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Opportunities for UK businesses in the net-zero transition

Opportunities for UK businesses in the net-zero transition


Supplying the goods and services to enable the global net-zero transition could be worth £1 trillion to UK businesses by 2030.

here is wide-ranging consensus on the imperative to decarbonize the global economy in order to mitigate the significant physical, economic, and societal risks from climate change.1 Clarity is also emerging about the pace and possible pathways that would enable the world’s energy and land-use systems to become compatible with net-zero emissions by 2050.2
As a system-level problem, tackling climate change will require incentives, investment, ingenuity, and unprecedented levels of cooperation. For example, moving to hydrogen-based trucking would need to be a continent-wide decision, with coordinated timing of the necessary standards, regulations, fuelling infrastructure, operator training, and so on. Efforts from all stakeholders—international institutions, governments, businesses, non-governmental organizations, and individuals—are involved in delivering the global net-zero transformation. McKinsey’s recent report, “Net-Zero Europe: Decarbonization pathways and socioeconomic implications”, illustrates some of the actions that different stakeholders may need to take.3
This article offers a complementary perspective, considering a narrower question: what are the concrete opportunities for UK businesses arising from the transition to net zero, for whom, and where?4 After all, while many businesses are leading on climate change for reasons of principle, and several will be compelled to change their business model to avoid the risks arising from climate change legislation, many others are likely to respond to market opportunities for more, or more profitable, sales of their goods and services.5 This article seeks to quantify and illuminate those opportunities, focusing on UK businesses and the timeline from now to 2030—the so-called “decade of delivery.”6

Many UK firms could use decarbonization as a spur to reduce their costs, increase their revenues, optimize their capital structure—or all three. (See sidebar, “Creating value from the net-zero transition: the fundamentals”.) Based on this logic, we have analyzed the broad shape of the opportunities available to UK businesses, sector by sector. The analysis presented here is an overview; readers are invited to explore more specific and in-depth perspectives in McKinsey’s online collection, “Insights on Sustainability.”7

The rest of this document discusses the three main types of opportunities that emerge for businesses to create value from the climate transition (Exhibit 1):

  1. Reducing costs by reducing the company’s own emissions. This opportunity applies mainly to businesses in agriculture, oil and gas production, mining, energy and water utilities, many manufacturing sectors, and transport—but also to other sectors that are transport-intensive, such as retail and wholesale, construction, and waste collection.
  2. Producing goods and services to feed the green capex revolution. This opportunity suggests major global growth plays for B2B companies—especially in sectors where the UK already has a leading position, such as professional, scientific, information, communication, and financial services. Due to the large size of the global market for capital goods, UK manufacturing and construction businesses can also benefit.
  3. Enabling others in the value chain—suppliers and customers—to reduce their emissions. This opportunity is likely to grow as greenhouse gas (GHG) prices and regulations mature and consumer attitudes shift. Sectors where green solutions could gain significant share include manufacturing—for example, of food, apparel, and other consumer goods—as well as retail and hospitality.Read More…
Source : mckinsey

Anand Gupta Editor - EQ Int'l Media Network