Business insights on growth and societal benefits

Sustainable and inclusive growth: Briefing note #49, June 8, 2023

In 2019, air travel was the mode of choice for only about 8 percent of trips covering a distance of roughly 95 to 500 miles in the United States, and only about 4 percent of such trips in the European Union. That might change as short-haul flying becomes more convenient, affordable, and sustainable. This week, McKinsey analysis examines the rise of regional air mobility (RAM). Elsewhere, an interview with the CEO of the Global Infrastructure Hub looks at strategies for ramping up the construction of sustainable infrastructure.

Travelers often decide that shorter trips will be cheaper, easier, and quicker by car than by air. But technological innovations in the design of small aircraft, thicker congestion on roadways, the increasing salience of sustainability, and the rise of user-friendly apps that turn mobility into a service could combine to make short-haul flying more attractive. Partners Axel Esqué, Robin Riedel, and coauthors say several developments could help enable the RAM transition, including continued advances in decarbonized aircraft propulsion technology and improved infrastructure at regional airports.

The Global Infrastructure Hub is a nonprofit organization formed by the G-20. Its CEO, Marie Lam-Frendo, recently spoke with McKinsey about the quest to build more sustainable infrastructure around the world. Lam-Frendo says that public–private partnerships will be crucial in the effort to derisk infrastructure investment. She adds that infratech—which involves embedding technology into infrastructure—could cut expenses and create more efficient outcomes.

Here are other recent notable findings from McKinsey research:

A survey reveals that many companies are struggling to find the right balance in creating a hybrid workplace. Partner Julia McClatchy and coauthors suggest that defaulting to old norms—such as the notion that more days in the office is the best measure of success—might be an impediment.
On an episode of the McKinsey Talks Talent podcast, senior partners Bill Schaninger and Lareina Yee and partner Bryan Hancock discuss generative AI’s potential effects on recruiting, performance reviews, and other HR functions.
Partner Joe Cyriac and coauthors discover that while companies might sometimes interpret activist-investor campaigns as a threat, these campaigns actually correlate with sustained increases to shareholder returns.
Partner Jean-Philippe De Montigny speaks with Hopper CEO Frederic Lalonde about how the travel app has employed fintech tools and gamification to attract 100 million younger-skewing mobile users.

A recent edition of Author Talks features Dr. Sheena Iyengar, a Columbia Business School professor, speaking about her new book, Think Bigger: How to Innovate (Columbia Business School Publishing, April 2023). The author offers a step-by-step methodology for inventing new solutions to existing problems.

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 build an economy that works for everyone. To learn more about McKinsey’s efforts to create an inclusive economy, visit McKinsey.com.

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

Sustainable and inclusive growth: Briefing note #48, June 1, 2023

Seven specific traits might determine a company’s ability to create financial value while also achieving positive social impact. Our weekly digest of McKinsey insights explores that topic and more.

As environmental, social, and governance (ESG) issues have gained salience with consumers, investors, and regulators, companies have become motivated to examine their own efforts in these realms. This week, a McKinsey survey assesses how organizations are thinking about their ESG initiatives. Survey results suggest that companies that exhibit seven specific traits are more likely to create value while reinforcing values. Meanwhile, a second article examines approaches that could improve retention, promotion, and satisfaction rates for women working in the public sector.

The newest McKinsey Global Survey asks some 1,100 respondents across the world about their organizations’ ESG outlooks. More than nine in ten say that ESG issues are on their companies’ agendas. One-third say their organizations’ ESG-related actions have improved employee retention. Senior partners Lucy Pérez, Jérémie Sneessens, and coauthors suggest that the survey’s results point to seven organizational characteristics that can help ESG initiatives succeed. Among them: being accountable to external stakeholders, linking compensation to ESG metrics, and empowering a specific C-suite executive to define and oversee ESG efforts.

Although women are better represented in the public sector than in the private sector, women remain underrepresented at the top of the public sector’s talent pipeline. Senior partner Nora Gardner and coauthors offer three suggestions for leaders who are hoping to do more to foster women’s career development: train managers to effectively run diverse, inclusive, hybrid teams; expand the scope of sponsorship programs that connect women with organizational advocates; and fine-tune performance evaluations to better recognize women’s positive achievements.

Here are other recent notable findings from McKinsey research:

Paper wealth has grown immensely over the past two decades, but households around the world lost $8 trillion in wealth in 2022. Senior partners Olivia White, Eckart Windhagen, Jonathan Woetzel, Michael Birshan, Sven Smit, and coauthors chart four plausible scenarios that could define the future of global wealth: a return to balance sheet expansion, a prolonged period of higher inflation, a drawn-out recession, or an acceleration of productivity.
Successful CEOs who are three to five years into their tenures face a unique set of challenges. Senior partners Carolyn Dewar, Scott Keller, Vik Malhotra, and Kurt Strovink offer four ways to avoid complacency and maintain momentum: keep listening and learning, adopt an outsider’s perspective, collaboratively define your next strategic phase, and take steps to future-proof your organization.
Senior partner Eli Larrea speaks with Nichole Lecher, vice president of client experience, strategy, and journeys at Northwestern Mutual, about her effort to streamline and automate the process by which consumers purchase life insurance.
The newest McKinsey Explainer offers a primer on personalization—the use of data to tailor marketing messages to specific consumers. Personalization can reduce customer acquisition costs by as much as 50 percent.

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

Sustainable and inclusive growth: Briefing note #47, May 25, 2023

Nuclear power could play a critical role in decarbonization. Our weekly digest of McKinsey insights explores that topic and more.

Energy production currently accounts for about 30 percent of global emissions, and electricity demand could triple by 2050. It’s clear that meeting the world’s climate goals will require decarbonizing the power sector. This week, a McKinsey commentary suggests that nuclear energy could be a significant part of the solution. Elsewhere, an article examines the new infrastructure requirements that will be created by the transition to battery- and hydrogen-powered aviation.

Nuclear energy can provide reliable, 24/7 power while using less land than wind or solar arrays. It is already the largest single source of zero-carbon power in the United States. Senior partners Daniel Pacthod, Humayun Tai, and coauthors suggest that nuclear power could play a growing role in meeting the world’s net-zero targets, but only if the industry first overcomes obstacles such as public skepticism, nonstandardized plant designs, and an aging expert workforce. Aggressively reallocating capital to the sector, streamlining licensing processes, and training a new generation of workers could help the nuclear industry meet the challenges ahead of it.

Aircraft powered by batteries or hydrogen could comprise 21 to 38 percent of the world’s commercial and cargo fleet by 2050. Stakeholders should begin to prepare for the infrastructure changes that will be needed to accommodate these new technologies, according to a report from the Target True Zero initiative of the World Economic Forum (for which McKinsey provided knowledge support). Large airports, in particular, will need to increase and alter their energy capabilities. McKinsey partner Robin Riedel and coauthors say that an intercontinental air hub might need to allocate approximately $3.9 billion toward infrastructure updates by 2050, while a major regional airport might need to invest about $1.3 billion.

Here are other recent notable findings from McKinsey research:

A report on the state of the beauty industry forecasts “premiumization” over the next few years as customers trade up and increase spending, especially on fragrance and makeup. Senior partners Achim Berg, Kristi Klitsch Weaver, and coauthors say that independent brands and new challengers will create intensifying competition for incumbents. Among factors that will shift the landscape: slowing growth in China and the rising influence of Gen Z.
Commercial real estate has traditionally outperformed during inflationary periods, in part because investors have come to believe it’s a safe harbor. Senior partner Rob Palter and coauthors say this time might be different.
A new McKinsey Health Institute survey of some 21,000 people aged 55 and older assesses older adults’ views on healthy aging. Among the surprising results, according to senior partners Hemant Ahlawat, Viktor Hediger, and coauthors: the widespread integration of new technology (especially smartphones) into older adults’ lives.
The newest McKinsey Explainer offers a primer on talent management—the approaches companies take to keep their employees happy, skilled, productive, and on board.

A recent edition of Author Talks features senior partners Eric Lamarre, Kate Smaje, and Rodney Zemmel speaking about their new book, Rewired: The McKinsey Guide to Outcompeting in the Age of Digital and AI (Wiley, June 2023). The authors share details from the playbook they use to help companies undertake digital transformations.

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

Sustainable and inclusive growth: Briefing note #46, May 18, 2023

What will it take for one of the world’s largest nations to become a farming powerhouse? Our weekly digest of McKinsey insights explores that topic and more.

Agriculture technology, or agtech, could add $95 billion to the Indian economy annually by 2030. This week, a McKinsey report examines which digital resources and other technologies could help rural Indian farmers embrace modern farming. McKinsey research focusing on Europe, meanwhile, explores how leaders could think about allocating precious land for renewable-energy projects. And the question of how to scale clean hydrogen is the subject of a column from a leader on McKinsey’s global hydrogen team.

Agriculture remains a central part of the Indian economy, accounting for more than 20 percent of the nation’s GDP. But hundreds of billions of dollars in growth could be left on the (farm to) table—unless the Indian agriculture industry embraces agriculture technology, or agtech, as McKinsey senior partner Avinash Goyal and coauthors uncover in their latest report. The space is gaining traction: Indian agtech start-ups raised about $1.6 billion in funding from investors in the past four years, mostly focused on platforms and products that play across the value chain, create digital solutions, or offer “agribiotech,” which uses biotechnology to create sustainable new products.

European leaders have set lofty goals to expand their renewable-energy sources (RES) by 2030. But one rigid problem stands in their way: land. Finding land to use for RES projects is difficult. Leaders should weigh the benefits of using the land for RES projects versus agriculture—if they don’t opt for land conservation altogether. Combining geographic information, satellite data, and AI, McKinsey partner Raffael Winter and his coauthors identify which areas are best suited for RES projects when weighing the costs.

Demand for hydrogen production is expected to grow four- to sixfold by 2050 and could cut global emissions by up to 20 percent annually in that time. Despite its promise, not all hydrogen is produced equally, as McKinsey partner Markus Wilthaner explains in his take on how to scale clean hydrogen. To realize hydrogen’s decarbonization potential, production costs need to drop, infrastructure needs to evolve, and investors and executives need to close the $460 billion investment gap.

Here are other recent notable findings from McKinsey research:

Uncertainty characterized much of the M&A market through the first quarter of the year, but there’s room for optimism yet. Executives expect to increase their M&A activity, citing factors such as shallower valuation drops than in previous downturns and stores of dry powder, explain McKinsey senior partners Jake Henry and Mieke Van Oostende.
The unsung heroes of the technology world, semiconductors, took center stage during the pandemic. If someone asked you to explain how they work, could you? Our McKinsey Explainer, “What is a semiconducter,” goes deep into what those valuable little chips are, what caused the semiconductor crisis, and more.
Having a hard time making sense of the economy’s mixed signals? McKinsey senior partners Michael Birshan and Ida Kristensen and partner Ezra Greenberg decipher what seemingly at-odds inflation, labor, and consumer confidence data could mean for the bigger picture.

A recent edition of Author Talks features retired United Airlines chairman and CEO Oscar Munoz and his new book, Turnaround Time: Uniting an Airline and Its Employees in the Friendly Skies (Harper Business, May 2, 2023), cowritten by Brian DeSplinter. In it, Munoz explains why listening to employees before diving into a company’s turnaround strategy is what distinguishes a successful transformation.

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

Sustainable and inclusive growth: Briefing note #45, May 11, 2023

What is the world’s leading electric-vehicle adopter doing to meet rising demand? Our weekly digest of McKinsey insights explores that topic and more.

Norway has more than 22,000 public electric-vehicle (EV) chargers, serving more than half a million electric vehicles. This week, a McKinsey report analyzes the Scandinavian nation’s approach to scaling EV charging infrastructure, offering lessons to other markets that build on the Norwegian experience. Elsewhere, McKinsey research sheds light on how organizations can reduce Scope 3 emissions, which are indirect emissions that appear across the value chain. And an interview with an industrial-agriculture executive highlights the role of biotech in raising livestock.

Norway provides a useful case study on how to scale EV charging infrastructure, as McKinsey partners Kjartan Kalstad, Swarna Ramanathan, and coauthors uncover in their latest report. To illustrate how quickly demand has grown in the country, whose pioneering approach to energy infrastructure has also become front-page news, consider this: it took four years to sell the first 10,000 EVs in Norway, but it only took four weeks to sell that many in 2022. To meet demand, a variety of actors have entered the competitive market to provide charging stations—although a clear leader hasn’t emerged, offering an opportunity to operators.

Reducing Scope 3 emissions (which arise throughout an organization’s value chain) is a must-solve issue as regulatory and investor pressures mount. Reducing those emissions begins by addressing six key dimensions—including supplier and customer selection and green-portfolio strategies—which simultaneously allow companies to capture value, according to McKinsey senior partners Jukka Maksimainen, Michel Van Hoey, and coauthors. In the chemicals industry, for example, sourcing from or partnering with providers of low-carbon raw materials could increase the share of recycled or biobased feedstock, which helps to reduce emissions both up and down the value chain.

Despite the rise in alternative proteins, animal-based food sources will continue to play an important role in the global food supply, according to Tina Sejersgård Fanø, executive vice president for agriculture and industrial biosolutions at biotech company Novozymes. For that reason, the focus should be on making animal production as sustainable as possible, Sejersgård Fanø explains to McKinsey senior partner Harry Bowcott and colleague. They discuss emerging innovations in the sector, such as a product that reduces the use of antibiotics in poultry farms, as well as examples of industry collaborations that could help to get us one step closer to a net-zero global economy.

Here are other recent notable findings from McKinsey research:

Today, 31 percent of nurses say they may leave their current jobs in direct patient care in the next year, reflecting the persistent challenges affecting the nursing labor market, according to our latest survey of frontline nurses in the United States. McKinsey senior partner Gretchen Berlin and coauthors examine what healthcare organizations can do to help attract and retain nurses.
Firms that adopt a “one-firm” operating model—where the “we” takes precedence over the “I”—are more than twice as likely to be in the top quartile of high-performing organizations. How does a one-firm business function in practice? McKinsey senior partner Scott Keller and coauthors outline the mechanics.
What is an effective meeting? Chances are, you could describe what isn’t an effective meeting. Consider this latest McKinsey Explainer the ultimate framework in deciding “Could this be an email instead?”

A recent edition of Author Talks features University of Oxford professor Paulo Savaget and his new book, The Four Workarounds: Strategies from the World’s Scrappiest Organizations for Tackling Complex Problems (Flatiron Books, March 2023). In it, the author shares how unconventional approaches to problem solving can bring the best results.

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

Sustainable and inclusive growth: Briefing note #44, May 4, 2023

What is the current status of organizational thinking about inclusion? Our weekly digest of McKinsey insights explores that topic and more.

More than 70 percent of companies express transformative ambitions around diversity, equity, and inclusion (DEI). But less than half say they have the infrastructure in place to realize those ambitions. This week, a McKinsey report analyzes the shifting landscape faced by organizations—including the challenge of translating DEI aspirations into results. Elsewhere, McKinsey research delves into consumer attitudes about the sustainability of product packaging. And a piece investigates whether AI can help insurers mitigate climate-related property risks.

The State of Organizations 2023 report—compiled by senior partners Dana Maor, Michael Park, Patrick Simon, and coauthor—identifies the ten most significant shifts confronting organizations today. Among them: the push to make meaningful progress on DEI. More than 20 percent of survey respondents who were asked about DEI said they can’t confirm that there is a sense of community and inclusion in their organizations. (Other topics covered in the report include the growing capabilities of AI, the changing expectations regarding talent attraction and retention, and the rise of the hybrid workplace.)

The newest McKinsey survey on packaging finds that about half of American consumers say they’re willing to pay more for products that are sustainably packaged. But, on average, respondents rank hygiene, ease of use, and durability as more important packaging characteristics. Senior partner David Feber and coauthors note that 40 percent of respondents living in urban neighborhoods cite the environmental impact of products as an extremely or very important factor in their buying decisions—compared with only 21 percent of respondents living in rural areas.

Executives from the analytics platform ZestyAI speak with partners Doug McElhaney, Christie McNeill, and Uma Sandilya about the potential for AI to help property and casualty insurers account for climate-related risks. AI-aided property assessments might also help inform property owners about strategies for reducing those risks. Insurers hoping to incorporate AI into their operations must sometimes contend with outdated tech infrastructure and regulatory limitations.

Here are other recent notable findings from McKinsey research:

The most recent McKinsey Global Survey on economic conditions finds respondents continuing to cite geopolitical instability and inflation as the top threats to economic growth. But Sven Smit, chair of the McKinsey Global Institute, and his coauthors note that financial-market volatility is a fast-rising concern.
A survey conducted by the McKinsey Health Institute reveals that Gen Zers and millennials are more likely than other generations to report that social media affects their mental health. Institute coleaders Erica Coe, Kana Enomoto, and coauthors also find that, among Gen Zers, female respondents are more likely than male respondents to say that social media negatively affects their body image and self-confidence.
The newest McKinsey Explainer offers a primer on quantum computing, which uses physics principles to solve complicated problems.

A recent edition of Author Talks features poet Maggie Smith—best known for the viral poem “Good Bones”—speaking about her new book, You Could Make This Place Beautiful (Atria/One Signal Publishers, April 2023). Smith’s memoir offers hard-earned perspectives on loss, forgiveness, and perseverance.

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

Sustainable and inclusive growth: Briefing note #43, April 27, 2023

Ships will need to run on greener fuels—but which ones? Our weekly digest of McKinsey insights explores that topic and more.

The world is seeking ways to decarbonize on land and at sea. In the maritime world, most ships are currently powered by fossil fuels, but greener fuel possibilities abound. This week, McKinsey analysis examines shipping companies’ plans and expectations as the industry prepares to adopt lower-carbon fuels. A separate article looks at the quest to decarbonize aluminum production. And a survey about retail banking assesses American consumers’ interest in climate-linked financial products.

To discover how shipping industry leaders are thinking about the adoption of lower-carbon fuels (such as ammonia and hydrogen), the Global Centre for Maritime Decarbonisation, the Global Maritime Forum, and the Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping recently conducted a survey—with analysis by McKinsey—of shipping companies that own and operate fleets comprising roughly 20 percent of the world’s total capacity. About one-third of respondents say they don’t know which types of fuel they expect their vessels to run on in future decades. Partner Matt Stone and coauthor suggest that there is opportunity for first movers to shape future fuel scenarios.

Aluminum can be infinitely recycled, with no loss of quality. But because much of the electricity needed for the world’s aluminum smelting comes from coal-fired power plants, the industry accounts for roughly 2 percent of global greenhouse-gas emissions. Partners Jeffrey Lorch, Alex Ulanov, and coauthors outline potential actions for stakeholders—including the finance sector (which could back investments in greener production processes), policy makers (who could offer grants to offset the costs of the transition), and aluminum customers (who could pledge to pay a 5 or 10 percent premium for green aluminum).

A McKinsey survey reveals that nearly 40 percent of American consumers report interest in enrolling in a climate-linked financial product (such as a climate-screened index fund). That interest extends across regions and income levels. Senior partners Marie-Claude Nadeau, Dan Stephens, and coauthors say that climate-linked financial products don’t need to be “concessionary” offerings since, in many cases, consumers express a willingness to pay more for them.

Here are other recent notable findings from McKinsey research on sustainable, inclusive growth:

Yvon Chouinard, founder of the apparel retailer Patagonia, speaks with Tony Hansen, McKinsey’s director of natural capital and nature. Chouinard says his career as a “reluctant businessman” demonstrates that it’s possible to run a successful enterprise while minimizing harm to the planet.
Elizabeth Maruma Mrema, cochairperson of the Taskforce on Nature-related Financial Disclosures (TNFD), speaks with partner Jason Eis about TNFD’s mission to support businesses in their efforts to restore and protect nature. Mrema says it’s important to distinguish between climate change and nature degradation while also recognizing that the two are linked.
The United States has committed to 100 percent zero-emission truck sales by 2040. Partners Andreas Breiter, Shannon Peloquin, and coauthors offer (literal) road maps charting how best to develop the charging infrastructure that will be required to support electric trucks’ freight routes.

A recent edition of Author Talks features venture capitalists Freada Kapor Klein and Mitchell Kapor speaking about their new book, Closing the Equity Gap: Creating Wealth and Fostering Justice in Startup Investing (HarperCollins Publishers, March 2023). The authors invest in tech start-ups that help close gaps of access, opportunity, or outcome for disadvantaged communities, and they maintain that this approach has resulted in top-quartile financial returns.

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

Sustainable and inclusive growth: Briefing note #42, April 20, 2023

Decarbonization could transform the steel industry. Our weekly digest of McKinsey insights explores that topic and more.

The steel industry is in a volatile moment, with a fragile outlook for the next decade. Decarbonization will play a major role in shaping steel’s future. This week, a McKinsey article looks at how industry players can navigate the current crossroads—with an eye toward greening the sector. Meanwhile, a separate article examines lessons learned from efforts to decarbonize the chemical industry in Germany. And a piece investigates the potential for recirculating the tech devices that large companies provide en masse to their employees.

An uncertain long-term demand forecast is complicating decision making for steel industry stakeholders. Partners Oleksandr Kravchenko, Benedikt Zeumer, and coauthors offer an analysis of potential scenarios, including an examination of decarbonization’s possible impact. While overall steel demand growth is expected to slow or stagnate, global demand for low-carbon steel is expected to grow tenfold over the next decade. Producing green steel will require significantly more power, which means regions with lower energy costs could attract investment—shifting the industry’s geographical footprint.

The chemical industry is large, energy-intensive, and responsible for roughly 2 percent of the world’s total emissions. Senior partners Ulrich Weihe, Thomas Weskamp, and coauthors present takeaways from the industry’s decarbonization initiatives in Germany. They identify four high-priority levers for reducing emissions: using a greener mix of fuels for steam generation, recapturing wasted heat, procuring renewably produced electricity, and maximizing energy efficiency.

Large corporations lease an immense number of tech devices such as smartphones, laptops, and computer monitors. The Berlin-based start-up circulee acquires preowned devices from large organizations, tests them, and recirculates them to smaller enterprises in need of tech hardware—offering a solution that’s both green and cost-effective. Thomas Gros, the CEO and cofounder of circulee, spoke with associate partner Tomas Laboutka about the challenge of convincing customers that preowned devices don’t incur additional risk or inconvenience.

Here are other recent notable findings from McKinsey research:

Technological advancements and falling costs have spurred demand for more satellite launches. Partner Ilan Rozenkopf and coauthors outline future scenarios—including the possibility that a near-term shortfall in satellite capacity could give way to a long-term oversupply.
A new M&A wave is expected in the oil and gas sector. Partners Tom Grace, Steve Miller, and coauthor offer suggestions to maximize the value created from deals, including by publicly announcing post-deal goals to put healthy pressure on teams.
Partners Kathleen Martens and René Schmutzler survey more than 150 European executives at mid-cap consumer companies. Among the takeaways: apply a venture capital or private equity mindset to growth strategies.
The newest McKinsey Explainer offers a primer on dynamic organizational change: “What is business transformation?”

Nine McKinsey colleagues spoke at this year’s South by Southwest conference in Austin, Texas. A recap of their presentations touches on, among other topics, the business case for alternative proteins, the potential for Formula 1 auto racing to reshape the broader mobility sector, and the power of empathy to counteract employee burnout.

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 #41, April 13, 2023

Hubs for carbon capture, utilization, and storage could let companies collaborate to achieve their net-zero goals. Our weekly digest of McKinsey insights explores that topic and more.

Carbon capture, utilization, and storage (CCUS) systems could help many hard-to-abate sectors achieve net-zero targets. Creating CCUS hubs—with capabilities shared across multiple companies or industries—might ease uptake of the technology. This week, McKinsey research examines ways to accelerate the development of CCUS hubs. Meanwhile, a separate article looks at the potential for reusable (not to be confused with recyclable) packaging.

CCUS hubs that serve multiple companies or sectors could lower costs, reduce risks, and attract government funding. There are currently about 15 CCUS hubs around the world in various stages of development. McKinsey analysis suggests that approximately 700 CCUS hubs could eventually be established. Partner Luciano Di Fiori and coauthors say that the business case for these hubs will depend, in part, on the availability of renewable energy to power carbon removal and the willingness of parties from different industries to cooperate on hub formation.

Reusable packaging (picture the returnable glass milk bottles of yore) has seen renewed interest lately, given its potential for minimizing waste. But reusability faces scaling challenges relating to infrastructure, safety, and cost. Senior partner Oskar Lingqvist and coauthors outline key questions to answer, including: How many times must a package be reused before gains are realized? How far will the average reusable package travel between uses? And will consumers be willing to adapt their behavior to reusability?

Here are other recent notable findings from McKinsey research:

Senior partner Carolyn Dewar and Asia chairman Gautam Kumra offer four steps to success for new CEOs: don’t make it all about you, listen before you act, create positive first impressions, and prioritize where you get involved.
A survey of chief investment officers for leading global funds reveals they favor CEOs who think holistically and move quickly. Partners Jay Gelb, Werner Rehm, and coauthors note that respondents prefer CEOs to focus less on short-term earnings and more on how to boldly reallocate resources to maximize value creation.
Partner Brandon Flowers and coauthors examine America’s market for individual health insurance and find that consumer options are expanding: 87 percent of consumers now have access to three or more insurers—up from 49 percent in 2018.
The newest McKinsey Explainer offers a primer on a very modern form of promotion: “What is influencer marketing?”

A recent edition of Author Talks features Don Norman, a former Apple executive and founding director of the University of California Design Lab, speaking about his new book, Design for a Better World: Meaningful, Sustainable, Humanity Centered (The MIT Press, March 2023). Norman draws a distinction between human-centered design (which aims to help people understand and use products) and humanity-centered design (which aims to reduce those products’ harmful effects on the environment).

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 #40, April 6, 2023

Automotive suppliers will need to adapt as electric vehicles become more prevalent. Our weekly digest of McKinsey insights explores that topic and more.

As the electric-vehicle (EV) market grows, automotive suppliers will need to accommodate changing demand. By 2030, sales of EV parts such as electric powertrain components are projected to comprise a much larger portion of suppliers’ revenue pools. This week, a pair of McKinsey articles looks at the opportunities and challenges that automotive suppliers are likely to encounter as vehicle electrification accelerates. Meanwhile, an interview examines the potential for wireless charging of EVs.

Between 2020 and 2022, EV sales grew by more than 90 percent in both the United States and Europe and by more than 300 percent in China. This surge has had dramatic effects up and down the automotive value chain. Components for electric powertrains, in particular, are now in high demand. Partners Brian Loh, Lukas Michor, Patrick Schaufuss, and coauthors offer guidance for suppliers of these components. Among their suggestions: cooperate with manufacturers to identify emerging needs; investigate M&A opportunities, which can come to the fore when marketplaces are in transition; and maintain focus on supply chain resilience as the industry landscape shifts.

Although demand for parts such as batteries and electric motors will grow as EVs proliferate on the world’s roads, senior partner Andreas Venus and coauthors note that many standard parts—such as axle systems and suspensions—will remain core components even as vehicles increasingly become electrified. These core components will generate a shrinking portion of total market revenues (declining from 69 percent in 2022 to 55 percent by 2030) but will still represent a significant source of value for suppliers. Suppliers will benefit from remaining focused on these core components even as they monitor the evolution in demand.

Wireless charging of EVs could be just as efficient as wired charging—without the inconvenience of a cord. Partners Florian Nägele and Shivika Sahdev interview four executives from companies hoping to provide wireless EV-charging solutions. Though widespread adoption is likely years away, wireless charging—which can be functionally similar to using an induction cooktop—has much potential: for instance, it might enable autonomous EVs to charge themselves.

Here are other recent notable findings from McKinsey research:

Hotels are facing acute labor shortages. Partner Ryan Mann and coauthors offer three techniques to improve hotel staffing models: use more granular metrics to better predict the ebbs and flows of staffing needs, redesign roles to combine multiple responsibilities, and assign staff to cover a network of locations instead of just one hotel.
Customer experience is becoming a primary differentiator for telecom companies. Senior partners Nicolas Maechler, Rohit Sood, and coauthors counsel telcos to redesign customer service in ways that make it more proactive—for instance, presenting customers with support options before they realize their Wi-Fi has gotten spotty.
Satellites using synthetic aperture radar (SAR) can see through clouds and darkness to gather images. Partner Dale Swartz and coauthor spoke with Payam Banazadeh, founder and CEO of Capella Space, a company that has provided SAR capabilities for defense and intelligence purposes. Banazadeh says SAR has commercial applications, such as allowing companies to monitor their global infrastructure.
Partner John Means spoke with David Arena, head of global real estate at JPMorgan Chase. The company’s new headquarters building in Midtown Manhattan features state-of-the-art office amenities. Among them: a pleasant smell. “We’ve done lots of due diligence on aromatherapy,” says Arena.

A recent edition of Author Talks features Martin Wolf, chief economics commentator at the Financial Times, speaking about his new book, The Crisis of Democratic Capitalism (Penguin Random House, February 2023). Wolf expresses his view that the marriage of democracy with the market economy is failing and that we must reverse this failure or risk succumbing to antidemocratic forces.

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 #39, March 30, 2023

Insufficient access to healthcare, high-speed internet, and financial services can harm Black communities. Our weekly digest of McKinsey insights explores that topic and more.

White Americans have 80 percent more wealth than Black Americans. Lack of inclusivity in the financial-services sector is among the culprits. This week, a guest on The McKinsey Podcast discusses ways to close the wealth gap—and also narrow racial inequities relating to healthcare and technology. Meanwhile, a separate article outlines opportunities for property and casualty (P&C) insurers hoping to aid the net-zero transition. And a compendium of McKinsey pieces on the global food crisis examines, in part, how global food systems have been disrupted by climate change.

A recent McKinsey report on Black economic mobility identified eight potential areas of investment to help support Black-owned businesses and Black communities. Senior partner Shelley Stewart III, coauthor of the report, discussed its findings in an appearance on The McKinsey Podcast. Stewart says better access to financial services and broadband internet could expand opportunities for Black Americans. But he adds that any effort to remedy racial disparities should not ignore access to healthcare, as good health is a crucial starting point for meaningful participation in the economy.

The net-zero transition could present growth opportunities for P&C insurers. Senior partner Sylvain Johansson and coauthors say insurers can attempt to capture value by providing decarbonization advisory services, developing products that transfer net-zero-related risks, and launching new business models. One example of a potential new model: using customer data to connect building owners with solar-energy companies while insuring the installation and operation of solar equipment.

A briefing examines the harmful disruption of the global food system. Climate change is threatening the world’s breadbaskets. Inefficient production processes squander a significant portion of harvested food before it reaches grocers’ shelves. Lack of access to nourishing food can exacerbate inequity: more than three billion people around the world can’t afford a healthy diet.

Here are other recent notable findings from McKinsey research:

The space economy—currently valued at nearly $500 billion and growing about 9 percent annually—is at an inflection point, offering opportunities for all sectors. Global managing partner Bob Sternfels, senior partner Ryan Brukardt, and coauthors suggest to executives: if space isn’t part of your strategy, it needs to be.
AI-enabled customer service can help financial institutions deliver personalized experiences that improve customer engagement. Senior partners Greg Phalin, Renny Thomas, and coauthors say companies should consider using AI to aid in deepening customer relationships. But they warn that consumers increasingly expect complex and sophisticated interactions from AI interlocutors.
Higher interest rates are changing customer behavior and presenting challenges for banks. Partner Andreas Bohn and coauthors offer a framework for European banks that are trying to safely navigate the shifting rate environment.
Kaya Henderson, the former chancellor of public schools for Washington, DC, spoke with associate partner Emma Dorn about how to improve student outcomes. Using her experiences as chancellor, Henderson has launched an education tech company that provides supplemental curricula.

This Women’s History Month, McKinsey leaders spoke about their roles as women in the workplace—and beyond. To view these video conversations, visit “The Women of McKinsey” page.

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 #38, March 23, 2023

Innovative new designs could accelerate the construction of nuclear power plants. Our weekly digest of McKinsey insights explores that topic and more.

Global power consumption could triple by 2050 as vehicles, building operations, and industrial processes all become electrified. It’s not clear, however, that renewables such as wind and solar will be able to keep pace with demand. This week, McKinsey research examines whether nuclear power—a zero-carbon energy source that currently generates roughly 10 percent of the world’s electricity—can scale up to fill the gap. A separate article outlines opportunities created by the passage of America’s Bipartisan Infrastructure Law (BIL), which will provide more than $1 trillion in public investment. Elsewhere, a piece considers the tangential business impacts that could result from electrification of America’s commercial vehicle fleets.

Nuclear power plant projects have frequently been hampered by construction delays and cost overruns. A new generation of smaller, less complex reactors has been designed with the goal of cutting costs and accelerating build times. Partner Bill Lacivita and coauthors suggest several approaches that could help quickly scale up construction of plants, thereby aiding efforts to reach decarbonization targets. Among them: establish streamlined international licensing processes, standardize designs for plant systems and components, and consider building multiple reactors at a single location.

Clean-energy funding provided by the BIL could be available to a wide range of stakeholders involved with projects up and down the value chain—from electric-grid improvements to carbon capture initiatives to the development of clean hydrogen. Roughly 40 percent of funding has been launched, but new funding cycles are expected to begin in early 2023. Partner Adam Barth and coauthors say that organizations that can tell a compelling story focused on economic development, environmental justice, and equity are more likely to seize funding opportunities.

The transition to battery-electric-vehicle commercial fleets will create myriad new business possibilities, such as charge point servicing and battery recycling. Partner Malte Hans and coauthors foresee resulting value pools being captured primarily by vertically integrated players, such as OEMs and utility companies. Strategic partnerships might improve the odds of success for others.

Here are other recent notable findings from McKinsey research:

Senior partners Pontus Averstad, Alejandro Beltrán, Gary Pinshaw, David Quigley, Aditya Sanghvi, and coauthors present McKinsey’s 2023 Global Private Markets Review. As interest rates rose in the second half of 2022, private-market deal volume plummeted, and valuations fell. Among other effects: investors fled to larger and better-known funds.
CEOs of private equity portfolio companies have a unique brief: they must execute a specific investment thesis in a limited time frame. Senior partners Sacha Ghai, John Kelleher, Kurt Strovink, and coauthor say that capturing “CEO alpha”—the advantage brought by a talented leader of a portfolio company—is a key strategy for private equity firms.
The aerospace and defense industry is simultaneously transitioning to a younger workforce and competing over talent. Senior partners Varun Marya, Michael Park, and coauthor suggest that, to entice younger workers, companies should consider offering frictionless hiring processes, rapid career progression, and hybrid-work flexibility.
McKinsey’s 2022 US Dairy Consumer Survey reveals shifts in dairy consumption. Partner Christina Adams and coauthors note that more people are trying plant-based dairy alternatives, though only 5 percent of respondents consumed exclusively plant-based alternatives, while 71 percent consumed exclusively dairy.

A recent edition of Author Talks features Tomas Chamorro-Premuzic, a professor of business psychology at Columbia University and University College London, speaking about his new book, I, Human: AI, Automation, and the Quest to Reclaim What Makes Us Unique (Harvard Business Review Press, February 2023). The author expresses his view that, in the AI age, the right questions might be more valuable than the right answers.

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 #37, March 16, 2023

Climate technologies must be scaled faster to meet net-zero goals. Our weekly digest of McKinsey insights explores that topic and more.

To meet current net-zero targets, climate technologies will need to be scaled faster. But challenges remain—particularly amid an uncertain economic moment. This week, a McKinsey article outlines promising areas of action for builders of green businesses. A separate piece looks at growth in climate-related investing and highlights key factors for investors to consider. Elsewhere, McKinsey research examines opportunities for recyclers of electric-vehicle (EV) batteries.

Climate tech must accelerate rapidly to meet net-zero commitments. Even mature technologies such as wind and solar will need to scale six to 14 times faster (exhibit). Bold decisions are necessary to stave off the direst climate change outcomes. Senior partners Rob Bland, Laura Corb, Tomas Nauclér, and coauthors suggest three moves to make now: develop supply chains by seeking partnerships across sectors (upstream, downstream, and horizontally); close the skills gap (by, for instance, launching new training facilities or partnering with universities on talent-building initiatives); and explore new financing avenues (such as blended finance models, which mix private, public, and philanthropic funding).

Climate-related investments grew significantly in 2022—up 6.6 percent from the year before—despite secular headwinds. Growth in energy transition financing has been bolstered by both policy support and general alignment in capital markets. Senior partners Fredrik Dahlqvist, Anders Rasmussen, and coauthors outline several factors essential to the success of climate-related investments. Among them: demonstrated effectiveness of technologies, a clear path to cost competitiveness for products, and the ability of leadership teams to attract necessary talent.

More EVs on roads means more EV batteries—and a greater need to recycle those batteries. More than 100 million EV batteries are expected to be retired in the next decade. These batteries can be refurbished and given second lives in other applications, but the battery recycling market remains far from maturity. Senior partner Martin Linder and coauthors say that to be successful, battery recyclers should secure sufficient access to end-of-life batteries, build partnerships up and down the recycling value chain, and keep tabs on the latest trends in battery design.

Here are other recent notable findings from McKinsey research:

Senior partner Stefan Rickert and coauthors say that programmatic M&A can be a winning source of growth for consumer goods companies. One important mindset shift for acquirers: ask not what the target can do for you but what you can do for the target.
Better management of their operational data could help tech companies generate steadier growth. Partner Antonio Castro and coauthors say that data-driven approaches can stabilize cash flows, reduce costs, boost productivity, and improve customer experiences.
Middle managers are a beleaguered yet vital component of many organizations. Senior partner Bill Schaninger and colleagues suggest that middle managers’ effectiveness can be improved if they are offered personalized incentives, given more time to focus on the needs of their talent, and freed from bureaucratic tangles.
Thomas Flohr, the founder of VistaJet, aims to convince businesses to ditch their corporate planes in favor of a subscription model. Speaking with partner Daniel Riefer, Flohr outlines his belief in the power of strong brands and simple contracts.

A recent edition of Author Talks features former IBM chair and CEO Ginni Rometty speaking about her new book, Good Power: Leading Positive Change in Our Lives, Work, and World (Harvard Business Review Press, March 2023). The author describes her journey from childhood poverty to the C-suite and explains her conviction that asking for help is a sign of strength.

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 #36, March 9, 2023

Decarbonizing cement and concrete production could lead to business opportunities. Our weekly digest of McKinsey insights explores that topic and more.

Global demand for cement and concrete nearly tripled over the past 20 years and is expected to remain consistent in upcoming decades. But producing these materials is a major contributor to carbon dioxide emissions. This week, McKinsey research looks at strategies for creating sustainable—and profitable—cement value chains. Elsewhere: an examination of the shifting landscape for real estate investors suggests that they should embrace sustainability initiatives as opportunities for value creation. And a piece about design thinking offers tips on how best to design with sustainability in mind.

Circular technologies could help cement players generate profits while reducing emissions. Examples of circular approaches include deriving energy from recovered heat, capturing and storing carbon, and repurposing waste materials (for example, turning demolished structures into gravel for roads). Senior partners Jukka Maksimainen, Daniel Pacthod, Humayun Tai, Michel Van Hoey, and coauthors say that the use of circular technologies could help eliminate or mitigate roughly two billion metric tons of carbon dioxide emissions by 2050.

Climate change is already shaping real estate valuations. Real estate investors would be wise to consider physical risks (such as floods) and transition risks (such as changes in regulatory requirements) that could stem from climate-related disruptions. Amid a broader examination of the real estate landscape, senior partners Daniele Chiarella and Aditya Sanghvi and coauthors offer guidance for real estate players looking to navigate climate change. Among their suggestions: carefully evaluate climate-related risks and opportunities attached to any prospective property, consider decarbonizing existing properties to enhance their value, and explore potential new businesses (such as offering emissions reduction services to other property owners).

Careful product design can aid decarbonization efforts. A McKinsey Explainer about design thinking outlines strategies for generating sustainable products. Smart design approaches can reduce emissions from both a product’s manufacturing process and its end use. “Skinny design” can create products that require less material and packaging.

Here are other recent notable findings from McKinsey research:

Some rules for growth are more powerful than others. Senior partners Chris Bradley and Jill Zucker and coauthors say that winning market share from competitors and focusing on regional dominance are both highly correlated with growth, while programmatic mergers and acquisitions seem to have less impact.
McKinsey’s global director of geopolitical risk Ziad Haider spoke with executives from Intel, Google, and Pfizer about how they build resilience in a continually changing risk environment. Getting perspectives from first-person sources on the ground—while avoiding disinformation—can help bring clarity to risk calculations.
Partner Robin Riedel and coauthors say that advanced air mobility (which involves flights as short as a few miles, often in technologically advanced aircraft) will thrive only if the “hassle factor” is eliminated. Companies can consider running more frequent flights even if available seats exceed demand, while looking for ways to ease passengers’ transitions between ground transport and air options.

A recent edition of Author Talks features leadership coach Sally Helgesen speaking about her new book, Rising Together: How We Can Bridge Divides and Create a More Inclusive Workplace (Hachette Book Group, February 2023). The author describes her simple test for identifying inclusive workplaces: do most employees speak about the organization as “we” or as “they”?

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 #35, March 2, 2023

A resilience agenda could help leaders weather short-term disruptions while maintaining focus on sustainable, inclusive growth. Our weekly digest of McKinsey insights explores that topic and more.

Organizations are seeking ways to build resilience in a world where they’re confronted with continuous, overlapping disruptions. Maintaining long-term perspective is crucial even amid short-term crises. In conjunction with the World Economic Forum, McKinsey presents a “resilience agenda” to help guide leaders who are attempting to foster sustainable, inclusive growth during a challenging moment. Elsewhere: an article offers guidelines for oil and gas companies looking to invest in the sustainable-power value chain. And McKinsey analysis reveals the value of employing neighborhood-level data in crafting American racial-equity initiatives.

Leaders should avoid being overwhelmed by immediate issues, even as disruptions mount. Choices about how to create a resilient world can translate into trillion-dollar swings in GDP growth—and incalculable differences in the quality of human life. McKinsey global managing partner Bob Sternfels and World Economic Forum president Børge Brende present a resilience agenda that offers a framework for building resilience across dimensions such as climate, healthcare, technology, and geopolitics. A holistic approach, a long-term mindset, and openness to public–private collaborations are all vital enablers of resilience.

Energy markets are changing rapidly, and the traditional business models of oil and gas players are under pressure. Senior partner Humayun Tai and coauthors say that oil and gas companies are strongly positioned—given their global scale, significant resources, and unique capabilities—to play key roles in the energy transition. Among the most promising areas for investment by these companies: offshore project development, hydrogen production and transportation, and electric-vehicle charging infrastructure.

Nationally aggregated data about racial inequity can sometimes miss crucial details that are specific to American cities or neighborhoods. McKinsey research has revealed important microlevel differences relating to issues such as education and food security. McKinsey Global Institute director Kweilin Ellingrud and North America social responsibility leader Ramesh Srinivasan suggest that a greater understanding of equity gaps between neighborhoods could help stakeholders prioritize in a more targeted manner.

Here are other recent notable findings from McKinsey research:

Now is a good moment for board-level conversations about geopolitical risk. Senior partner Andrew Grant and coauthors offer a tripartite framework involving these concepts: black swans (unpredictable, high-impact events), gray rhinos (foreseeable, high-impact events), and silver linings (opportunities created by disruption).
Senior partners Yuval Atsmon and Tomás Lajous and coauthors say the telecom industry has yet to fully embrace AI as a strategic tool. AI could improve customer service and help build telco networks that are self-healing and self-optimizing.
New federal funding in the United States has made this an opportune time to launch regional innovation hubs. Partner Ben Safran and coauthors outline six key steps for creating productive innovation ecosystems. Among them: ensure that innovation hubs exude a sense of place linked to local communities.
Ann Harrison, dean of the University of California, Berkeley, Haas School of Business, speaks with McKinsey Quarterly about the need for leaders to develop “confidence without attitude.”

A recent edition of Author Talks features University of Southern California adjunct professors of entrepreneurship Garrett Brown and Colin Coggins speaking about their new book, The Unsold Mindset: Redefining What It Means to Sell (HarperCollins Publishers, February 2023). The authors express their views that manipulation and smarm are ineffective sales techniques and that authenticity and emotional intelligence can help salespeople close deals.

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 #34, February 23, 2023

Corporate monetary pledges aimed at fighting racial injustice have become more difficult to track. Our weekly digest of McKinsey insights explores that topic and more.

In recent years, many large companies have made monetary pledges to fight racial injustice. This week, the McKinsey Institute for Black Economic Mobility analyzes those pledges. New research reveals, among other insights, that these commitments have become more broadly targeted and more difficult to track. Elsewhere, an article looks at how supply chain snarls can impede renewable-energy projects.

Companies’ monetary commitments in support of racial equity have become less specifically targeted since 2021. Companies increasingly direct monetary pledges toward broad initiatives that don’t always disclose how funds are spent. McKinsey partner Duwain Pinder and coauthors offer suggestions for companies looking to make future pledges. Among them: be transparent and specific about the timelines and targets of pledges, and don’t forget—while making those external pledges—to also make internal commitments to employees.

Supply chain tangles have created difficulties for developers of renewable energy. Labor shortages and the geographic concentration of vital raw materials are among the most pressing obstacles to the construction of new (and in-demand) wind and solar capacity. Senior partner Alberto Bettoli and coauthors say vertical integration could be one solution: renewables companies that can acquire or partner with materials suppliers might be better able to keep projects on track.

Here are other recent notable findings from McKinsey research:

For almost two decades, US labor productivity has grown at a lackluster pace. Boosting productivity represents a $10 trillion opportunity. Managing partner for North America Asutosh Padhi, McKinsey Global Institute directors Kweilin Ellingrud and Olivia White, and coauthors present a comprehensive and prescriptive report on efforts to rekindle the productivity of the American workforce.
Data ethics is becoming top of mind for companies, amid increased consumer interest and regulatory scrutiny. Partner Henning Soller and coauthor offer a framework for putting data ethics into practice. Strong guiding principles and clear communication can help an organization create a healthy data culture.
Small and medium-size businesses (SMBs) comprise 44 percent of US GDP. Senior partner Mohsin Imtiaz and coauthors say that tech providers could benefit from considering the specific tech needs of SMBs instead of merely attempting to replicate enterprise commercial approaches.
Outer space is getting crowded with both public and private actors. Associate partner Giacomo Gatto and coauthor suggest governance principles that could help limit conflicts as the space economy develops.

A recent edition of Author Talks features Harvard Medical School psychiatry professor Robert Waldinger speaking about his new book, The Good Life: Lessons From the World’s Longest Scientific Study of Happiness (Simon & Schuster, January 2023). Waldinger, who oversees the Harvard Study of Adult Development, says the 85-year-old longitudinal study reveals that the strongest source of happiness is good relationships, a successful career does not always result in contentment, and no one is happy all the time.

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 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 #33, February 16, 2023

Banks need better methods for handling data on sustainability. Our weekly digest of McKinsey insights explores that topic and more.

The banking industry faces increasing pressure to disclose data relating to environmental, social, and governance (ESG) issues. Achieving greater transparency will require banks to adapt their IT infrastructure. This week, a McKinsey piece lays out an ESG-data road map for banking’s IT leaders. Separately, an interview with the chief sustainability officer at the Monetary Authority of Singapore looks at approaches to financing the net-zero transition. And McKinsey research reveals that meat consumption trends in China could have environmental implications.

To keep pace with regulatory changes and consumer needs, banks need to integrate ESG-related data into their IT systems and processes. McKinsey partner Henning Soller and coauthors offer banking’s IT leaders best practices on the topic. Among them: give investors real-time visibility into the ESG-related aspects of their portfolios, ensure that ESG data handling is sensitive to both shifting market demands and location-specific regulatory requirements, and encourage cross-functional collaboration to avoid data silos.

Severe weather events resulting from climate change pose a grave threat to Southeast Asia. Gillian Tan, chief sustainability officer at the Monetary Authority of Singapore, spoke with McKinsey partner Bharath Sattanathan about the potential to use a blend of public and private finance to help combat climate change. Tan wonders whether financial institutions could be offered inducements—such as different treatment of loans for green initiatives—to take more action in the fight against carbon emissions.

Results of a McKinsey survey of Chinese consumers identify trends in meat consumption, including attitudes toward sustainability. Senior partners Sheng Hong and Roberto Uchoa de Paula and coauthors note that awareness of food sustainability issues is rising in China but has not yet resulted in increased enthusiasm for alternative meat. Almost 80 percent of survey respondents report that they dislike the taste of alternative meat products. About 20 percent dislike the price.

Here are other recent notable findings from McKinsey research:

The mining industry is having trouble luring young talent. Partner Tino Grabbert and coauthors say the sector’s long-established structural challenges—including the perception of hazardous work, a dearth of advancement opportunities, and remote locations that lack family-friendly infrastructure—are making it particularly unattractive to the next generation of workers.
The auto financing landscape is in flux. Senior partner Ben Ellencweig and coauthor suggest that lenders should consider novel strategies, such as partnering with online car retailers and focusing on new types of customers.
Partner Gaurav Agrawal and coauthors say that drug development could benefit from a quicker path to first-in-human studies. Pharma companies should put increased focus on speed and innovation during the preclinical-development phase.
Senior partner Chandru Krishnamurthy and coauthors offer three strategies—drawn from the private sector—that could aid the financial-management efforts of government agencies: boost internal transparency, automate data reporting, and strengthen partnerships between financial and operational leadership.

A recent edition of Author Talks features University of Pennsylvania Carey Law School professor Tess Wilkinson-Ryan speaking about her new book, Fool Proof: How Fear of Playing the Sucker Shapes Our Selves and the Social Order—and What We Can Do about It (HarperCollins Publishers, February 2023). Wilkinson-Ryan maintains that decision making suffers when people are scared to look foolish but improves when people make themselves cognizant of that fear.

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 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 #32, February 9, 2023

Consumers say they care about sustainability—but what do their wallets say? Our weekly digest of McKinsey insights explores that topic and more.

In surveys, American consumers often signal that sustainability matters to them. But are they in fact more likely to buy a product if it’s sustainably produced? This week, McKinsey research investigates whether products that make claims related to environmental, social, and governance (ESG) sell better than products that don’t. Meanwhile, a separate article looks at ways to close the Black tech talent gap. And a piece examines decarbonization efforts in the cement and concrete industry.

Consumer products that made ESG-related claims on their packaging grew faster over a five-year period than products that made no claims, according to a study jointly conducted by McKinsey and NielsenIQ. Among other findings from the study (which analyzed sales data covering 600,000 individual product SKUs representing $400 billion in annual retail revenues): ESG-related claims boosted sales across varied product categories and brand sizes, and less-common claims tended to be associated with larger sales effects. Senior partner Steve Noble and coauthors say that consumer-packaged-goods companies could benefit from ramping up development of environmentally sustainable and ethically produced products.

Black people constitute 12 percent of the US workforce but only 8 percent of tech employees and 3 percent of C-suite tech executives. As a result, Black households could lose out on more than a cumulative $350 billion in tech job wages by 2030. Senior partner Mark McMillan and coauthors suggest several actions that could help close the Black tech talent gap. Among them: develop stronger partnerships between corporations and historically Black colleges and universities and upskill Black tech employees to ease advancement into leadership ranks.

Cement production is a crucial target for decarbonization as it generates 7 percent of global CO₂ emissions. Senior partner Jukka Maksimainen and coauthors identify three emissions-reduction levers that could aid the effort: replace clinker (a lumpy substance—often used as a binder in cement products—that accounts for 90 percent of cement production emissions) with alternative materials such as fly ash or metal slag; use electric kilns to cut energy-related emissions; and store and reuse remaining CO₂.

Here are other recent notable findings from our research:

Anna Mattsson and coauthors say that companies carved out of larger corporate entities often don’t need to build back the same level, or type, of support structure that they relied on prior to the split.
Knut Alicke notes that the value of effective supply chain leaders has been highlighted by recent disruptions—while wondering if more companies would benefit from elevating supply chain leaders to CEO roles.
Asutosh Padhi, managing partner for North America, interviews Peter Stavros, the cohead of US private equity at KKR. Influenced by his father’s experiences as a construction worker, Stavros advocates for more employee ownership of companies.

A recent edition of Author Talks features father–daughter duo Alex Jadad and Tamen Jadad-Garcia speaking about their new book, Healthy No Matter What: How Humans Are Hardwired to Adapt (Penguin Random House, January 2023). The authors elucidate, among other themes, their concept of “enoughness”: health strategies can err both by doing too much (overtesting, overdiagnosing) and too little (failing to control risk factors such as high blood pressure or high blood sugar).

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 #31, February 2, 2023

Executives are navigating a serpentine path to net zero. Our weekly digest of McKinsey insights explores that topic and more.

Getting to net zero will involve trade-offs between long-term goals and short-term realities. It could be a serpentine path, full of setbacks and adjustments. This week, a McKinsey podcast looks at possible next moves for executives trying to balance decarbonization efforts against pragmatic concerns. Meanwhile, a separate article examines the economics of electrifying America’s commercial-vehicle fleets.

Many executives might be wondering how to advance toward a decarbonized future while enduring near-term economic shocks. In an episode of The McKinsey Podcast, Anna Moore and senior partner Humayun Tai discuss this duality and its ramifications. One way to make pragmatic strides toward decarbonization is to search for win–win scenarios in which decarbonization initiatives lead to market share gains.

Operators of American commercial-vehicle fleets have been hesitant to embrace electrification—in part because they have memories of an earlier transition (to engines powered by compressed natural gas) that failed to successfully materialize. But Moritz Rittstieg, Saleem Zafar, and coauthors say shifting economics are making this an appealing moment to make the switch to electric fleets. Facts to consider: electricity is now three to five times cheaper than diesel fuel, and battery electric vehicles might outperform internal-combustion-engine vehicles in terms of total cost of ownership as soon as 2025.

Investments related to environmental, social, and governance (ESG) concerns have attracted increasing levels of interest—and scrutiny—in recent years, and companies have endeavored to solidify their ESG-related policies.

Here are other recent notable findings from our research:

Digital therapeutics is a fast-growing field that shows great promise in helping patients manage chronic diseases. Senior partner Ralf Dreischmeier and coauthors say that key capabilities include improving monitoring and feedback, keeping care providers more thoroughly informed, and gamifying behavioral modifications such as diet changes.
Commodity trading is in flux—roiled by the energy transition. Roland Rechtsteiner and coauthors identify five strategies for navigating this turbulent commodities moment. Among them: embrace the shift toward short-term markets and rapidly ramp up trading scale.
A series of infographics illustrates the benefits of prioritizing a company’s most loyal customers. Senior partner Julien Boudet and coauthors say that a well-designed VIP loyalty program can lift revenue and reduce churn.

A recent edition of Author Talks features senior partners Venkat Atluri and Miklós Dietz speaking about their new book, The Ecosystem Economy: How to Lead in the New Age of Sectors without Borders (John Wiley & Sons, October 2022). The authors maintain that cross-sectoral ecosystems—bundling a variety of offerings from different industries—are poised to create increasing levels of value while making life easier for consumers.

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 #30, January 26, 2023

Inadequate broadband access for Black households could factor into lower Black representation rates in the American tech workforce. Our weekly digest of McKinsey insights explores that topic and more.

In the United States, Black households lag behind White households in digital skills, ownership of desktop and laptop computers, and access to high-speed internet. It’s a gap that can be interpreted as both a cause and an effect of inadequate Black representation in the American tech workforce. This week, McKinsey analysis looks at ways to narrow that digital divide. Meanwhile, a separate piece assesses the shortfall of women working at European tech companies—and offers suggestions to redress the imbalance.

Only 69 percent of Black Americans have desktop or laptop computers, compared with 80 percent of White Americans (exhibit). Disparities like this can skew hiring for tech jobs—which often pay better than other occupations—thereby exacerbating income and wealth gaps. Kunal Modi, Todd Wintner, and coauthors posit five steps that could be taken to help promote digital equity and inclusion. Among them: conduct comprehensive surveys of underserved locations to ensure that Black communities receive their fair share of tech-enabling government funding, and partner with local stakeholders to ensure that eligible households then take advantage of these subsidies.

2020The digital divide disproportionately affects Black Americans across adoption, computer ownership, and digital skills.

Women occupy only 22 percent of all tech roles across European companies. The percentage of European women in STEM drops off precipitously during the transition from secondary school to university and again during the transition into the workforce. Senior partner Sven Blumberg and coauthors suggest four interventions that could improve women’s representation in European tech. One potential approach is to retrain and redeploy women to place them in tech fields where hiring is growing fastest.

Here are other recent notable findings from our research:

For CEOs, the metaverse is too big to ignore. It presents both tremendous opportunity and risk. Managing partner of global client capabilities Homayoun Hatami, senior partner Eric Hazan, and coauthors present a CEO’s guide to the metaverse—outlining the why, what, and how of ushering an organization into the virtual realm.
Senior partners Chandra Gnanasambandam and Jeremy Schneider and coauthors investigate what separates the top tech product managers from the rest and find that the most effective product managers are able to—among other capabilities—focus intently on holistic issues and identify potential unintended consequences.
Senior partner Nicolas Maechler and coauthors attest that, while often associated with B2C endeavors, customer-experience considerations can also be critical in the B2B world.
After exceptional performance during the height of the pandemic, the 2023 outlook for sporting-goods companies is hazier. Senior partners Achim Berg and Raphael Buck and coauthors offer strategies to mitigate risk—including nearshoring to head off potential supply chain disruptions.

A recent edition of Author Talks features Ha-Joon Chang, professor of economics at SOAS University of London, speaking about his new book, Edible Economics: A Hungry Economist Explains the World (PublicAffairs, January 2023). Chang explains why he uses stories about food to elucidate economic arguments, while also expressing his belief that countries can benefit from strong, government-led industrial policies.

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 #29, January 19, 2023

As Davos 2023 continues, sustainable and inclusive growth lies at the center of many discussions. Our weekly digest of McKinsey insights explores that topic and more.

The World Economic Forum (WEF) gathered leaders from around the world this week. As a strategic partner to the WEF, McKinsey is engaging with Davos 2023 participants—including decision makers from government, business, and civil society—to identify opportunities for creating sustainable, inclusive growth across the globe. Our WEF overview page is the place to find McKinsey’s latest Davos-related insights and interviews. Elsewhere: McKinsey analysis points to six areas of action for business leaders and policy makers who hope to enable an orderly transition to renewable energy. And a look at the future of batteries examines strategies for making the industry more sustainable and resilient as battery demand rises.

Sustainability and inclusivity are central discussion topics at Davos 2023. Senior partner and chief marketing officer Tracy Francis and senior partner Daniel Pacthod explain why the WEF matters more than ever as leaders around the world reimagine globalization for a new, uncertain era. In partnership with the WEF’s Centre for the New Economy and Society, senior partners Kweilin Ellingrud and Lareina Yee and coauthors examine best practices for improving diversity, equity, and inclusion (DEI) and suggest ways to make DEI efforts more quantifiable and scalable. For more from Switzerland, check out what young global leaders list as their top Davos agenda items, and—if you need a primer—read the latest McKinsey Explainer, “What is Davos?”

A key element in reducing greenhouse-gas (GHG) emissions in the United States will be decarbonizing the electric sector, which currently accounts for 25 percent of US GHG emissions. Senior partners Hamid Samandari and Humayun Tai and coauthors outline six steps for reducing emissions while maintaining a resilient energy supply. Among them: securing and developing land for renewable energy. To meet some climate goals, a high proportion of the land suitable for generating solar or onshore wind power will need to be used efficiently.

As global demand for lithium-ion batteries grows, the industry will face new opportunities and challenges. In collaboration with the Global Battery Alliance, senior partners Mikael Hanicke and Martin Linder and coauthors suggest ways to scale up effectively and responsibly. Three important components for healthy growth: diversified supply chains, decarbonized operations, and a circular value chain, in which materials are reused, repaired, or recycled.

Here are other recent notable findings from our research:

Asutosh Padhi (senior partner and managing partner, North America), Sven Smit (senior partner, chair of the insights and ecosystems, and chair of the McKinsey Global Institute), and coauthors outline potential 2023 macroeconomic scenarios ranging from a soft landing to an extended downturn.
Jen Henry and coauthors suggest an eight-part recipe for cooking up growth during an unsettled moment in the restaurant sector. Among the suggestions for finding new revenue streams: launching a first-party delivery service.
On The McKinsey Podcast, McKinsey Global Institute partner Michael Chui and expert partner Roger Roberts discuss three emerging technology trends: applied AI, cloud and edge computing, and bioengineering.
Demand for data centers is soaring, and the United States accounts for about 40 percent of the global market. Senior partner Andrea Del Miglio and coauthors highlight potentially attractive areas for investing resources along the data center value chain. Among them: immersion cooling solutions.

A recent edition of Author Talks features Myra Strober, founding director of Stanford’s Clayman Institute for Gender Research, speaking about her new book, Money and Love: An Intelligent Roadmap for Life’s Biggest Decisions (HarperCollins Publishers, January 2023), written with Abby Davisson. Strober explains her “5Cs” framework for making decisions about money and love: clarify, communicate, consider a broad range of choices, check in with family and friends, and anticipate likely consequences.

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 #28, January 12, 2023

Davos 2023 begins next week, with global sustainability and inclusivity expected to be major focal points. Our weekly digest of McKinsey insights explores that topic and more.

The annual meeting of the World Economic Forum (WEF) kicks off next week in Davos, Switzerland. As a strategic partner to the WEF, McKinsey will engage with Davos 2023 participants—including decision makers from government, business, and civil society—to identify opportunities for creating sustainable, inclusive growth across the globe. Our WEF overview page will be the place to find McKinsey’s Davos-related insights and interviews. In the meantime: a McKinsey article offers four strategies for fashion brands looking to become more inclusive by connecting with Black consumers (whose spending on apparel and footwear is expected to reach $70 billion by 2030, with much new business up for grabs in the interim). And a piece examines the rise of virtual healthcare, while suggesting ways to include populations that are getting left behind in the rush to telemedicine.

Davos 2023 will run from January 16–20. Sustainability and inclusivity are poised to be central discussion topics. Chief marketing officer and senior partner Tracy Francis and senior partner Daniel Pacthod have hosted a sneak preview video covering what to expect. And next week, Pacthod will join senior partner Kate Smaje to host an on-site event—that welcomes virtual attendees—providing firsthand accounts of what they’re seeing and hearing on the ground in Switzerland. To prepare for the WEF, check in on what young global leaders view as top Davos agenda items. (If you’re in need of a primer, read McKinsey’s explainer: “What is Davos?”)

When shopping for apparel, Black consumers are 11 percentage points more likely than non-Black consumers to prefer e-commerce options. Senior partners Tiffany Burns and Shelley Stewart III and coauthors analyze data on Black consumers’ buying habits while suggesting four effective strategies for reaching these shoppers: amplify products made by Black creators (and inspired by the needs of Black consumers); employ diverse marketing campaigns (that include user-generated content from Black consumers); make products affordable (and offer flexible payment models); and build digital and physical shopping realms in which Black consumers feel welcome.

Telemedicine represented 1 percent of patient visits prior to the COVID-19 pandemic. It now represents 14–17 percent of visits. But there are emerging gaps in access to virtual healthcare: for instance, though rural areas are often physically farther from in-person health services, they still trail urban areas when it comes to virtual-healthcare adoption. Alex Harris and coauthors suggest that telemedicine’s potential could be bolstered by improving uptake rates for lower-income patients, older patients, and patients with less access to technology.

Here are other recent notable findings from our research:

McKinsey’s 2022 Global Industrial Robotics Survey reveals that while many industrial-sector executives see promise in automation, challenges remain daunting. Emily Shao and coauthors note that 71 percent of respondents cite the capital cost of robots as an obstacle, while 61 percent cite their companies’ general lack of experience with robotics.
COVID-19 sickness reduced American workers’ availability by as much as 2.6 percent in 2022—the equivalent of up to 4.3 million workers dropping out of the workforce for the full year. Senior partner Shubham Singhal and coauthors suggest this might help explain persistent US worker shortages.
During periods of business disruption, maintaining an organization’s status quo can be riskier than attempting innovation. Senior partner Michael Birshan and coauthors advise companies to consider raising their innovation aspirations and to pursue innovations that are aligned with emerging trends.

A recent edition of Author Talks features marketing professor Peter Fader and retail scientist Michael Ross speaking about their new book, The Customer-Base Audit: The First Step on the Journey to Customer Centricity (Warton School Press, November 2022). Fader and Ross maintain that long-term business growth begins with a deep understanding of how customers think and behave—and with an acknowledgment that some customers provide far more value than others.

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 #27, January 5, 2023

A majority of luxury-vehicle owners are ready for the shift to electric vehicles. Our weekly digest of McKinsey insights explores that topic and more.

Luxury-vehicle owners around the world are open to buying electric vehicles (EVs). They also profess very little brand loyalty. This week, McKinsey research examines the global luxury-vehicle sector and the opportunities that could emerge as it transitions to an EV-heavy future. A separate article looks at the entrance of Asian EV brands into the European market—and what European incumbents might learn from it. Meanwhile, a look at the potential benefits of using drone-powered package delivery services finds that drone deliveries could eventually be cheaper and greener than other last-mile delivery options.

A global McKinsey survey of owners of luxury vehicles (retailing for $200,000 or more) finds that 62 percent of respondents who own luxury vehicles with internal-combustion engines are open to switching to EVs or plug-in hybrids. And 95 percent of luxury-vehicle owners say they’d consider switching brands for their next vehicle purchase. Senior partner Jan-Christoph Köstring and coauthors suggest that many luxury-EV customers could soon be up for grabs and that manufacturers might boost brand loyalty by fostering exclusive owners’ communities replete with special events and services.

Asian EV makers are gaining a foothold in the European market. Their strategies have varied widely, ranging from direct-to-consumer approaches to partnerships with local importers. Among the customer frustrations these new players are attempting to address with better solutions: puzzlement at opaque vehicle pricing and disappointment over long delivery wait times. Niels Dau and coauthors suggest that incumbent European brands might seize this unsettled moment amid the ongoing EV transition to make overdue changes—or risk getting left behind by disruptive Asian competitors.

Thousands of commercial drone deliveries already occur every day around the world. Drones could potentially offer lower carbon emissions than other last-mile delivery options such as cars and vans (even electric ones). But, say Robin Riedel and coauthors, labor costs could be a limiting factor: for drones to succeed, regulations and technology will need to permit a single operator to control many drones simultaneously.

Here are other recent notable findings from our research:

American technology workers overwhelmingly prefer to work remotely instead of moving for a new job. Oliver Bossert and coauthor suggest that companies might reevaluate their office footprints—and allow tech workers to shift more interactions to video teleconferencing.
Asmus Komm and coauthors identify five emerging archetypes for HR departments. Among them: a decentralized approach that places more responsibility with on-the-ground managers, and a machine-driven model that automates many decisions and processes.
An interview with the LEGO Group’s chief data officer delves into the toy company’s use of artificial intelligence to improve product development, manufacturing, customer experiences, and countless other elements of its business.

A recent edition of Author Talks features Jacob Harold, cofounder of Candid, speaking about his new book, The Toolbox: Strategies for Crafting Social Impact (John Wiley & Sons, December 2022). Among the powerful tools Harold recommends for enacting social change and building a better world: game theory, mathematical modeling, design thinking, and storytelling.

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.

For McKinsey’s 2022 perspectives on sustainable and inclusive growth, visit our archive of briefing notes that were published throughout the year.

Sustainable and inclusive growth: A weekly briefing

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Sustainable and inclusive growth: Briefing note #29, January 19, 2023

As Davos 2023 continues, sustainable and inclusive growth lies at the center of many discussions. Our weekly digest of McKinsey insights explores that topic and more.

Sustainable and inclusive growth: Briefing note #28, January 12, 2023

Davos 2023 begins next week, with global sustainability and inclusivity expected to be major focal points. Our weekly digest of McKinsey insights explores that topic and more.

Sustainable and inclusive growth: Briefing note #27, January 5, 2023

A majority of luxury-vehicle owners are ready for the shift to electric vehicles. Our weekly digest of McKinsey insights explores that topic and more.

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