TODAY’S NEWS. TOMORROW’S INSIGHTS.A daily newsletter from McKinsey & Company
Edited by Belinda Yu Editor, Atlanta
Billions to buy green. A group of 65 companies has announced a commitment to buy low-carbon aluminum, low-carbon steel, and other green materials frequently used in construction, transportation, and other industrial sectors. The coalition of corporate buyers revealed its $12 billion pledge at the 2022 UN Climate Change Conference (COP27), taking place in Egypt. The group seeks to spur demand for green materials, decarbonize supply chains, and speed the development of clean technologies. [Bloomberg]
Sustainable sourcing. Cement, concrete, and steel account for roughly half of global greenhouse-gas emissions in industrials. Using greener building materials is critical to decarbonizing industry as the climate crisis intensifies, and governments can play a big role. Roughly 25% of the demand for steel and 40% for cement comes from public procurement. But to take action, countries need better data to understand the carbon footprint of materials used in public construction projects. [WEF]
Going green. Materials value chains make up roughly one-fifth of global greenhouse-gas emissions. As consumers, manufacturers, and governments call for increased sustainability, demand for low-carbon materials is growing. For several commodities, green premiums are already emerging and will increasingly shape supply and demand, explain McKinsey senior partner Michel Van Hoey and colleagues. In the past decade, high-quality recycled plastics reached an average premium of up to 60% over virgin plastics for some products.
Understanding green premiums. Knowing where green premiums exist today and where they will emerge can help materials players capture economic benefits for sellers and secure supplies of low-carbon products for buyers. For instance, premiums are expected to be high for flat low-carbon steel, with the European market likely to be undersupplied by around 14 million metric tons in 2030, our analysis shows. See three archetypes for forecasting supply and demand of sustainable materials in 2025 and 2030, and the expected premiums that may emerge.
Was this forwarded to you? Sign up here.
Or send us feedback—we’d love to hear from you.
Follow our thinking
Copyright © 2022 | McKinsey & Company, 3 World Trade Center, 175 Greenwich Street, New York, NY 10007
