Sustainable and inclusive economic growth is crucial to ensuring the well-being of people and the planet. It equips countries with the necessary resources to address the most pressing environmental and social challenges, such as reducing greenhouse-gas emissions that cause global warming, increasing life expectancy, reducing child mortality, and working toward gender parity. Businesses, which account for 70 percent of global GDP, are uniquely positioned to lead the transformation.
The paper, “Toward a sustainable, inclusive, growing future: The role of business,” was launched at the 2022 B20 summit in Indonesia. It presents two frameworks to quantify the necessary changes and to measure progress made: the empowerment gap and the sustainability gap.
The empowerment gap is the spending capability that all households in a given country would require to meet basic needs, have discretionary income, and be able to weather emergencies. The sustainability gap is the amount of additional annual investment in low-emissions technologies that a country would need to make to move the world to a pathway resulting in net-zero emissions by 2050.
The current decade will determine whether we opt for sustainable, inclusive growth or for dangerous warming and large segments of society left behind.Toward a sustainable, inclusive, growing future: The role of business, McKinsey, November 2022
In addition to strong economic growth, two key factors are needed to close the empowerment and sustainability gaps: first, appropriate government intervention and allocation of public resources; second, business-led innovation to make inclusion and sustainability more “affordable” by reducing the cost of products and services that further those goals. The paper details ways that businesses can drive sustainable, inclusive growth by seizing existing market opportunities or by shaping new ones.
Much of the onus rests on Asian businesses. The world’s largest and most populous continent is also the most economically productive; by 2040, it will account for 50 percent of global GDP and 40 percent of the world’s consumption. There is much work to be done—and opportunity to be grasped. India, for example, requires a total of $1.9 trillion to close its sustainability gap, and narrowing the empowerment gap even in a highly developed economy like Japan’s will cost $1.1 trillion.
These are ambitious goals that, if achieved, will have a profound global influence. By driving employment, productivity, and opportunity, companies can contribute meaningfully to Asia’s new growth imperative: to become a region that is sustainable, inclusive, and growing.