing and partnerships.

Women are more likely than men to spend upward of three hours per week in the metaverse. They are also more likely to attend events, exercise, and shop in the virtual realm. Yet, say senior partner Lareina Yee and coauthor, female-led metaverse companies have received a lower share of entrepreneurial funding. And 90 percent of leadership roles at organizations shaping metaverse standards are held by men.

More than half of Fortune 500 companies now have a CDO or equivalent—and, say Monne Williams and coauthors, the role has never been more important. But turnover among CDOs has been high over the past few years, and many organizations seem to have difficulty defining what CDOs should do and empowering them to do it. To enable success, organizations should determine the exact mission and scope of the CDO role, decide how best to measure its impact, carefully situate it within the broader organizational structure, and staff it with properly suited talent.

Here are other recent notable findings from our research:

Homayoun Hatami and Liz Hilton Segel outline six priorities for CEOs facing a turbulent moment. Among them: stay the course on decarbonization, rebuild the employee experience in the age of hybrid work, and don’t be afraid to hatch a new business—even in the depths of a downturn.
New CEOs often find themselves feeling simultaneously overwhelmed and lonely. Senior partner Carolyn Dewar and coauthors offer four tips for early-tenure CEOs, including: don’t make it about you, and be sure to listen before you act.
Summer 2022 was filled with bad headlines for the travel industry: long lines, delayed flights, and lost luggage. Senior partner Alex Dichter and coauthors say airlines’ historical assumptions about traveler and crew behavior are due for updating. A five-percentage-point improvement in on-time performance could save a typical large US carrier $170 million per year.

A recent edition of Author Talks features Dr. Tina Opie, chief vision officer of the Opie Consulting Group, speaking about her new book, Shared Sisterhood: How to Take Collective Action for Racial and Gender Equity at Work (Harvard Business Review Press, October 2022), cowritten by Beth A. Livingston. Opie says that a “color-blind” approach to creating workplace equity can be harmful when it prevents a deeper examination of challenging issues.

This briefing note, based on our latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Sustainable and inclusive growth: Briefing note #22, November 17, 2022

Recycling more types of plastic might improve the health of the planet—while also meeting market demand. Our weekly digest of McKinsey insights explores that topic and more.

America recycles only about 9 percent of the plastic it uses. The low recycling rate is partly the result of consumer behavior and partly due to the difficulty of recycling certain types of plastic. This week, McKinsey research investigates the potential to recycle a wider variety of plastic in a manner that’s both economically sound and environmentally beneficial. A separate report examines thermal-energy-storage (TES) technology, which might help deliver lower-emission heating solutions while also smoothing energy consumption. And an article looks at the role that business-led innovation could play in creating a more sustainable, inclusive future.

Demand for recycled plastic is high because many companies have made commitments to include recycled material in their products. But certain types of plastic waste—for instance, films used in food packaging—often go unrecycled because of challenges in collecting, sorting, and processing them. Senior partner Chris Musso and coauthors suggest that these conditions create a market opportunity: by building ancillary feedstock preparation facilities, which can handle the plastics that standard recycling plants have difficulty with, recyclers could meet more of the demand for postconsumer plastic while also reducing the amount of waste that ends up in landfills.

At moments when winds are blowing and the sun is shining, TES technology allows excess energy to be stored in the form of heat. Later, that heat can be deployed to warm buildings or furnish steam for industrial processes. By transforming the inherently variable output of these renewable-energy sources into a reliable font of decarbonized heat, TES neatly solves two problems at once. Senior partner Humayun Tai and coauthors say that some use cases for TES are already profitable, but more pilot programs will be necessary to spur wider adoption.

Three factors might help lift billions out of poverty in an environmentally sustainable way: economic growth, which can raise incomes for all; governmental intervention, which can steer resources toward important goals; and business-led innovation, which can improve productivity while making low-emissions technology cheaper and more broadly available. Senior partner Sven Smit and coauthors offer a framework to help companies assess opportunities to create sustainable, inclusive growth through innovation. One consideration: weighing the size of societal returns against the time it will take to realize them.

Here are other recent notable findings from our research:

Graying populations could create myriad challenges across the globe. Senior partner Martin Dewhurst and coauthors limn six ways for the world’s institutions to enable healthier aging. Among them: collect better data on aging, accelerate innovations that provide aging-related solutions, and motivate older people to live to their full potential.
Companies blame poor performance on external headwinds roughly three times more often than they credit external tailwinds for good performance. Research from senior partner Ryan Davies and coauthors suggests that this is true across industries. Notably, exogenous factors are often blamed for specific elements of underperformance, even when a company is doing well overall.
Saurabh Sanghvi and coauthor highlight five trends shaping the educational-technology (edtech) sector. Among them: an influx of investment, a consolidation of major players, and the emergence of India as a leading edtech market.
Senior partners Kevin Carmody and Ishaan Seth and coauthors suggest that chief financial officers of publicly held companies might learn several lessons from the behavior of companies held by private equity (PE) firms. For instance, PE-backed companies tend to set well-defined and achievable targets that focus on value creation.

A recent edition of Author Talks features tech policy scholar and University of San Diego law professor Orly Lobel speaking about her new book, The Equality Machine: Harnessing Digital Technology for a Brighter, More Inclusive Future (PublicAffairs, October 2022). Lobel maintains that technologies such as artificial intelligence—sometimes criticized for amplifying human biases—can, in fact, help create a fairer, more just society.

This briefing note, based on our latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Sustainable and inclusive growth: Briefing note #21, November 10, 2022

Progress in renewable energy is being slowed by a dearth of available, qualified workers. Our weekly digest of McKinsey insights explores that topic and more.

More workers will be needed to accelerate efforts to produce renewable energy. But the Great Attrition, coupled with industry-specific challenges, has hollowed out the renewables workforce. This week, McKinsey research reveals strategies the sector can use to restock its talent pools. A separate McKinsey piece details the infrastructure that Europe will need to construct to keep the continent’s future electric vehicles (EVs) charged. Meanwhile, an article about reducing emissions that stem from the “built environment”—a term that encapsulates the life cycles of residential and commercial buildings—looks at business opportunities that could develop as buildings attempt to get greener.

The fast-growing renewable-energy sector could require a quadrupling of its global workforce by 2030 (exhibit). Many of these jobs will demand specific technical expertise. Senior partner Jan Krause and coauthors suggest several ways for the industry to fill employment gaps. Among them: offer clearer career development paths, boost long-term incentives, and acquire qualified talent by buying related companies.

Estimated full-time-equivalent needs for the global development, construction, and operation of wind and solar assets will more than quadruple by 2030.

To keep pace with its growing EV fleet, Europe might need 3.4 million public charging stations in place by 2030. In 2021, it had only 375,000 operational charging stations. Ramping up the installation pace will necessitate careful coordination among governments, automobile makers, charging-point providers, and power grid operators, say Patrick Schaufuss and coauthors. An equitable distribution of affordable charging stations could help ensure that EV ownership is possible for a greater percentage of Europeans.

The world’s residential and commercial buildings—including their materials, construction, usage, and demolition—are collectively responsible for more emissions than global shipping, aviation, or electricity generation. The effort to decarbonize buildings could create as much as $800.0 billion to $1.9 trillion in future value pools, say Brodie Boland and coauthors. One important area of focus: retrofitting existing buildings. Retrofits can save energy costs for owners while bringing buildings in line with regulatory changes.

Here are other recent notable findings from our research:

Fraud is on the rise, enabled in part by the continuing digitization of commerce. Adrian Murphy and coauthors offer several solutions for companies looking to reduce fraud risks. Among them: embed fraud defenses into product design and establish a threat intelligence unit that works across the organization.
Companies might look to save money by lowering their cloud computing costs, suggest Abhi Bhatnagar and coauthors. Vendor agreements can be renegotiated, usage can be carefully tracked, and unused capacity can be trimmed. It’s possible that as much as 15 to 25 percent of a company’s cloud costs could quickly be cut without affecting performance.
Many private-equity firms could benefit from hiring a chief performance officer (CPO), say Claudy Jules and Jason Phillips. CPOs can assess a potential target company’s senior-leadership team before an acquisition and then work closely with that team to execute new initiatives after a deal is struck.
Chef and nonprofit founder José Andrés spoke with McKinsey Quarterly about his dual mission to improve the world while running a thriving restaurant business. Andrés says that when an emergency arrives, it’s important to prioritize quick action over meticulous planning. His nonprofit has raised and spent an estimated $420 million this year.

A recent edition of Author Talks features former professional poker player Annie Duke speaking about her new book, Quit: The Power of Knowing When to Walk Away (Penguin Random House, September 2022). Duke says the power of quitting is that it allows us to take risks, since we know we can walk away if we don’t like the outcomes. She also notes that “quit while you’re ahead” is not always sound advice—sometimes it’s better to quit when you’re behind.

This briefing note, based on our latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Sustainable and inclusive growth: Briefing note #20, November 3, 2022

CEOs face a tricky challenge as they balance short-term economics with long-term climate goals. Our weekly digest of McKinsey insights explores that topic and more.

Today’s CEOs confront a “devilish duality”: while pursuing a carbon-free future, they must also manage the volatility of the present moment. This week, a McKinsey article suggests ways for leaders to weather the current storm without losing sight of ambitious climate goals. Another McKinsey piece examines obstacles that could slow the build-out of new wind and solar farms. And an article about carbon capture, utilization, and storage (CCUS) says this technology—if it can be deployed at scale—could be a critical component of the world’s decarbonization efforts.

Balancing long-term climate goals with the need for near-term resilience—amid economic and geopolitical instability—is a knotty task for any CEO. But leaders can view this as an “and” situation, not an “or” situation. McKinsey global managing partner Bob Sternfels and coauthors suggest five strategies that CEOs can adopt to overcome today’s shocks while still charting a course toward the future. Among them: accelerate capital deployment now to make earlier-cycle investments in sustainability, which offer higher returns.

Decarbonization on a global scale will require ramping up renewable-energy production. Building large new wind and solar farms could aid this effort. But hurdles must be overcome before these renewable-power projects can succeed. Senior partner Humayun Tai and coauthors say one challenge is a lack of usable land. In Germany, for instance, a combination of regulatory, environmental, and technical constraints have caused large swathes of otherwise suitable land to be eliminated from consideration as sites for onshore wind farms.

Carbon capture, utilization, and storage technology is a promising tool in the effort to reduce the world’s emissions. But, say Luciano Di Fiori and coauthors, CCUS uptake will need to grow 120 times by 2050 for countries to achieve their net-zero commitments. To scale, CCUS will need to rely on more than just subsidies. One potential revenue source involves using captured carbon as an ingredient in polymers and synthetic fuels.

Here are other recent notable findings from our research:

Jorge Amar and coauthors suggest that artificial intelligence (AI) can be a powerful schedule optimization tool for workforces. AI-driven models can eliminate human bias and error to create fairer schedules. They’ve already been successful in the utilities sector.
Ocean freight rates have finally begun to fall, even though fuel remains expensive. A video from Steve Saxon explains why rates are down, while offering guidance for shippers and carriers that want to reduce future uncertainty.
Long-time UCLA Anderson School of Management professor Richard Rumelt thinks that business leaders often misunderstand the meaning of strategy. In a conversation with McKinsey senior partner Yuval Atsmon, Rumelt says that leaders sometimes confuse strategy with a set of ambitions. Rumelt also argues that bad strategy has been contagious over the past few decades.
Consumers are keenly aware of inflation and it’s influencing their behavior. A video from Kari Alldredge notes which channels continue to grow despite inflation, tracks the rise of private-label products, and explores some of the differences in sentiment between demographic groups (for example, high-income millennials are showing the strongest net intent for future spending).

Our latest edition of Author Talks features McKinsey senior knowledge expert Jacqueline Brassey, McKinsey senior partner Aaron De Smet, and Imagine CEO Michiel Kruyt speaking about their book, Deliberate Calm: How to Learn and Lead in a Volatile World (Harper Collins, November 2022). The authors counsel leaders to take deep breaths during challenging moments, and then to draw on self-awareness, emotional intelligence, and mindfulness to help cultivate a state of calm before taking action.

This briefing note, based on our latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Sustainable and inclusive growth: Briefing note #19, October 27, 2022

Public-sector leaders can help close gaps in the world’s decarbonization strategies. Our weekly digest of McKinsey insights explores that topic and more.

The public sector can play a unique part in fighting climate change. It wields tools—such as tax funding, regulatory mandates, and the ability to create demand—that might be vital complements to private-sector action as the world advances toward a carbon-free future. This week, a McKinsey article offers a framework for public-sector leaders contemplating how best to aid decarbonization. A separate McKinsey piece draws a road map for companies hoping to launch green businesses in the industrial sector. And a data visualization series explains how hydrogen could play a major role in reducing emissions.

If a promising early-stage decarbonization technology runs out of research funding, public-sector investment can step in. When uncertain demand holds back the creation of supply chains, public-sector procurement contracts can fill the gap. Senior partner Solveigh Hieronimus and coauthors counsel public-sector leaders to focus on innovation, industrialization, and infrastructure as they consider ways to bolster decarbonization efforts. Since climate is a global problem, new global public institutions—akin to the World Bank or the International Monetary Fund—might enable more efficient coordination.

Companies looking to establish green businesses in the industrial sector might wonder how to assess the opportunities systematically. Dorothee Herring and coauthors offer a five-step approach for evaluating the prospects of green industrial endeavors. Important considerations include the potential market size of the business, the future regulatory environment it could encounter, and the maturity of the technologies it will rely on. By 2030, decarbonization-related businesses could garner more than $12 trillion in annual revenues.

By 2050, hydrogen could be responsible for more than 20 percent of annual reductions in global emissions. Senior partner Bernd Heid and coauthors present a selection of charts demonstrating the pivotal role hydrogen could play in the energy transition. One critical area of focus: the steel industry, responsible for 8 percent of the world’s annual emissions. More than 50 hydrogen-based green steelmaking projects, promising significant future carbon abatement, have already been announced.

Here are other recent notable findings from our research:

Senior partner Steve Van Kuiken identifies four trends reshaping the future of information technology. Among them: a burgeoning focus on digital trust, which may eventually force companies to put identity protection and trust management at the core of their business processes.
Senior partner Kelsey Robinson and coauthors say that retailers should be cautiously optimistic about the upcoming holiday shopping season. Consumers still have cash and are willing—if they can find good value—to spend it. Stores would do well to begin holiday promotions earlier this year, as shoppers are itching to get in the holiday mood.
Cars are becoming smartphones on wheels—digitally enabled ecosystems that provide everything from autonomous driving to entertainment. Anna Herlt and coauthors advise auto manufacturers to consider shifting their orientation: instead of focusing on isolated hardware components, they should emphasize their overarching electronics and software systems.

Our latest edition of Author Talks features futurist Ari Wallach speaking about his book, Longpath: Becoming the Great Ancestors Our Future Needs (HarperOne, August 2022). Wallach urges leaders to pause whenever they feel themselves succumbing to short-term thinking and to develop long-term mindsets by simultaneously considering the past, being present in the moment, and thinking about how to improve the future.

This briefing note, based on our latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Sustainable and inclusive growth: Briefing note #18, October 20, 2022

New breakthroughs could make fusion energy a vital component of decarbonization. Our weekly digest of McKinsey insights explores that topic and more.

Fusion energy has long been hailed as a promising zero-carbon power source. Making it work has proved elusive—skeptics joke that success has been 20 years away for the past 50 years—but new developments strengthen the notion that fusion could provide the green energy of tomorrow. This week, a McKinsey article offers guidance for governments, companies, and investors preparing for a possible fusion revolution. A separate piece looks at ways for battery makers to meet a demand surge that’s being propelled by the adoption of electric vehicles (EVs). Meanwhile, an analysis of consumer survey results suggests that retailers would do well to stock their shelves with more products from diverse-owned businesses.

Fusing hydrogen isotopes together by pressurizing them at extremely high temperatures could eventually produce clean power that draws on easy-to-source materials while generating minimal waste. For now, the energy required to enable fusion exceeds the energy that fusion emits. But there are reasons to believe that recent technological breakthroughs and increased levels of private investment (exhibit) might lead to proof of concept within a decade—and that fusion could play a major role in decarbonizing the power sector by 2050. Senior partner Miklós Gábor Dietz and coauthors advise relevant leaders in business, financial management, and government to consider how a working fusion machine might disrupt the energy landscape and result in new infrastructure and supply chain opportunities.

Private investment in fusion energy has surged over the past 20 years, with the value of investments nearly tripling in 2021.

Demand for batteries is skyrocketing in tandem with demand for EVs. Annual revenue from battery cell production and related activities could reach $410 billion by 2030. Senior partner Martin Linder and coauthors say that three areas of focus will be crucial to the ramp-up of battery manufacturing capabilities. First, large, well-designed factories must be promptly constructed (using AI-driven scheduling software to optimize construction timelines). Second, a competent, productive workforce must be trained (a process eased when factory sites are chosen with an eye toward mining local talent pools). And third, efficient supply chains, featuring reliable sourcing of raw materials, must be put in place (with multiyear contracts limiting the effects of price fluctuations).

According to a consumer survey, 49 percent of Gen Z and 44 percent of millennial shoppers consider whether a brand is Black owned when they make buying decisions. But Black-owned brands face formidable challenges scaling up—including limited access to capital and a tendency to have products pigeonholed as only for Black consumers. Senior partner Tiffany Burns and coauthors detail seven ways for retailers to support diverse-owned brands. Among them: offer prime shelf space, provide promotional support, and accelerate supplier payments to help small businesses manage tight cash flows.

Here are other recent notable findings from our research:

Making vaccine production a more resilient process could help mitigate the effects of future global public-health emergencies. Heightened competition, increased production capacity, and shorter times to market have all transformed the vaccine landscape. Senior partner Tania Holt and coauthors say that worldwide vaccine manufacturing capabilities should be carefully reassessed now, on a national and regional level, to spot potential failure points.
China is now the world’s second-largest theme park market, yet only 27 percent of China’s population has ever visited a park (compared with an average of 68 percent in populations from developed markets). Steve Saxon and coauthors advise park operators hoping to seize this opportunity to look beyond mere rides and instead provide immersive storytelling experiences, encourage repeat visits by frequently updating offerings, and design environments that make great backgrounds for guests’ social media posts.
Retiring baby boomers and an underpopulated training pipeline have left the United States with an acute shortage of construction workers. This will only be exacerbated as government-sponsored infrastructure projects ramp up in coming years. Senior partner Adi Kumar and coauthors suggest several strategies for renewing the labor supply, including offering nonwage benefits (such as housing), hiring from nontraditional talent pools (such as formerly incarcerated people), and launching apprenticeships for high school students.

Our latest edition of Author Talks features CNBC senior media and tech correspondent Julia Boorstin speaking about her book, When Women Lead: What They Achieve, Why They Succeed, and How We Can Learn from Them (Simon & Schuster, October 2022). Boorstin says there’s evidence that women leaders are more adaptable when a plan goes awry, more likely to incorporate varied perspectives into decision making, and more comfortable with expressing vulnerability in front of employees.

This briefing note, based on our latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Sustainable and inclusive growth: Briefing note #17, October 13, 2022

Commercial fleet operators are keen to find reliable electric-vehicle charging solutions. Our weekly digest of McKinsey insights explores that topic and more.

Commercial electric-vehicle (EV) fleets are a fundamental component of the emerging EV landscape. But businesses that rely on EVs can’t afford downtime due to struggles with charging. This week, a McKinsey interview examines the challenge of building out effective, comprehensive fleet-charging infrastructure. Another McKinsey piece looks at opportunities for global banks to embed sustainability inducements within financial transactions. Meanwhile, an interview with a Google executive explores ways to ensure that inclusion and equity are central to product development processes.

Companies with sprawling fleets—for instance, swarms of delivery vehicles—are eager to transition to EVs. But they want assurance that fleets can be charged reliably and seamlessly, even while on the move. Andreas Lips, president and CEO of Shell Recharge Solutions in North America and Asia–Pacific, spoke with McKinsey’s Russell Hensley about the need to create charging infrastructure that offers convenience and ubiquity while maximizing vehicle uptime. Effective charging infrastructure might need to be interoperable with many different kinds of vehicles and available for use by multiple different customers.

Demand is growing for financial services that integrate sustainability goals into transactions. But, say senior partners Alessio Botta and Helmut Heidegger and coauthors, global transaction banking (GTB) leaves 90 percent of this demand unmet. Banks could play an important role in reaching global sustainability targets by, for instance, embedding sustainability tracking into agreements or offering preferred rates for transactions in which an underlying asset contributes to emissions reduction. Revenue from sustainable GTB activities is expected to grow quickly in coming years, and sustainability-related provisions might soon become core elements of successful GTB offerings.

The product development process is an important moment to consider issues of equity and inclusion. Customers of all kinds need to feel that products were designed with them in mind. Annie Jean-Baptiste, head of product inclusion and equity at Google, speaks with McKinsey partners Martin Harrysson and Claudy Jules about how to incorporate principles of equity and inclusion into four inflection points during the development process: ideation, user research and design, user testing, and marketing. Jean-Baptiste notes that products developed specifically for marginalized groups sometimes benefit wider populations—for instance, curb cuts designed in the 1970s for wheelchair users now get used by people with skateboards, rolling suitcases, and shopping carts.

Here are this week’s other notable findings from our research:

Banks spend billions of dollars each year to fight financial crimes such as money laundering but often seem to be one step behind miscreants. Adrian Murphy and coauthors say machine learning (ML) can be an important tool in this battle. Using ML to monitor and analyze transactions might lead to earlier identification of emerging criminal trends.
Utilities’ ambitious expansion plans—coupled with supply shocks spurred by the COVID-19 pandemic and geopolitical tensions—have created challenges for utilities procurement professionals. Roman Belotserkovskiy and coauthors say longer lead times for materials and parts now necessitate better demand planning, more transparency across a company’s units, and simplification and reduction of specifications for procurement.
The five-year revenue outlook for the global payments industry is outpacing prepandemic forecasts and is now expected to exceed $3 trillion by 2026. Meanwhile, rising interest rates and other factors are reshaping the global payments landscape and creating new opportunities. Olivier Denecker and coauthors say that many leaders in the payments sector haven’t previously encountered a high-interest-rate, high-inflation environment and will need to quickly adapt to thrive.
A McKinsey survey of roughly 8,000 consumers in France, Germany, the United Kingdom, and the United States reveals that retailers and food producers are not adequately meeting demand for healthy, sustainable food products that enable “conscious eating.” Senior partner Jessica Moulton and coauthors found that about 50 percent of surveyed consumers identify health as their top priority, but less than a third of respondents describe the range of products on grocery shelves as “great.”

Our latest edition of Author Talks features Amy Gallo, a contributing editor at Harvard Business Review, speaking about her book, Getting Along: How to Work with Anyone (Even Difficult People) (Harvard Business Review Press, September 2022). Gallo’s book describes eight types of difficult coworkers—including insecure bosses, know-it-alls, and political operators—and offers tips for dealing with them.

This briefing note, based on our latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Sustainable and inclusive growth: Briefing note #16, October 6, 2022

Can the United States build a thriving climate tech industry that leverages existing innovation? Our weekly digest of McKinsey insights explores that topic and more.

While the United States has functioned as an incubator for green technologies, homegrown innovations often flourish in other markets where government support allows those technologies to scale. This week, a McKinsey article examines potential effects of recent legislation that will direct more than $800 billion to US clean energy over the next decade—possibly boosting America’s ability to compete with green-tech industries in Europe and China. Meanwhile, another McKinsey piece explores findings from a global survey of packaging purchasers. Despite commitments, corporations frequently fall short of their packaging sustainability targets.

Recent legislative action is designed to encourage US private industry to prioritize climate technologies. Senior partner Laura Corb and coauthors say the United States can distinguish itself as a global green leader and chart the path toward energy independence by better integrating existing innovations into supply chains, for example. If new incentives to support climate technology work as intended, a virtuous cycle might result: more investment in innovation and climate tech deployment could create greater production capability, which would allow producers to scale up and meet consumer demand—ultimately leading to lower costs.

At $1 trillion of annual global spending, packaging presents a significant opportunity for businesses to implement more sustainable practices. Many, responding to consumer demand for greener packaging, have pledged to do as much, according to the findings of a new survey synthesized by senior partners David Feber, Yogesh Malik, and coauthors. But less than a third of respondents say they have managed to meet regional requirements or internal sustainability goals. Among the challenges that businesses face in tackling sustainable packaging hurdles: poor collaboration among manufacturing and sales teams, a lack of incentives to implement sustainable solutions, and insufficient metrics to understand what success looks like.

Here are other recent notable findings from our research:

Although much of the world has adjusted to life in a post-COVID-19 world, the impact on the US healthcare system persists, and the total additional costs of treating the endemic virus could be approximately $220 billion by 2027. Senior partners Pooja Kumar, Shubham Singhal, Matt Wilson, and their coauthors outline questions the healthcare system must answer (for example, is it possible to mitigate second-order effects of living with COVID-19?) to navigate the ongoing burden.
Using artificial intelligence is often touted as a way to improve a company’s operations. But to gain maximum value from AI, businesses must also be able to explain exactly what their AI is doing, which data it considers, and whether the results it computes are trustworthy. Senior partner Alex Singla and coauthors advise businesses to make AI explainable and suggest that doing so could lead to better bottom-line returns.
In an interview with McKinsey’s Imran Manji, L Catterton partner Matt Leeds answers a question that behemoth brands and challengers alike are asking: How do you unlock growth in a crowded consumer market? One seemingly paradoxical insight: sometimes you need to shrink to grow.
A recent report on employee burnout from the McKinsey Health Institute finds that a quarter of employees around the world say they experience toxic behavior in the workplace. To understand how to navigate that toxicity and reduce burnout, McKinsey chief scientist and director of research Jacqueline Brassey speaks with Tessa West, professor of psychology at New York University, who explains how workplace leaders can play an important role.

Our latest edition of Author Talks features Simmons University president Lynn Perry Wooten speaking about her book, The Prepared Leader: Emerge from Any Crisis More Resilient Than Before (Wharton School Press, September 2022), cowritten by Erika H. James, dean of the Wharton School of Business at the University of Pennsylvania. Wooten says prepared leadership means having a road map for how to lead through a crisis. Case studies, such as NBA commissioner Adam Silver’s decision to create a COVID-19 “bubble” during the pandemic, help illustrate the concept.

This briefing note, based on our latest published insights, was prepared by Alexandra Mondalek, an associate editor in McKinsey’s New York office.

Sustainable and inclusive growth: Briefing note #15, September 29, 2022

Could decarbonized shipping routes help cargo vessels go green? Our weekly digest of McKinsey insights explores that topic and more.

Ships powered by green energy will need specialized ports and fueling stations. This week, a McKinsey article looks at early development plans for green corridors—shipping routes designed to accommodate vessels that run on alternative fuels. Green corridors will require significant investment and will necessitate complex interplay between a wide variety of public and private stakeholders. A separate McKinsey piece examines efforts to decarbonize a fleet of much smaller conveyances: the recreational-vehicle (RV) sector (which includes pleasure boats, snowmobiles, and motor homes) might be able to reduce its greenhouse-gas emissions by embracing new materials and methods. Meanwhile, a discussion about CO₂ removal (CDR) investigates the technique’s potential capacity to mitigate global warming.

In determining the feasibility of creating green shipping corridors, four considerations take priority: the supply chain that will provide alternative fuels for ships; the port infrastructure required to transport, store, and handle those fuels; the investment needed to build new kinds of vessels powered by those fuels; and the interests of cargo owners and end customers. McKinsey partner Matt Stone and coauthors offer a blueprint, created in collaboration with the Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping, that lays out the technical, economic, and regulatory challenges faced by the shipping industry as it works to create routes conducive to alternative-fuel use.

Buyers of RVs such as personal watercraft, snowmobiles, and motor homes have indicated that they’re willing to pay more for eco-friendly products, which means that RV companies that reduce their emissions might be able to seize a greater share of this $90 billion industry. Senior partner Patrick Lahaie and coauthors advise manufacturers to consider building more electric-powered RVs (more than 60 percent of RV customers say they would likely be willing to pay more for an electric vehicle) and to rethink their use of materials (by finding greener sourcing methods for key building blocks such as aluminum and fiberglass).

Emissions reduction is only part of the decarbonization equation. CDR could also play a vital role in efforts to mitigate climate change. CDR involves removing CO₂ from the atmosphere—via chemical or biological absorption methods—and then storing it safely. Senior partner Mark Patel and coauthors say companies might eventually be obliged to pay for CDR to hit their climate-related targets. By 2050, the CDR market could be worth $1 trillion a year.

Here are this week’s other notable findings from our research:

Companies are finding it hard to hire and retain talented technical professionals. Senior partner Eric Lamarre and coauthors present seven helpful strategies for attracting and keeping tech talent. Among them: cast a wider net during the recruitment phase and provide candidates with more preparation before interviews.
Data management can be ethically fraught. Companies that mishandle private data or allow bias to creep into data sets could face reputational or financial harm. Senior partner Kayvaun Rowshankish and coauthors urge companies to embed data principles in their operations and to communicate clear data usage values.
With cross-border e-commerce projected to grow from $300 billion in 2020 to $1 trillion by 2030, customs agencies will be put under increasing stress. Partner Chiara Marcati and coauthors suggest that advanced analytics might help meet the challenge. By implementing techniques such as machine learning, customs agencies could begin to improve fraud detection and revenue collection in as little as 12 weeks.
McKinsey’s latest research on the Great Attrition reveals five employee personas that companies should be aware of as they seek to bolster their workforces. Associate partner Bonnie Dowling describes these five personas as the traditionalists, the do-it-yourselfers, the idealists, the caregivers, and the relaxers. Each has different needs and wants that companies should consider when making personnel decisions.

Our latest edition of Author Talks features journalist and former high-school cross-country coach Linda Flanagan speaking about her book, Take Back the Game: How Money and Mania Are Ruining Kids’ Sports—And Why It Matters (Penguin Random House, August 2022). Flanagan says youth sports have gone from accessible and fun to expensive and stressful—causing anxiety for both kids and parents.

This briefing note, based on our latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Sustainable and inclusive growth: Briefing note #14, September 22, 2022

Could chief information officers play a vital role in the world’s decarbonization efforts? Our weekly digest of McKinsey insights explores that topic and more.

Enterprise technology accounts for about 1 percent of the world’s total greenhouse-gas emissions. It’s a sizable amount, roughly equivalent to half the emissions from aviation or shipping. This week, a McKinsey article examines strategies for greening organizations’ technology use. Meanwhile, a survey about minimobility—a concept involving lightweight, three- or four-wheeled electric contraptions—finds that there might be a sweet spot between e-bikes and full-size electric vehicles (EVs). And a piece looks at ways that the COVID-19 pandemic has exacerbated gender disparities in employment.

Chief information officers (CIOs) can aid decarbonization efforts by scrutinizing the emissions caused by their companies’ tech devices and data centers. Senior partners Andrea Del Miglio and Jeffrey Lewis and coauthors suggest that CIOs could reduce emissions by more carefully managing the procurement and recycling of end-user devices (such as laptops, phones, and printers) and by migrating more of their companies’ computer workloads to the cloud instead of using on-premises data centers. Moves like these might require minimal investment while achieving significant results.

Somewhere between the realms of micromobility (which refers to two-wheeled vehicles such as e-bikes and e-scooters) and EVs (full-size electric vehicles with four wheels), there exists minimobility—a segment that includes three- and four-wheeled electrified rigs weighing 100 to 500 kilograms and capable of carrying one or two people. Partners Kersten Heineke and Timo Möller and coauthors say that minimobility could make important contributions to the transportation landscape. Minimobility vehicles offer more cargo capacity and weather protection than e-bikes and e-scooters but are cheaper, easier to park, and consume less energy than standard EVs.

The world was moving closer to gender equality in employment—until the COVID-19 pandemic interrupted the trend. Women represent about 40 percent of the global workforce but account for as much as 54 percent of COVID-19-related job losses. McKinsey Global Institute partner Mekala Krishnan identifies several reasons the pandemic pushed women out of the workplace. Among them: women are more likely to work in the sectors most disrupted by COVID-19 (including retail and accommodation) and are also more likely to take on additional family care responsibilities during a crisis (which translated, in the United States, to a ten- to 15-hour increase in unpaid work per week when the pandemic arrived).

Here are this week’s other notable findings from our research:

Although the US economy is throwing off mixed signals, it seems a safe bet that interest rates will remain elevated for an extended period. In this higher-for-longer environment—accompanied by low consumer confidence and grave concerns about inflation—senior partners Stephan Görner, John Kelleher, Ida Kristensen, Asutosh Padhi, Alex Panas, and coauthors counsel corporate leaders to consider prioritizing growth. Today’s uncertainty could be a “timely jolt” that helps companies build resilience and agility.
More widespread use of a software bill of materials (SBOM) might help protect companies and consumers from cyberattacks. SBOMs are like the nutrition labels on food products: they tell you, with precision, everything that’s inside a piece of software. Partners Tucker Bailey and Justin Greis and coauthors say that SBOMs can help companies to incorporate third-party software into their operations and products while mitigating the risk of hacking.
Wellness remains a top priority for American consumers. Among the latest trends: an increasing focus on better sleep. Senior partners Martin Lösch and Warren Teichner and coauthors estimate that consumer spending on wellness products and services has reached more than $450 billion in the United States and is growing at more than 5 percent annually.
Created in 1897, the Stanley Steamer was a popular and impressive early automobile. Its steam-powered engine was reliable, and its racing model could achieve speeds of up to 127.7 miles per hour. But the Steamer was soon outmoded by cheaper gas-powered cars like Henry Ford’s Model T. Russell Hensley, Shivika Sahdev, and their coauthor say the demise of the Steamer offers useful lessons as we transition from gas-powered cars to EVs. Among them: a great car can still fail. Success might instead hinge on manufacturing speed and costs and the infrastructure that supports the vehicle.

Our latest edition of Author Talks features Harvard professor and former Medtronic CEO Bill George speaking about his book, True North: Leading Authentically in Today’s Workplace, Emerging Leader Edition (Wiley, August 2022). In an interview with McKinsey Global Publishing’s Rick Tetzeli, George says he updated his original bestseller to teach a new generation of leaders how to gain trust through authenticity.

This briefing note, based on our latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Sustainable and inclusive growth: Briefing note #13, September 15, 2022

Using more of the food we grow could benefit society, corporations, and the planet. Our weekly digest of McKinsey insights explores that topic and more.

Roughly $600 billion worth of food is lost each year before it ever reaches store shelves or consumers. This week, a McKinsey article looks at ways for farmers, manufacturers, and grocers to reduce food loss. Conserving food could ameliorate global hunger, diminish carbon emissions, and be good for business. Meanwhile, a look at Fortune Global 500 companies’ stances on environmental harm finds that most set climate-related targets but far fewer establish targets connected to issues such as freshwater consumption or biodiversity loss. Elsewhere: a McKinsey report on Asian American workers finds that Asian Americans perceive low levels of fairness in the workplace and struggle to get promoted into the highest ranks of corporate leadership.

The world squanders 33 to 40 percent of its annual food production, incurring needless greenhouse-gas emissions along the way. About half of this results from “food loss,” which occurs during production and processing stages and is not to be confused with “food waste,” which happens after food is distributed to retailers and consumers (exhibit). There are three food loss culprits: farms producing more food than they can sell, stringent customer requirements that make some edible food unmarketable, and handling damage that renders food unfit to eat. Senior partners Clarisse Magnin-Mallez and Björn Timelin and coauthors say that solutions will require farmers, manufacturers, and grocers to work together but could result in both environmental gains and boosts to bottom lines.

About half of global food loss and waste happens upstream, before products arrive at retailers’ stores or warehouses.

More than 80 percent of Fortune Global 500 companies have set climate-related targets (and nearly all acknowledge the existence of climate change). But, find senior partner Kartik Jayaram and coauthors, those companies are less likely to address other “nature positive” goals publicly. Issues such as the degradation of seabeds or the loss of biodiversity could become the focus of future regulatory decisions, so companies might consider broadening their understanding of these concerns now.

Asian American workers earn 93 cents for every dollar earned by White colleagues. They also fail to receive proportional representation at the highest rungs of the corporate ladder. Senior partner Kweilin Ellingrud and coauthors use data to dispel myths about Asian Americans in the workplace and then suggest five actions that companies can take to improve outcomes and experiences. Among them: collect more data that are disaggregated by Asian American ethnicity because, for example, the experiences of South Asians can differ from those of East Asians.

Here are this week’s other notable findings from our research:

McKinsey’s latest survey of global economic conditions finds that geopolitical risk is a top CEO concern. In a related article, senior partners Andrew Grant and Jean-Christophe Mieszala and their coauthor limn six types of resilience that organizations can cultivate amid the fraught geopolitical landscape. Among them: reputational resilience, which involves knowing clearly what an organization stands for and what it opposes.
A McKinsey survey on digital trust finds that consumers weigh personal data protection nearly as much as price when making buying decisions. Meanwhile, note senior partners Alex Singla and Kate Smaje and their coauthors, nearly 90 percent of companies believe that they are at least somewhat effective at mitigating digital risks—but 57 percent of executives report that their organizations have suffered at least one material data breach in the past three years.
Poppy Jaman, CEO of the mental-health advocacy group MindForward Alliance, speaks with McKinsey senior partner Ramesh Srinivasan about ways to foster better mental health in workplaces and homes. Jaman urges organizational leaders to be open about their own mental-health struggles.

Our latest edition of Author Talks features McKinsey senior partner Asutosh Padhi and coauthors Gaurav Batra and Nick Santhanam discussing their book, The Titanium Economy: How Industrial Technology Can Create a Better, Faster, Stronger America (PublicAffairs, October 2022). In an interview with McKinsey Global Publishing’s Lucia Rahilly, the authors highlight an under-the-radar sector that is flourishing financially and has the potential to push forward positive societal changes.

This briefing note, based on our latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Sustainable and inclusive growth: Briefing note #12, September 8, 2022

Financial-services providers have often underserved Black communities. Our weekly digest of McKinsey insights explores that topic and more.

Given that 47 percent of Black households are unbanked or underbanked, there exists ample opportunity for financial-services providers to forge more inclusive relationships with Black consumers. This week, a McKinsey article outlines strategies for banks, insurers, and wealth managers to keep in mind as they endeavor to provide much-needed products to an underserved market. Elsewhere: a piece investigates the thesis that companies are better off playing offense, not defense, when addressing climate change. And an article about biases that can skew corporate hiring and promotion examines what happens when good intentions get derailed by motivated reasoning.

Black consumers are often less satisfied than their non-Black peers regarding the financial products available to them (exhibit). Research from the McKinsey Institute for Black Economic Mobility suggests that while Black consumers are especially eager to explore new financial services, these consumers’ needs are not well met by current offerings from financial-services companies. Senior partner Shelley Stewart III and coauthors present five strategies the industry could implement to more effectively capture opportunities in Black communities. Among them: develop tailored solutions for short-term financing, make procedures for opening accounts less cumbersome, and provide culturally intelligent customer service.

Black consumers are generally less satisfied than their non-Black peers with financial offerings.

Efforts to meet the world’s climate change goals could spur the single largest asset reallocation in history—while putting up for grabs $9 trillion to $12 trillion in new annual revenue pools. Senior partner Michael Birshan and coauthors discuss ways that companies can seize the initiative both to hasten and to benefit from a net-zero future. Among emerging profit opportunities: carbon accounting services that rely on developing technologies to track and manage emissions.

Biases can distort perceptions of fairness in organizational hiring and promotion. Tim Koller and coauthors examine the perils of motivated reasoning—a type of bias that can occur when executives place faith in conclusions they want to be true instead of those supported by evidence. Systematically reviewing a company’s past actions and using data to inform policy setting can help replace emotionally driven beliefs with fact-based assessments.

Here are this week’s other notable findings from our research:

Arianna Huffington, founder and CEO of Thrive Global, spoke with McKinsey’s Erica Coe about ways that organizations can reduce burnout resulting from work stress. Huffington (whose company creates wellness-focused software) says burnout is an epidemic that is negatively affecting workers’ health and happiness.
Mark Boggett, managing director of Seraphim Capital, spoke with McKinsey’s Mina Alaghband for an episode of the At the Edge podcast. Boggett, a prolific investor in space technology, says three trends are driving the sector: lower satellite launch costs, smaller and cheaper satellites, and a burgeoning digital infrastructure in orbit.
Senior partner Dana Maor and coauthors urge companies to eschew fear-based decision making when it comes to hiring tech talent. Companies might be tempted to stay safe by choosing proven workers, but many potential tech hires are capable of growing into larger roles.
For an episode of the Inside the Strategy Room podcast, economist John List spoke with McKinsey senior partner Yuval Atsmon about how to know when an idea can become a blockbuster. List’s new book, The Voltage Effect: How to Make Good Ideas and Great Ideas Scale, argues that effective scaling is subject to what’s called the “Anna Karenina principle”: if even one element of an idea is flawed, scaling will magnify the problem.

Our latest edition of Author Talks features science journalist Jessica Nordell speaking about her book, The End of Bias: A Beginning (Macmillan, reissued August 2022). In an interview with McKinsey Global Publishing’s Raju Narisetti, Nordell contends that subtle, ambiguous bias within an organization can actually be more detrimental than explicit bias.

McKinsey is striving to create a more inclusive economy through collaborations with clients and local communities. By preparing students for the jobs of tomorrow, propelling wealth creation for working families, and supporting racial equity, McKinsey is helping to build an economy that works for everyone. Learn more about McKinsey’s commitment to inclusive growth on McKinsey.com.

This briefing note, based on our latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Sustainable and inclusive growth: Briefing note #11, September 1, 2022

Decarbonization is coming to the transport sector—faster than some have predicted. Our weekly digest of McKinsey insights explores that topic.

Propelling people and goods around the world has long been a major source of greenhouse-gas emissions. This week, two McKinsey pieces look at efforts to decarbonize the transport sector. First, an article about the promise of power-to-liquid (PtL) fuel examines this technology’s potential to green the aviation industry. Then, an interview with a truck maker’s head of operations highlights the economic case for electrifying vehicles while revealing what’s really behind the demand for cleaner trucks and buses.

PtL fuel is produced through complex processes that convert carbon into a liquid capable of powering jet engines. PtL is still in a developmental phase, with considerable technical challenges yet to be overcome. But a joint report from McKinsey and the World Economic Forum makes the case that PtL can play a central role in aviation’s future, lowering emissions while also generating commercially useful by-products. Senior partner Bernd Heid and coauthors forecast rising demand for PtL while cautioning that substantial investments—a cumulative total of $3 trillion to $4 trillion between 2022 and 2050—will be required to ramp up production. Providing the carbon necessary for PtL via direct air capture could be an important way to boost efficiency and further reduce emissions.

Electrification of trucks and buses will be driven less by regulation than by customers’ own decarbonization targets, says Michael Grahe, head of operations for truck and bus manufacturer Navistar. In a discussion with McKinsey senior partner Philipp Kampshoff, Grahe also identifies total cost of ownership as a key consideration in electric-vehicle adoption while predicting that by 2025 electric trucks and buses will outscore their nonelectric brethren on that metric. Grahe says Navistar is already taking orders on a fully electric school bus but warns that insufficient highway charging infrastructure could delay the electrification of long-haul trucking.

Here are this week’s other notable findings from our research:

This era’s volatility—pandemics, conflicts, inflation—might tempt some corporate leaders to hunker down and play defense. But crisis creates opportunity. Global managing partner Bob Sternfels and senior partners Michael Birshan and Ishaan Seth counsel leaders to act courageously. An effective organization will maximize three edges over competitors: deeper insight, bolder commitment, and quicker execution.
The building materials sector has been upended by the ballooning cost of inputs such as steel and crude oil. Senior partner Jan-Christoph Köstring and coauthors suggest several mitigating strategies. Among them: create pricing agreements that allow for rapid resets in response to cost changes.
Inflation has been particularly tough on property and casualty insurance carriers. Senior partners Kia Javanmardian and Fritz Nauck and coauthors assess the effects on insurers of three potential future scenarios. Leaders who wish to be prepared might consider creating a “resilience playbook” now.
The number of manufacturing firms and plants in the United States has fallen by roughly 25 percent since 1997. But, suggest senior partners Mike Doheny and Asutosh Padhi and coauthors, a US manufacturing renaissance may soon be at hand. To thrive, US manufacturing must pay close attention to trends in sustainability, digitization, and automation.

Our latest edition of Author Talks features husband-and-wife author team Nathan Furr and Susannah Harmon Furr speaking about their new book, The Upside of Uncertainty: A Guide to Finding Possibility in the Unknown (Harvard Business School Press, July 2022). In an interview with McKinsey Global Publishing’s Astrid Sandoval, the authors say human beings are wired to fear uncertainty but are better off finding ways to embrace it.

This briefing note, based on our latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Sustainable and inclusive growth: Briefing note #10, August 25, 2022

Sustainable production of commodities is a promising frontier in decarbonization. Our weekly digest of McKinsey insights explores that topic.

The advent of ‘green commodities’ (produced using clean, low-emission methods) is reshaping the commodities sector. Molecularly identical materials can now command different prices depending on their backstories. This week, a McKinsey article examines what happens when commodities are greened and materials such as aluminum and steel are suddenly, well, “decommoditized.” Elsewhere, a piece investigates the challenges and opportunities presented by efforts to decarbonize the public sector.

In the past, commodity producers rarely needed to consider things such as branding or price premiums. One shipment of aluminum, steel, or polypropylene was indistinguishable from another, and the lowest price generally won the day. That has all changed now that green (more sustainably produced) and gray (less sustainably produced) versions of these materials exist. Demand for some green commodities is expected to outstrip supply in the coming decade (exhibit). Senior partner Michel Van Hoey and coauthors advise commodity producers to begin decarbonizing sooner rather than later and to carefully assess customers’ willingness to pay a “climate premium.”

Demand for certain green materials could exceed supply in large markets.

Public-sector entities often set the agenda and create regulations for decarbonization. But, say senior partner Jonathan Woetzel and coauthors, the public sector might consider ways to green itself. Although they are often less agile than their private-sector counterparts, public-sector organizations—given their scope and influence—could have an outsize effect on emissions reduction. Among suggested areas for public-sector focus: decarbonizing buildings, creating more sustainable workforce travel policies, and introducing new procurement criteria.

Here are this week’s other notable findings from our research:

America’s crisis management community has made great strides in the two decades since the September 11 attacks. Tony D’Emidio and coauthors offer thoughts on how to prepare for future crises. Useful questions to ask: What role could the private sector play in preparedness? And how could the disaster management community encourage more civilians to get involved in preparedness efforts?
Conflict between Russia and Ukraine—in one of the world’s six breadbasket regions—has greatly increased worries about global food security. Senior partners Daniel Aminetzah and Nelson Ferreira and coauthors warn that food shortages might worsen next year. Swift steps, such as providing financial aid to at-risk populations, could help mitigate the severity of the crisis.
Many industrial companies have little experience with setting prices during a time of inflation. Nicolas Magnette and coauthor advise industrial companies to engage in active price management and to consider short-, mid-, and long-term time horizons as they reset pricing strategies.
In the latest edition of McKinsey’s American Opportunity Survey, 36 percent of employed respondents self-identify as independent workers. Senior partners André Dua and Kweilin Ellingrud and coauthors discovered that these respondents, while reporting many barriers to their well-being, are far more optimistic about economic opportunity than workers overall.

Our latest edition of Author Talks features Danish design experts Christian Bason and Jens Martin Skibsted speaking about their new book, Expand: Stretching the Future By Design (Penguin Random House, May 2022). In an interview with McKinsey Global Publishing’s Adam Volk, the authors describe the limitations of traditional “design thinking.”

This briefing note, based on our latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Sustainable and inclusive growth: Briefing note #9, August 18, 2022

Though its doubters are legion, ESG is more essential now than ever. Our weekly digest of McKinsey insights explores that topic.

The abbreviation ‘ESG’ (environmental, social, and governance) was coined in 2005 as shorthand for a more responsible approach to doing business. Lately, the concept has been met increasingly with skepticism from critics who suggest that companies either can’t or shouldn’t bother to uphold ESG precepts. This week, a pair of McKinsey articles make the affirmative case for ESG—laying out reasons to care about it and strategies to implement it effectively. Elsewhere, a conversation with a CDO (chief diversity, equity, and inclusion officer) focuses on methods for building a culture of representation.

Naysayers complain that ESG is a distraction for many companies, creating goals that are impossible to meet and effects that are impossible to measure. Senior partners Lucy Pérez, Vivian Hunt, Hamid Samandari, and coauthors offer rebuttals to those claims, asserting that ESG is now more essential, relevant, and quantifiable than ever before. Addressing ESG is imperative for companies that wish to demonstrate they deserve society’s trust.

For ESG to make a difference, it must be implemented in a rigorous, socially attuned manner. Having established the “why” of ESG, Pérez, Hunt, Samandari, and coauthors move to the “how”—practical steps for making ESG real. Among key components they recommend for an effective ESG strategy: benchmark regularly, think systematically about trade-offs, and let investors see how ESG meshes with the business model.

To put in place a successful diversity, equity, and inclusion (DEI) strategy, a company must designate a DEI leader. Indhira Arrington is the first global chief DEI officer of Ares Management, an alternative asset management firm. Arrington talks with McKinsey’s Diana Ellsworth and Drew Goldstein about how she became a CDO, how she created Ares’ DEI plan, and where she sees DEI strategy making the most difference.

Here are this week’s other notable findings from our research:

Despite the historically low unemployment rate in the United States, 28 percent of respondents to McKinsey’s latest American Opportunity Survey cite the limited availability of jobs as the biggest barrier to their employment searches. Senior partners André Dua and Kweilin Ellingrud and coauthors highlight mismatches of skills, geography, and expectations as potential drags on the US labor market.
McKinsey’s latest Consumer Pulse Survey finds consumer confidence at a new low. But, say senior partner Kelsey Robinson and coauthors, there are glimmers of hope—including the fact that most US consumers are now sitting on solid nest eggs.
Senior partner Chris Bradley and coauthors offer ten rules for value-creating growth. Among them: start with a scalable formula, prioritize profitable markets, and don’t be afraid of “shrinking to grow” by ruthlessly pruning a portfolio.

Looking for more insights? McKinsey Global Publishing produces more than 40 newsletters on a broad range of topics. The Daily Read highlights one article per day that we think is worthy of special attention. Monthly Highlights is a summary of our top-performing articles from the past 30 days. And On Point makes a daily connection between top news stories and a published McKinsey insight.

This briefing note, based on our latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Sustainable and inclusive growth: Briefing note #8, August 11, 2022

A more inclusive approach to mobility will lead to faster decarbonization. Our weekly digest of McKinsey insights explores that topic.

The e-mobility revolution holds implications for sustainability and inclusivity: decarbonization will happen faster if everyone is on board. This week, McKinsey surveyed the preferences of Black automotive consumers, whose spending is expected to reach $190 billion by 2030. McKinsey research suggests that 40 percent of Black consumers expect to purchase an electric vehicle (EV) in the next ten years—but the industry’s relationship with these buyers will depend on its equitable treatment of them. Two other vehicle-focused pieces looked at growth opportunities for chemical companies supplying EV manufacturers and at changes in the investment allocations of shared-micromobility funders. Elsewhere: an interactive timeline visualized shifts in spending, output, and job creation in eight key sectors as we advance toward a net-zero world.

A McKinsey survey discovered that Black respondents were three times more likely than other respondents to express interest in disruptive mobility trends such as EVs. Black consumers are, however, particularly concerned about the availability of charging stations. Senior partner Shelley Stewart III and coauthors advise EV players to distribute charging infrastructure equitably, ensuring there will be no “charging deserts” in Black neighborhoods.

EV manufacturers are searching for materials that improve the efficiency of parts such as batteries, motors, and wiring and are increasingly willing to pay higher costs for superior performance. In light of this, senior partner Chris Musso, senior expert Dennis Schwedhelm, and coauthors advise chemical companies to consider more participation in the automotive industry and to assess whether they might provide profitable solutions.

E-kickscooters have come to dominate the shared-micromobility segment. Bikes were winning prepandemic, but electrified stand-up scooters now attract nearly 90 percent of investment, with mopeds a distant third (exhibit). Kersten Heineke and coauthors note that a growing share of funding is directed toward parking and charging solutions, which are vital elements for shared-micromobility fleets.

Decarbonization will upend markets and force reallocation of capital. Along the way, it will create trillions of dollars in opportunity. Senior partners Hamid Samandari and Humayun Tai offer an interactive look at what the march toward net-zero will mean for particularly exposed sectors such as steel, cement, and forestry. Clicking through a detailed timeline to 2050 reveals projected shifts in emissions, capital spending, output, and jobs.

About 90 percent of micromobility investments now go to e-kickscooters.

Here are this week’s other notable findings from our research:

McKinsey’s 2022 summer reading guide has arrived. We asked leaders from around the world for book recommendations. Their suggestions included works from the realms of history, memoir, fiction, and poetry.
Senior partners Thomas Kilroy and Emily Reasor and coauthors offered four strategies for retail marketplaces to ensure effective pricing: vet the sellers, encourage competition among them, scrape lots of data, and enable customer loyalty programs.
Building new businesses has become a key trait of resilient companies. Senior partners Ari Libarikian and Kurt Strovink and coauthor suggested five ways for CEOs to support the business-building process. Among them: resolve issues quickly and have the courage to absorb criticism.
McKinsey’s Violet Chung spoke with Arthur Wang, CFO of WeBank. As China’s first digital bank, WeBank has been at the forefront of using AI to cut costs while servicing a huge customer base.

Our latest edition of Author Talks features Andrew Leon Hanna, an Egyptian American lawyer and human rights advocate, speaking about his new book, 25 Million Sparks: The Untold Story of Refugee Entrepreneurs (Cambridge University Press, May 2022). In an interview with McKinsey Global Publishing’s Joyce Yoo, Hanna suggested it would be financially “foolish” to ignore the plight of refugees, who are among the most entrepreneurial people in the world.

This briefing note, based on our latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Sustainable and inclusive growth: Briefing note #7, August 4, 2022

Inclusive growth means lifting all, not just some. Our weekly digest of McKinsey insights explores that topic.

This week, a trio of McKinsey pieces examined the challenge of creating growth that leaves no one behind. A report on race at work found that hourly frontline workers, such as waiters and employees of retail stores—who are disproportionately people of color—often perceive that they face limited paths for advancement and a general lack of fairness and inclusion. A discussion about the growing divide between urban and rural America focused on strategies to encourage entrepreneurship and innovation in sparsely populated communities. And a look at the state of apprenticeship touched on the perils of the “mini-me” mindset: leaders offer opportunities only to team members they find most similar to themselves. Elsewhere, a pair of articles about efforts to decarbonize transport looked at ways to encourage more travelers to choose passenger rail and more shipping carriers to green their operations.

More than 70 percent of frontline workers would like to be promoted by their companies, but only 4 percent actually graduate to corporate jobs. Senior partner Lareina Yee and coauthors encourage companies to enable a smoother path to the middle class by investing more in their frontline employees. Workers of color in frontline jobs frequently receive little if any sponsorship in their organizations and face too many obstacles in climbing the corporate ladder.

The COVID-19 pandemic exacerbated the already widening gulf between the fortunes of urban and rural America. Matt Dunne, the founder of the Center on Rural Innovation, spoke with Rachel Riley, of McKinsey’s Future of America podcast, about his belief that tech can help narrow the divide. Small-town America has 13 percent of the country’s workforce but only 5 percent of its math and computing jobs.

Apprenticeship is a valuable tool for retaining talent and building the skills of employees. But leaders must be mindful about who gets to apprentice—and who doesn’t. Lisa Christensen and Tony Gambell spoke to The McKinsey Podcast about the keys to a successful apprenticing relationship (one is that the expert should know when to “fade away”) and about the danger of succumbing to the mini-me bias: sometimes experts are tempted to work only with apprentices who remind them of themselves.

The transport sector, which accounted for roughly 21 percent of the world’s carbon emissions in 2020, is looking for ways to get greener. Senior partner Detlev Mohr and coauthors say that shippers and carriers could collaborate to create incentives for decarbonization. Among the suggestions: shippers could create contracts requiring logistics partners to set carbon reduction goals.

Passenger rail experienced a steep drop in ridership during the pandemic. Since rail is generally more sustainable than flying or driving, restoring rail’s share of passenger travel would aid decarbonization. Carsten Lotz and coauthors examine strategies that would help rail to differentiate itself—for instance, providing better service and denser travel networks.

Here are this week’s other notable findings from our research:

The McKinsey Health Institute’s Kana Enomoto spoke with psychiatrist and Harvard professor Shekhar Saxena about Saxena’s conviction that we should train every health worker to become a mental-health worker.
The McKinsey Center for Future Mobility’s Russell Hensley talked with Clare Jones, the chief commercial officer of what3words, about her company’s unique approach to mapping the world. After dividing the globe’s surface into 57 trillion squares (each measuring nine square meters), what3words assigned each square a randomly generated three-word name (for instance, “filled count soap”). The company believes that this system is more efficient than old-fashioned street addresses.
With COVID-19 vaccination rates remaining low in most African countries, Ying Sunny Sun and coauthors suggest a data-driven approach to increasing vaccine uptake. Research-based insights could help promote localized, actionable, iterative, and agile solutions.
Workplace connections have become attenuated since the pandemic’s onset: employees spend less time and effort forming relationships. Senior partners John C. W. Parsons and Bill Schaninger and their coauthors say that companies can rebuild the social capital of employees by giving them the motivation, access, and ability to create more robust networks.

Our latest edition of Author Talks features Melissa Daimler, Udemy’s chief learning officer, speaking about her new book, ReCulturing: Design Your Company Culture to Connect with Strategy and Purpose for Lasting Success (McGraw-Hill, May 2022). In an interview with McKinsey Global Publishing’s Katherine Tam, Daimler advised leaders to prioritize organizational culture instead of dismissing it as “soft stuff.”

This briefing note, based on our latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Sustainable and inclusive growth: Briefing note #6, July 28, 2022

Could heat pumps save Europe—and the world? Our weekly digest of McKinsey insights explores the topic.

With Russia threatening to slash its natural-gas exports in coming months, Europe could face severe heating challenges in the winter. This week, McKinsey assessed the potential for electric heat pumps. With 2.2 to 4.5 times the efficiency of gas furnaces, heat pumps are an improving technology that might provide a heating alternative while also cutting carbon emissions. Meanwhile, McKinsey’s look at sustainability in the grocery sector suggested that grocers are uniquely positioned—as intermediaries between farmers and consumers—to push for decarbonization of the global food system. And an examination of B2B opportunities presented by the world’s shift away from fossil fuels advised companies to look for durable competitive advantages that could arise from the transition. Elsewhere, a continuing investigation of equity in US higher education found that very few institutions achieve both representational parity and above-average rates of completion for students from historically underrepresented populations.

Heat pumps provide an increasingly viable solution for electrifying both space- and water-heating systems in buildings. Blake Houghton, Evan Polymeneas, and coauthors note that with equipment and installation expenses falling—and natural-gas prices rising—heat pumps are in some cases approaching cost parity with fossil-fuel-generated heat. A McKinsey analysis predicts that heat pumps, which could substantially reduce buildings’ emissions (exhibit), might constitute 90 percent of new heating-unit sales by 2050.

Heat pumps powered by renewable energy could produce significantly lower emissions than other common heating methods.

The food system accounts for more than 30 percent of global greenhouse-gas emissions. Most of these emissions, such as those resulting from farm operations, fall outside grocers’ direct control. But, according to Bartosz Jesse and coauthors, grocers can be a powerful force for decarbonization while saving costs and capturing value along the way.

The transition out of fossil fuels could require an average annual investment of roughly $9 trillion over the next three decades. Senior partner Georg Winkler and coauthors say the B2B companies that reap the most benefit from these changes will be those that play offense, making bold strategic decisions instead of merely avoiding risks.

Equity in higher education will require both better student representation from historically marginalized populations and improved efforts to help those students graduate. Senior partner Jonathan Law and coauthors used data to illustrate that few institutions get both parts of this equation right. Almost 20 percent of institutions have not made recent, meaningful progress on either dimension.

Here are other notable findings from our research this week:

The world faces an acute shortage of healthcare workers, exacerbated by the demands of aging populations and newly emerging pathogens. Senior partners Pooja Kumar and Matt Wilson and coauthors offer strategies to rebuild the talent pipeline.
A McKinsey survey on US summer travel found that leisure travel is booming—increasingly outstripping even levels seen before the onset of the COVID-19 pandemic. Ryan Mann and coauthors discovered that nearly 70 percent of travelers plan to take a summer vacation “no matter what.”
Governments could benefit from AI innovations in areas such as crisis response, education, and healthcare but often face barriers that prevent them from capturing AI’s full value. Senior partner Tom Isherwood and coauthors suggest useful ways for governments to ease the implementation of AI technology.
Senior partner Asutosh Padhi interviewed Alan Murray, CEO of Fortune Media and former head of the Pew Research Center, about the emerging social consciousness of business. Murray says stakeholder capitalism is sometimes just a PR ploy but, done right, can be deeply meaningful.

Our latest edition of Author Talks features former marketing executive Dalia Feldheim speaking about her new book, Dare to Lead like a Girl: How to Survive and Thrive in the Corporate Jungle (Rowman & Littlefield, June 2022). In an interview with McKinsey Global Publishing’s Raju Narisetti, Feldheim advised executives to incorporate more “feminine traits”—such as passion and intuition—into their leadership style.

This briefing note, based on our latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Sustainable and inclusive growth: Briefing note #5, July 21, 2022

Is net-zero aviation cleared for takeoff? Our weekly digest of McKinsey insights explores the topic.

The Farnborough International Airshow opened on Monday—amid sweltering UK temperatures—and one major theme among executives in attendance has been aviation’s climate impact. This week, a trio of McKinsey articles explored the quest to decarbonize the sector. A report found that aviation can achieve net-zero emissions by 2050 through accelerated focus on aircraft efficiency and sustainable fuel production. An examination of aircraft life cycles suggested that reducing non-fuel-related emissions—by devising greener manufacturing and maintenance operations—can also play a role. And a look at capital flows into future air mobility, or FAM (think electric flying cars), argued that funding, though slightly down this year, remains comparatively strong. Elsewhere: a McKinsey analysis of equity in higher education revealed that, for some historically marginalized groups, progress seems to have stalled.

The Making net-zero aviation possible report—created by an alliance of climate leaders, in conjunction with McKinsey—proposed scenarios for reaching net zero in the sector by 2050. Among the most promising levers for decarbonization are power-to-liquid approaches that convert electricity into sustainable, synthetic liquid fuels capable of running aircraft engines (exhibit). Axel Esqué and his coauthors estimate this technology could enter the market at a large scale by the late 2020s.

Global aviation can achieve net zero by 2050.

Fuel-related emissions account for most of aviation’s climate impact, but a broader reckoning must also assess an aircraft’s full life cycle. A recent post on the Future Air Mobility blog suggests that aerospace companies moving to decarbonize their operations—manufacturing, assembly, maintenance—can play a part in emissions reduction. Sourcing low-carbon materials such as green aluminum will aid the effort.

Investment in the FAM industry slowed in the first half of 2022, but Robin Riedel and his coauthors say funding is still on pace with historical trends. FAM entrepreneurs are working on innovative airframe designs and propulsion systems. One of the more active investment areas concerns development of passenger electric vertical takeoff and landing vehicles (eVTOL)—sometimes referred to as “flying cars.”

Historically marginalized populations continue to be underrepresented in higher education. An analysis from senior partner Jonathan Law and his coauthors found that, if current trends persist, it could take 70 years for these groups to achieve full equity in student admissions. As for faculty: there was effectively no progress in representation between 2013 and 2020.

Here are other notable findings from our research this week:

A McKinsey Global Survey of board directors suggested five ways to increase a board’s long-term impact. One of these ways—according to senior partners Celia Huber and Frithjof Lund and their coauthors—is to invest more time in onboarding to ensure new board members fully understand the company’s strategy and culture.
Research shows that CFOs are often perceived as obstacles to innovation within their organizations. Senior partner Eric Kutcher and his coauthors offer five strategies for CFOs to rebrand themselves as innovation allies.
Consumer-facing companies are increasingly appointing, and relying on, chief medical officers. Shaun Callaghan and his coauthors note that the role’s responsibilities can range from establishing in-house COVID-19 protocols to overseeing employee mental health and identifying strategic business opportunities.
A new edition of McKinsey for Kids takes a look at space junk. There are an estimated 29,000 pieces of junk larger than a bagel orbiting Earth right now—including a spatula, a glove, and a pair of pliers dropped by spacewalking astronauts. Any one of these objects could potentially collide with a satellite and smash it to bits.

Our latest edition of Author Talks features Stanford Graduate School of Business lecturer Susan Wilner Golden speaking about her new book, Stage (Not Age): How to Understand and Serve People over 60—the Fastest Growing, Most Dynamic Market in the World (Harvard Business Review Press, June 2022). In an interview with McKinsey Global Publishing’s Raju Narisetti, Golden explained that extended life spans are creating a “longevity economy.”

This briefing note, based on our latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Sustainable and inclusive growth: Briefing note #4, July 14, 2022

Assumptions about sustainability may not always align with data. Our weekly digest of McKinsey insights explores the topic.

Intuitions about sustainability can benefit from reality checks grounded in science. This week, McKinsey investigated the climate impact of plastic—a frequent environmental bugbear—and discovered that widespread assumptions about this oft-maligned material might warrant some reexamination. Likewise, an article looking at trends in luxury automobiles—another common target of climate criticism—suggested that electrification will come to dominate future premium car segments. Elsewhere, on the topic of inclusivity, discussions with healthcare and financial services executives explored strategies to boost everyone’s health and wealth, regardless of background.

In a McKinsey report on the climate impact of plastics, senior partners David Feber, Stefan Helmcke, Thomas Hundertmark, Chris Musso, and their coauthors found that, while plastics often catch criticism for contributing to marine pollution and general environmental toxicity, the full picture is more complicated. In some cases, plastics can reduce greenhouse-gas emissions when compared with alternative materials like paper, aluminum, or glass (exhibit).

Soft drink container US 2020 view: PET bottle has the lowest total greenhouse-gas contribution.

The luxury automobile segment is expected to gain market share over the next decade. It’s also where much of the most exciting vehicle innovation is happening—including cutting-edge electrification technology. Senior partner Jan-Christoph Köstring and his coauthors found that affluent customers are increasingly willing to go electric when shopping for premium cars.

The zip codes we grow up in shouldn’t determine our health outcomes, yet too often still do. In the latest episode of the McKinsey on Healthcare podcast, Daniel E. Greenleaf, CEO of Modivcare—a healthcare services provider—spoke about how his personal background has inspired him to address ongoing disparities in health equity.

Closing the racial wealth gap could boost GDP in the United States by 5 percent annually. McKinsey brought together a group of financial services executives for a video conversation about how the industry can play its part in enabling economic mobility for all.

Here are other key findings from our research this week:

A new McKinsey Global Survey asked about the state of automation. Most respondents felt their organizations are far from realizing the full potential of automation technologies.
In a series of seven charts employing the latest publicly available data, McKinsey Global Publishing illustrated the worrisome encroachment of inflation on the global economy.
An in-depth look at the current state of customer care found call volumes and customer expectations growing as employee talent pools shrink.
McKinsey senior partner Gautam Kumra interviewed Infosys cofounder Nandan Nilekani about his role in improving India’s digital public infrastructure and his belief that technology can be a force for good.
MassMutual CEO Roger W. Crandall spoke to senior partner Pradip Patiath for an episode of McKinsey’s Inside the Strategy Room podcast. Among other topics, Crandall revealed how the pandemic disrupted the insurance industry.

Our latest edition of Author Talks features former policy maker Justin Zorn and consultant Leigh Marz speaking about their new book: Golden: The Power of Silence in a World of Noise (Harper Wave, May 2022). Quieting our minds has never been more difficult—or more important.

This briefing note, based on our latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Sustainable and inclusive growth: Briefing note #3, July 7, 2022

Sustainable and inclusive growth is a global effort, happening locally. Our weekly digest of McKinsey insights explores the topic.

Achieving sustainable and inclusive growth can, and should, involve peering beyond our own backyards. This week, McKinsey zeroed in on a variety of global locales from which business insights are emerging. In Europe, consumer goods companies are discovering the potential of circularity. In Asia, an e-mobility ecosystem is growing—and creating opportunity. Africa is home to a fintech pioneer. Further articles include a multimedia look at the future of video entertainment in Hollywood, a survey of LGBTQ+ workplace experiences in the United States, and an examination of sustainable mining practices that could be implemented worldwide.

Consumer-packaged-goods companies have sometimes viewed circularity as a threat: How do you sell new goods if customers are buying the used versions? But, in fact, circularity presents growth opportunities. Senior partner Stefan Helmcke and his coauthors demonstrate that smart companies can capture value even as product life cycles are extended, with benefits for sustainability thrown into the bargain (exhibit).

By 2030, European circular-economy product segments will grow at around 10 to 15 percent annually to reach around 400 million euros to 650 billion euros.

E-mobility is gaining momentum in Asia, and there is growth to be captured for those who think in terms of ecosystems. Opportunity lies beyond the traditional auto industry frameworks. Senior partner Nimal Manuel and his coauthors suggest that both established firms and start-ups can grow by exploring novel relationships between technology, energy, and finance.

The popular African mobile-phone-based money service M-Pesa serves seven countries, with 50 million monthly active users. Its success has transformed lives: one study found that M-Pesa lifted 2 percent of Kenyan households out of poverty by encouraging healthier financial behavior. In the latest episode of McKinsey’s Talking Banking Matters podcast, M-Pesa’s managing director, Sitoyo Lopokoiyit, spoke about the vision driving one of Africa’s first fintechs.

McKinsey’s The Next Normal series aims its lens at the future of video entertainment. Discussions with experts from film, TV, and video games explore a push to democratize the tools of content creation and enable new, diverse voices to tell compelling stories for all audiences.

McKinsey research on “active allyship” in the workplace discovered, among other eye-opening data, that 45 percent of surveyed workers who identify as LGBTQ+ say they feel they must be careful about discussing their personal lives at work.

After years of underinvestment, mining is poised for transformation. McKinsey offers five key areas of focus for mining CEOs as they chart a future path. One suggestion: treat environmental, social, and governance (ESG) propositions as a source of value.

Here are other key findings from our research this week:

The latest McKinsey Global Survey on economic conditions tracks a dramatic shift in sentiment. Respondents from all corners of the world no longer suggest that geopolitical instability or the COVID-19 pandemic will be the biggest impediments to future growth. Inflation has become their number one concern for the year ahead.
Companies might strive for a unified culture but should accept that there are many varied paths to get there. When it comes to cultural transformation, the most effective business leaders are flexible and accommodating along the way.
Government leaders with good intentions often find themselves battling intransigent bureaucracies. Lessons from successful organizations can help make sure those leaders aren’t sabotaging themselves with self-defeating behaviors.
As demand shifts from gasoline to petrochemicals, refineries need to adapt by rethinking their operations.
Advertising is being transformed. Commerce media directly links ad impressions to consumer transactions, thereby improving targeting and delivering better experiences for consumers. It has the potential to generate more than $1.3 trillion of enterprise value in the United States alone.

Looking for more insights? McKinsey Global Publishing produces more than 40 newsletters on a broad range of topics. The Daily Read highlights one article per day that we think is worthy of special attention. Monthly Highlights is a summary of our top-performing articles from the past 30 days. And On Point makes a daily connection between top news stories and a published McKinsey insight.

This briefing note, based on our latest published insights, was prepared by Seth Stevenson, a senior editor in McKinsey’s New York office.

Sustainable and inclusive growth: Briefing note #2, June 30, 2022

Accelerating sustainable and inclusive growth is often a matter of mindset. Our weekly digest of McKinsey insights explores the topic.

We tend to think of achieving sustainable and inclusive growth as the challenge of building new technology or retrofitting the physical world around us. But this week, McKinsey explored how sometimes the crucial step is developing a fresh mindset. Our research on how many Americans work from home reveals a sea change in what it means to have a job. Articles about meeting the psychological needs of all workers, improving wealth management for women, decarbonizing real estate, and pursuing global cooperation highlight how changing the way we think about people and institutions can be the key to growth.

The third edition of McKinsey’s American Opportunity Survey provides the data on how flexible work fits into the lives of workers in the United States. The most striking figure from this research is 58 percent: the number of Americans who reported having the opportunity to work from home at least one day a week (exhibit). When workers are offered flexibility, 87 percent choose to work from home at least part of the time. Senior partners André Dua, Kweilin Ellingrud, and Robert Palter and their coauthors reveal that employees’ mindsets about work have clearly changed. Now it’s up to employers to think creatively about how to satisfy workers’ desire for flexibility in ways that strengthen diversity, innovation, and productivity.

Of job holders in the United States, 58 percent—the equivalent of 92 million people—say they can work remotely at least part of the time.

Many leaders mistakenly believe that only other professionals who have enjoyed similar success truly value the nonfinancial aspects of their work. That is simply not true, yet data show that the psychological needs of lower-earning workers are typically going unmet, far more often than is the case for higher earners. Our novel data and analysis illustrate the premium placed by all workers on psychologically satisfying work and how business leaders can respond.

Women investors now control roughly a third of total assets under management in Western Europe, valued at some €4.6 trillion. By 2030, women’s share of investments is expected to reach a total of €10 trillion. Senior partners Cristina Catania and Martin Huber and their fellow authors explore how women investors differ from men and what financial institutions should do to better serve them.

On March 21, 2022, the US Securities and Exchange Commission proposed a climate-related disclosure rule for investors. Whatever the final outcome, the proposed regulation signals a new era for how real-estate players think about their industry and climate change. Industry players are becoming aware that they need to measure their Scopes 1 and 2 greenhouse-gas emissions, work on decarbonizing buildings, and offer tenants and other stakeholders ways to reduce emissions.

The global economic landscape offers plenty to worry about, including the war in Ukraine, the difficulty of the net-zero transition, and inflation. But don’t assume that things are impossible, counsels Jean Pisani-Ferry, senior fellow at the European think tank Bruegel and professor of economics with Sciences Po in Paris. In an interview with Janet Bush and Michael Chui, executive editor and partner, respectively, at the McKinsey Global Institute, Pisani-Ferry examines nuanced ways to look at the trade-offs presented by global challenges.

Here are other key findings from our research this week:

As digital payments grow—in 2020, revenues reached $1.9 trillion—so does the risk of financial crime. Rather than wait for new regulation, payments service providers can move proactively against crime.
Credit cards accounted for 37 percent of US consumer purchases by dollar value in 2021, but their market position is gradually being undermined by the growth of buy now, pay later. Credit card issuers can reimagine their products to meet consumer needs and rethink card economics.
Our third annual Digital Sentiment Survey in Europe found that, despite some expected growth in offline activity following the end of COVID-19 quarantines, digital adoption remains strong. To make the most of the moment, companies need to invest differently in digital offerings, focusing on user experience, mobile, and revenue-generating interactions.
By leveraging digital technology across the most effective use cases, more companies can drive outsize impact. The Global Lighthouse Network, a research collaboration between the World Economic Forum and McKinsey on the future of production and the Fourth Industrial Revolution, identified successful factory transformations and analyzed how these sites achieved their goals.
Hotels are filling up again but now confront a new problem: a lack of personnel. To recruit and retain top hospitality talent, employers can explore five key talent acquisition trends, including the rise of remote work.
From 2012 to 2019, a small group of airlines managed to generate shareholder value. McKinsey studied this cohort and identified six secrets to airline success.

Our latest edition of Author Talks features Marcus Buckingham, a business consultant and motivational speaker, speaking about his new book: Love + Work: How to Find What You Love, Love What You Do, and Do It for the Rest of Your Life (Harvard Business Review Press, April 2022). Employees who find teams, projects, and situations to love tend to be highly successful.

This briefing note, based on our latest published insights, was prepared by Katy McLaughlin, a senior editor in McKinsey’s Southern California office.

Sustainable and inclusive growth: Briefing note #1, June 23, 2022

A new era is possible—one that sees growth and societal benefits as complementary goals that reinforce each other. Our weekly digest of McKinsey insights explores the topic.

For over two years, this compendium of McKinsey’s latest research focused on COVID-19’s implications for business. While our pandemic-related insights will continue, we are pivoting our summary of the week’s publishing to a new topic of similar urgency and complexity: how to achieve sustainable and inclusive growth (SIG). This regular briefing, curated by McKinsey Global Publishing editors, will highlight our most recent perspectives on how companies, organizations, and society can view growth and societal benefits not as conflicting goals but as equal imperatives for holistic impact.

We are launching the “SIG briefing note” on the heels of McKinsey’s 2021 ESG Report, which provides a multifaceted view of our approach to environmental, social, and governance imperatives. Before we ask other organizations to examine themselves for ways to improve, we must ask the same of ourselves. In this report, we share our decarbonization efforts, progress on diversity and inclusion, sustainable procurement, and other cornerstones of ESG. Case studies highlight companies that have successfully merged growth with what in another era might have been considered “social missions.” The report explains why it is no longer helpful to look at social missions as separate from traditional corporate growth and profitability goals; instead, a SIG mindset sees addressing a broader array of stakeholders’ needs as part and parcel of growth.

At McKinsey, we believe the future belongs to those who can drive growth that is both sustainable and inclusive—and we are working with purpose, on issues from decarbonization to diversity, in order to make that future a reality.
Bob Sternfels, Global Managing Partner, McKinsey & Company

Getting to net zero will depend on building green businesses to produce the technologies, materials, and systems the transition requires. Like the digital leaders of our time, successful green business builders have been adept at creating and shaping markets rather than spectating and waiting for the markets to appear, and they have embraced the notion of accelerated scaling. Senior partners Rob Bland and Tomas Nauclér and partner Anna Granskog highlight promising innovations and best practices.

Car manufacturers should look beyond the tailpipe to deliver greener cars. Industry players can capture carbon and cost savings by scrutinizing the end-to-end manufacturing value chain. More environmentally friendly cars at a lower per-unit cost will depend on moves including redesigning components, implementing circularity to decrease waste, and making design shifts to reduce the amount of raw material required. Collaboration with suppliers and R&D are key enablers of both the commercial and technical aspects of the implementation strategy.

Nearly all European flat-steel players have announced plans to gradually decarbonize production processes for the sheets and plates used by the automotive, machinery, and construction industries. For many of the newly built plants, the initial intention was to use natural gas for parts of the process. Now, rising natural-gas and electricity prices, as well as potential limitations on the natural-gas supply, are forcing reconsideration. McKinsey’s analysis of how to safeguard the green-steel industry suggests four scenarios for how the situation may play out, two of which represent the most viable courses of action.

Strengthening Black-owned businesses can accelerate inclusive growth. Twenty percent of Black Americans start businesses, but only 4 percent of these businesses survive the start-up stage. On the Future of America podcast, McKinsey senior partner Tiffany Burns and associate partner Tyler Harris discuss challenges Black entrepreneurs face. One key sticking point: a lack of contacts, mentors, and a network that can be crucial for building beyond the “great idea” phase.

Here are other key findings from our research this week:

Edtech start-ups raised record amounts of venture capital in 2020 and 2021, and market valuations for bigger players soared. To learn how edtech is being adopted in higher education, McKinsey surveyed over 1,400 students, faculty, and experts at US public and private nonprofit colleges and universities. Senior partner Varun Marya and his coauthors share which learning tools have the highest uptake, how students and educators view them, the barriers to higher adoption, and the notable impacts on learning.
Organizations can prepare for compliance with new US cybersecurity regulations by following a three-step approach for readiness, response, and remediation.
The McKinsey Quarterly interviewed entrepreneur Marc Andreessen about Silicon Valley’s past and future. He advises companies to identify their smartest technologists—and make them the leaders.
Three new factors have emerged as critical to capturing value from digital transformations. They include the development of proprietary assets, the use of digital tech to achieve strategic differentiation on customer engagement, and a focus on attracting and developing tech-savvy executives.

Our latest edition of Author Talks features Daniel Coyle discussing his new book, The Culture Playbook: 60 Highly Effective Actions to Help Your Group Succeed (Bantam Books, May 2022). Coyle, an adviser to Google, Microsoft, and the Navy SEALs, shares methods that allow teams to connect over goals and a common purpose. Companies should not rely on people being “a good culture fit,” which can lead to homogeneity, but instead should look for ways employees can bond, including by sharing their vulnerabilities.

Also in Author Talks, Julien and Kiersten Saunders, creators of the blog rich & REGULAR, discuss their new book, Cashing Out: Win the Wealth Game by Walking Away (Portfolio, June 2022). The authors say the FIRE movement—which stands for “financial independence/retire early”—is lesser known in communities of color, where there may be fewer role models of people who have successfully “cashed out.” Learning to eschew lifestyle inflation, to save, and to invest are key to financial independence.

This briefing note, based on our latest published insights, was prepared by Katy McLaughlin, a senior editor in McKinsey’s Southern California office.

Sustainable and inclusive growth: Our weekly briefings from 2022

You’ve reached an archival page. Please see our newest perspectives on sustainable and inclusive growth here.

Sustainable and inclusive growth: Briefing note #26, December 15, 2022

The rise of electric vehicles could be hampered by a shortage of raw materials. Our weekly digest of McKinsey insights explores that topic and more.

Sustainable and inclusive growth: Briefing note #25, December 8, 2022

Climate targets are beginning to slip out of reach—but there’s still time to get back on track. Our weekly digest of McKinsey insights explores that topic and more.

Sustainable and inclusive growth: Briefing note #24, December 1, 2022

Hydrocarbon-rich countries might play a critical role in the proliferation of clean hydrogen. Our weekly digest of McKinsey insights explores that topic and more.

Sustainable and inclusive growth: Briefing note #23, November 23, 2022

Zero-emissions trucking is on the horizon—what’s the road map for getting there? Our weekly digest of McKinsey insights explores that topic and more.

Sustainable and inclusive growth: Briefing note #22, November 17, 2022

Recycling more types of plastic might improve the health of the planet—while also meeting market demand. Our weekly digest of McKinsey insights explores that topic and more.

Sustainable and inclusive growth: Briefing note #21, November 10, 2022

Progress in renewable energy is being slowed by a dearth of available, qualified workers. Our weekly digest of McKinsey insights explores that topic and more.

Sustainable and inclusive growth: Briefing note #20, November 3, 2022

CEOs face a tricky challenge as they balance short-term economics with long-term climate goals. Our weekly digest of McKinsey insights explores that topic and more.

Sustainable and inclusive growth: Briefing note #19, October 27, 2022

Public-sector leaders can help close gaps in the world’s decarbonization strategies. Our weekly digest of McKinsey insights explores that topic and more.

Sustainable and inclusive growth: Briefing note #18, October 20, 2022

New breakthroughs could make fusion energy a vital component of decarbonization. Our weekly digest of McKinsey insights explores that topic and more.

Sustainable and inclusive growth: Briefing note #17, October 13, 2022

Commercial fleet operators are keen to find reliable electric-vehicle charging solutions. Our weekly digest of McKinsey insights explores that topic and more.

Sustainable and inclusive growth: Briefing note #16, October 6, 2022

Can the United States build a thriving climate tech industry that leverages existing innovation? Our weekly digest of McKinsey insights explores that topic and more.

Sustainable and inclusive growth: Briefing note #15, September 29, 2022

Could decarbonized shipping routes help cargo vessels go green? Our weekly digest of McKinsey insights explores that topic and more.

Sustainable and inclusive growth: Briefing note #14, September 22, 2022

Could chief information officers play a vital role in the world’s decarbonization efforts? Our weekly digest of McKinsey insights explores that topic and more.

Sustainable and inclusive growth: Briefing note #13, September 15, 2022

Using more of the food we grow could benefit society, corporations, and the planet. Our weekly digest of McKinsey insights explores that topic and more.

Sustainable and inclusive growth: Briefing note #12, September 8, 2022

Financial-services providers have often underserved Black communities. Our weekly digest of McKinsey insights explores that topic and more.

Sustainable and inclusive growth: Briefing note #11, September 1, 2022

Decarbonization is coming to the transport sector—faster than some have predicted. Our weekly digest of McKinsey insights explores that topic.

Sustainable and inclusive growth: Briefing note #10, August 25, 2022

Sustainable production of commodities is a promising frontier in decarbonization. Our weekly digest of McKinsey insights explores that topic.

Sustainable and inclusive growth: Briefing note #9, August 18, 2022

Though its doubters are legion, ESG is more essential now than ever. Our weekly digest of McKinsey insights explores that topic.

Sustainable and inclusive growth: Briefing note #8, August 11, 2022

A more inclusive approach to mobility will lead to faster decarbonization. Our weekly digest of McKinsey insights explores that topic.

Sustainable and inclusive growth: Briefing note #7, August 4, 2022

Inclusive growth means lifting all, not just some. Our weekly digest of McKinsey insights explores that topic.

Sustainable and inclusive growth: Briefing note #6, July 28, 2022

Could heat pumps save Europe—and the world? Our weekly digest of McKinsey insights explores the topic.

Sustainable and inclusive growth: Briefing note #5, July 21, 2022

Is net-zero aviation cleared for takeoff? Our weekly digest of McKinsey insights explores the topic.

Sustainable and inclusive growth: Briefing note #4, July 14, 2022

Assumptions about sustainability may not always align with data. Our weekly digest of McKinsey insights explores the topic.

Sustainable and inclusive growth: Briefing note #3, July 7, 2022

Sustainable and inclusive growth is a global effort, happening locally. Our weekly digest of McKinsey insights explores the topic.

Sustainable and inclusive growth: Briefing note #2, June 30, 2022

Accelerating sustainable and inclusive growth is often a matter of mindset. Our weekly digest of McKinsey insights explores the topic.

Sustainable and inclusive growth: Briefing note #1, June 23, 2022

A new era is possible—one that sees growth and societal benefits as complementary goals that reinforce each other. Our weekly digest of McKinsey insights explores the topic.

Related Articles

Beyond the bottle: Solutions for recycling challenging plastics

Toward a sustainable, inclusive, growing future: The role of business