PremiumKaka, senior partner, McKinsey and Co, said that 25-30% of global funds are ESG. or sustainability, funds, which means that genuinely clean companies can enjoy up to a 1-1.1% advantage on their weighted capital, which is very significant
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Sharing his views at a special session, The Future of Sustainability, at the SAP presents Mint Sustainability Action Summit 2022, senior partner, McKinsey and Co., Noshir Kaka said: “On average, global temperatures have risen by 1.1 degrees. And we are adding another 0.2 degrees per decade. So, in less than two decades, if we don’t do anything substantial, we will cross the 1.5-degree threshold for climate change if we go with the predicted climate change impacts thereafter."
What is needed to control this situation is not easy. He said that every sector, every new technology will require in each sector an uplift of at least four times at the low end to 45-50 times at the high end.
“This means that if you look at any nascent and deployable technology like solar capacity, electric cars, production of hydrogen, etc., you are going to require a 4-50 times upliftment in the next decade if we are to limit the impact of climate change to 1.5 degrees. And, that is a staggering number," he said.
Currently, several powerful economic forces make decarbonization or sustainability attractive to certain segments and sectors.
Citing examples, he said that 25-30% of global funds are ESG. or sustainability, funds, which means that genuinely clean companies can enjoy up to a 1-1.1% advantage on their weighted capital, which is very significant.
On the consumer side, too, companies can enjoy a very positive return on investment—a cost cut potential of 19-23% in some industries with the added benefit of making a product green or an energy source sustainable.
India has moved very fast on this, but a lot more needs to be done.
“The first is the action that governments or companies can do is measure and accounting of carbon and its related risk assessments. The next step is to manage and come up with sustainability solutions," he further said.
So, what can we do? “We have found close to 100 use-cases and opportunities where you can think about massive opportunities in sustainability, whether around mobility, the circular products economy, green products particularly those which are directly interfaced by consumers," he said.
