For much of the past decade, the underlying logic of climate action has been clear. The world set commitments to limit warming to 1.5°C, or at least well below 2°C. Those global targets cascaded through to institutional commitments, including multilateral agreements, sectoral targets, and national, corporate, and investor pledges. This architecture of commitments became a unifying logic built around limiting the most damaging effects of climate change; it created a shared sense of purpose, mobilized capital, and established measurable benchmarks for progress. It became a shared “why” that motivated governments, companies, and investors to take climate action.
To be very clear, that logic remains critical. The imperative to reduce emissions is as pressing as ever: Every fraction of a degree of avoided warming reduces the human, ecological, and economic toll of climate change.
However, multiple forces have started to destabilize this architecture of commitments. The shared 1.5°C goal by 2050 that anchored this architecture is slipping out of reach. Higher interest rates have raised the cost of capital required to upgrade our existing energy systems and build new infrastructure. Geopolitical tensions have weakened multilateral cooperation. Domestic policies, from incentives to regulation, have shifted repeatedly in major economies. The corporate and investment communities are grappling with trade frictions, supply chain vulnerabilities, and the potentially monumental shifts driven by AI.
While competitiveness, risk management, and stakeholder pressure have always shaped executive decision-making, the shared climate commitments provided a simple, measurable logic that helped coordinate action. The simplicity of that logic is now strained, and it has become harder, for example, for CEOs to tell their boards, “We must invest because we made a 1.5°C commitment.”
Leaders should face that reality clearly. Past commitments alone will not sustain forward motion. Given the forces at work today, progress over the coming years cannot depend on maintaining a single global why, but instead should be bolstered by plural, mutually reinforcing whys: economic, social, and political incentives that align with the climate imperative. Here, we describe some of the emerging whys for various stakeholders—companies, investors, and countries—that make us cautiously optimistic about climate progress.
A new opportunity to align whys
Aligning diverse interests with solving climate problems is not a new idea. For decades, leaders have advanced versions of “doing well by doing good.” When McKinsey published its first global marginal abatement cost curve in 2007, we identified many emission reduction opportunities that would generate positive financial returns—an early attempt to show that the economics of decarbonization could work with, rather than against, business logic. Since then, the world’s understanding of how climate action aligns with broader interests has expanded dramatically. Beyond sustainability concerns, the drivers include energy security, industrial competitiveness, national resilience, technological leadership, and improvements in energy and cost efficiency.
Businesses move faster when they can invest profitably. Governments sustain action when it creates jobs and wins votes. Individuals support change when it enhances health, affordability, and quality of life. Our task is to find and construct ways for those incentives to work for the climate imperative.
This is a moment rich with opportunities for such alignment, despite today’s headwinds. New technologies are becoming economically competitive. Investors are integrating physical risk and transition opportunity into valuation models. Nations are linking decarbonization to security and industrial policy. Large pools of capital—both public and private—are still directed by decarbonization mandates. Our view is that we are entering an era with increased, not decreased, alignment between these interests and climate progress. By understanding where these whys exist, we can take pragmatic steps forward today.
Companies: Some new technologies ‘in the money’
For companies, economics are the strongest driver of decarbonization: A growing set of low-carbon technologies now directly improves cost, performance, or growth prospects, rather than requiring trade-offs against them. Across sectors, technological progress is changing the economics of abatement. Many low-carbon solutions that once required subsidies now compete directly with their high-emission peers. In power, renewables are the lowest-cost source of new generation across much of the world. In 2024, 91 percent of new utility-scale renewable-power projects commissioned globally delivered electricity at a lower cost than the cheapest new fossil fuel alternative.1 In transport, electric vehicles have reached cost parity in some markets. By 2024, most small battery electric vehicles (BEVs) in China were priced below the average small internal combustion engine (ICE) car, and more than half of BEV SUVs were also priced lower than their ICE equivalents.2 In industrial processes, advances in electrification, hydrogen, and carbon capture are moving rapidly down their cost curves. For example, capital costs for proton exchange membrane electrolyzers fell by roughly 90 percent between 2000 and 2020—a dramatic decline that improves the economic competitiveness of low-carbon hydrogen.3
Artificial intelligence could further accelerate this shift. By analyzing massive data sets—from building energy use to industrial process flows—AI can identify combinations of measures that maximize emission abatement at minimal cost. In the building sector, for example, millions of buildings could generate near-term value from building upgrades, but often neither building owners nor providers of upgrade services know which buildings would most benefit. AI tools could make identifying high-ROI building decarbonization opportunities easier.4
The result of these advancements is an expanding set of technologies that are “in the money,” delivering both emission reduction and financial return. As this frontier expands, corporate climate action becomes not just compliance with commitments, but the strategic capture of competitive advantage.
Investors: Revaluing climate performance
Investors, too, are becoming more sophisticated about how decarbonization affects valuation. Rather than treating climate considerations as a peripheral “environmental, social, and governance (ESG) premium,” investors increasingly view them as fundamental drivers of performance and valuation for their assets.
Investment flows are a product of investors’ views on growth in cash flows, the risks associated with those cash flows, and the costs of acquiring the capital required to invest. Across each of these dimensions, climate is becoming an increasingly important driver.
On growth, capital is flowing toward assets and infrastructure that investors expect to expand as energy systems evolve. Clean power and grids already account for most power sector investment globally, underscoring how growth expectations are tilting toward low-carbon assets.5 Rather than reflecting a simple rerating of companies, these capital allocation patterns signal where investors expect future system build-out, demand growth, and long-term expansion to concentrate.
These investment signals strengthen the case for expanding the set of options to decarbonize energy supplies, including technologies such as carbon capture, utilization, and storage (CCUS). While deployment remains limited today, the pipeline of announced CCUS projects is expanding: According to the International Energy Agency, just over 50 million tonnes of CO₂ capture capacity is currently in operation globally, and announced projects could raise capture capacity to around 430 million tonnes per year by 2030.6 With policy support such as the US 45Q tax credit for carbon capture, CCUS projects now create value chains that span new industries (such as direct air capture) and existing ones (such as enhanced oil recovery). As investment drives costs down, CCUS could become viewed not as a compliance cost but as part of the broader infrastructure, enabling lower-carbon power systems and energy-intensive growth. From an investor perspective, the significance lies not in any single technology, but in the growing viability of multiple pathways to decarbonize energy supply—pathways where risk, return, and long-term demand are becoming more closely aligned.
At the same time, investments now increasingly address emission reduction and physical resilience together. While mechanisms to finance resilience have existed for years, these approaches are now scaling and becoming more tightly integrated with broader energy system investment. Investments in grid modernization and resilience, for instance, both enable higher penetration of low-carbon power and reduce exposure to outages and extreme weather. In the United States, programs such as the Grid Resilience and Innovation Partnerships (GRIP) initiative illustrate this shift toward scale, directing capital toward grid upgrades that support decarbonization while strengthening system resilience.7
Finally, beyond growth and risk projections, access to capital itself is increasingly shaped by climate alignment. Significant pools of global capital—such as public sector employee pensions, family offices, and sovereign wealth funds—remain focused on decarbonization because their constituents support it. Beyond these commitments, regulations also affect the flows of capital. For example, in Europe, the Sustainable Finance Disclosure Regulation requires institutional investors to report how they integrate sustainability risks, reinforcing the expectation that capital flows toward lower-carbon assets.8
In asset-intensive sectors, such as real estate and infrastructure, the ability to attract capital increasingly depends on credible net-zero strategies. Even where only a small portion of investors demand climate performance, their participation can influence the terms for all, because blended-funding structures require alignment across participants. In practice, this means that in many industries, decarbonization is now a prerequisite for access to the most desirable capital.
In all these examples, capital markets are beginning to differentiate not just by emission intensity but also by resilience and growth potential in a decarbonizing economy.
Countries: Linking decarbonization to security and competitiveness
National strategies are shifting in parallel: For many governments, climate action now intersects directly with security and industrial policy.
China’s dual pursuit of energy security and industrial leadership illustrates the point. China accounts for most global manufacturing capacity in solar photovoltaic panels and lithium-ion batteries and is the world’s largest producer and market for electric vehicles.9 These positions have advanced China’s own economic resilience while accelerating the global energy transition. Its rapid deployment of renewables helps satisfy fast-growing power demand, while the electrification of transport reduces dependence on imported oil. China’s leading positions in these fields have also become a source of soft power around the world, advancing adjacent interests.
Other economies are adopting similar logic. In the United States, recent policies explicitly linked decarbonization to broader economic and strategic goals such as domestic manufacturing, job creation, supply chain security, and technological competitiveness. This framing has helped position clean-energy investment not just as a climate priority but as an engine of industrial renewal. For example, in the two years following the Inflation Reduction Act, clean-energy and decarbonization investment totaled almost $500 billion, including roughly $89 billion in new manufacturing facilities.10 Even as the political environment evolves, many of the economic incentives remain in place, including long-standing support for technologies such as nuclear power and carbon capture. In Europe, the Net-Zero Industry Act seeks to anchor green manufacturing within its regional borders.11
Across emerging markets, energy independence, air quality, and climate resilience are converging as shared priorities. In Bangladesh, for example, the World Bank describes enhancing energy security and air quality as “critical economic and development priorities.”12 And in Armenia, the World Bank finds that reduced air pollution combined with climate adaptation could add around 1.5 percent to the GDP annually by 2060.13 These overlapping interests, including competitiveness, security, economic development, and public health, can produce powerful, durable motivation for climate action.
Taken together, these developments suggest an expanding, not a narrowing, set of pathways for climate action. Rather than relying on a single global “why,” this landscape is shaped by the combination of multiple, context-specific whys. Policies, technologies, and economics will continue to evolve unevenly across sectors and regions, yet the total opportunity for pragmatic forward progress is vast. Leveraging multiple whys to build sustainability efforts can unite parties with narrower interests around opportunities with broad climate benefits. We can build a new coalition of whys—rooted in competitiveness, security, prosperity, and health—that sustains and accelerates progress.
Related Articles
A different high-growth story: The unique challenges of climate tech
