McKinsey research has shown that growing demand for green products and offerings could generate $9 trillion to $12 trillion of annual sales by 2030. This opportunity—and how European companies can position themselves to capture value in the face of strong global competition—was the major theme at McKinsey’s June 2025 Green Business Building (GBB) Global Summit in Stockholm. This fourth edition of the summit brought together close to 350 participants from across the global green-business-building ecosystem, including senior executives from leading incumbents and start-ups, entrepreneurs, founders, and investors.
This year, discussions focused particularly on learning from the leading players in Asia and the U.S. on how to drive performance and bring costs down in the green tech space. A core theme was the emergence of a new innovation execution operating model—and there was also considerable discussion of the importance of investors, strategic partnerships, and an enabling environment in realizing the potential of that new model.
“We now see a new operating model emerging, similar to the way that ‘lean’ became the established operations concept in Japan in the 1980s and ’90s,” said Tomas Nauclér, a McKinsey senior partner. “This innovation execution operating model is focused around dramatically driving costs down, improving efficiency, and ensuring excellent capital expenditure performance and fast-paced delivery. Successfully adopting this model will be crucial for leaders looking to build competitive green businesses.”
The new innovation execution operating model
Summit participants repeatedly came back to recent developments within the European electric-vehicle (EV) market as a source of important lessons for how Europe can bolster its competitiveness and avoid market share erosion within strategic sectors over the coming years. Chinese EV companies have outcompeted European peers on costs, currently holding a cost advantage of around 20 percent.1 This has led to the market share of Chinese carmakers in the European EV market rising from 5 percent in 2015 to almost 15 percent in 2023, while the share of European carmakers fell from 80 percent to 60 percent.2
Chinese and US-based disruptors in the EV industry have focused on embedding innovation across their businesses. European companies looking to capture market share in nascent and growing industries can look to apply the same approach.
Innovation without execution will not, however, be sufficient. As was the case in the EV industry, the companies that win will be those that i) set high targets on Capex, cost and pace, and offering; ii) focus on step-change innovations and execution across all functions and the entire ecosystem; and iii) focus on CEO-led, fast-paced problem-solving. European companies will therefore need to shorten innovation cycles and recognize that cost competitiveness is nonnegotiable.
A can-do attitude will be crucial here. “It starts with setting the right goals, since the ambition needs to be there,” said Steven Prast, a senior expert at McKinsey and a former senior manager at Tesla. “If you look at the mission statements of many disruptor companies, they say their mission is to become the market leader in their segment. That’s not a slogan. They mean it and they run their business and drive their teams accordingly.”
Investors and strategic partnerships
Investors and strategic partnerships have a critical role to play in propelling innovation in sustainability and scaling new attractive technologies. Investors are important because funding gaps can appear at different stages of technology maturity, hindering the innovation journey. These funding issues can be particularly difficult for first-of-their-kind assets, for which there may not yet be a proven market. During the summit, two of the world’s top ten investors presented how they are able to bridge the gap between venture capital and infra/growth capital through ground-breaking financing schemes.
In the past five years, we have seen a shift in investor focus from growth to profit, which further increases the importance of cost ramp-down and gaining a unit cost advantage. As noted by Stefan Helmcke, a senior partner at McKinsey, “As with all other investment opportunities, sustainability investments need to offer attractive returns at an acceptable level of risk if they are to be successful. Promising opportunities might include products that offer one or more of following characteristics: cost parity with what is currently on the market for a new or improved product, a lower cost as a result of simplification or geographic derisking, a clear and rapid path to scale, or a technology readiness level of 7 or higher.”
In discussing how to create such opportunities for European companies, participants came back repeatedly to the importance of fully implementing the new innovation execution operating model.
Creating an enabling environment
As prior McKinsey research has illustrated, infrastructure gaps, regulatory complexity, and a lack of financial support can constitute issues for European clean-tech companies. The public sector has an important role to play in minimizing potential obstacles as much as it can, including by helping address energy costs by diversifying the energy supply mix, facilitating more clustering of complementary companies, and, in partnership with the private sector, offering concessional capital such as blended finance.
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Participants left the McKinsey GBB Summit in Stockholm with an enhanced appreciation of both the magnitude of the green-technology opportunity for Europe and some of the actions that could be priorities for the companies looking to seize it.
As Anna Granskog stressed in her closing remarks, “Climate technology scaling is well and truly alive, and it’s maturing at a fast pace. Over just a few years, it has become much clearer what it takes to succeed and create real returns on invested capital. It will be important to have the courage to set high ambitions on cost, performance, and the pace of progress. We also need thoughtful yet practical collaboration across value chains. And most importantly, as Europeans, we need to become much faster—fast.”
Anna Granskog is a partner in McKinsey’s Helsinki office. Gustav Bolin is a partner in the Stockholm office, where Tomas Nauclér is a senior partner. Stefan Helmcke is a senior partner in the Vienna office.
The authors wish to thank Daniel Nord and Lukasz Kowalik for their contributions to this blog post.
1https://www.china-briefing.com/news/chinas-electric-vehicle-supply-chain-and-its-future-prospects/
2Mario Draghi, The future of European competitiveness—Part A: A competitiveness strategy for Europe, European Commission, September 2024.