Climate Risk & Response

We help public- and private-sector entities build the capabilities, tools, and processes to understand their climate risk exposure and optimize their adaptation and mitigation strategies.

Climate change has reached a critical magnitude, creating physical (acute and chronic), transitional (changing technologies, regulations, policies, and stakeholder expectations), and liability risks. The speed at which these changes are happening makes it imperative for organizations to understand their cascading impacts and engage on a path of prudent mitigation and orderly adaptation.

McKinsey helps organizations develop robust qualitative and quantitative approaches to identify, measure, and manage their exposure to climate risk under all relevant scenarios.

Our Approach

Our comprehensive approach leverages deep industry knowledge, change-management expertise, proprietary risk frameworks, and advanced analytics to help our clients in three key ways:

building capabilities, processes, and governance to integrate climate risk into decision making
analyzing the universe of physical and transitional risks, prioritizing them based on potential impact, building and evaluating stress scenarios to quantify potential impact, and devising adaptation and mitigation strategies
charting energy-transition strategies that provide customized insights to guide companies on the most practical pathway to decarbonization

Examples of our work

Strategy and risk-capability development

We helped a multilateral development bank integrate climate risk into credit-risk measurement by developing a climate-risk-assessment framework covering physical and transitional risks.

Portfolio restructuring

We worked with an oil and gas company to restructure its portfolio, which included shifting away from oil to gas assets; developing short-cycle, lower-cost projects; and moving to cleaner fuels (such as by refining more middle distillates than gasolines).

Featured Capability

Decarbonization-Pathway Optimizer: Our digital tool helps countries or regions design decarbonized-target systems for industry sectors and quantify associated needs for capital- and operating-expenditure investment.