The movement toward global sustainability has gained momentum over the past decade, driven by falling costs for technologies such as wind and solar, which in some regions have reached cost parity with fossil fuels. Decarbonization has accelerated through widespread electrification, and companies are increasingly mature in their approaches to the energy transition. Significant capital is now being directed to lower-carbon investments, and in some geographies, wind and solar have become the leading sources of new energy thanks to their cost advantages and shorter build times.
Despite this progress, the world remains off track from the Paris Agreement’s stated goals. Only about 10 percent of the low-emissions technologies needed to meet commitments by 2050 have been deployed, leaving a daunting 90 percent yet to scale. Broader sustainability challenges such as food security add further complexity. A shifting geopolitical landscape, rising macroeconomic uncertainty, and uneven government policies create near-term headwinds but may also drive change. Industrial competitiveness, energy security, and the rising energy demands of data centers are already forcing leaders to secure supply chains and accelerate clean energy adoption.
As the planet continues to warm, mitigation efforts alone will not suffice. Adaptation strategies will be critical to address rising risks from heat, flooding, and storm surges. We explore the complexities leaders will face and the opportunities to create lasting value while building a more sustainable planet in the latest issue of McKinsey Quarterly.
Four Central Sustainability Themes
1. Getting the “hard stuff” right
The current energy system delivers high performance but contributes more than 85 percent of global CO₂ emissions. Replacing it with one that is equally effective yet far cleaner requires transformation at an unprecedented scale. In the next 25 years, the power system must at least triple in size while emissions fall sharply. This means replacing 1.5 billion vehicles, decarbonizing production of seven billion tons of industrial materials such as steel and cement, and building out infrastructure for rare earths, lithium, EV charging, and the power grid.
2. Building sector-specific strategies
Sustainability challenges and opportunities differ by sector:
3. Addressing challenges beyond carbon
Sustainability is broader than emissions reduction. Water, a vital resource, is being consumed at unprecedented levels. Encouragingly, just 150 companies account for one-third of global water use, suggesting concentrated action could yield significant results. Companies are also developing nature strategies to mitigate risks to supply chains, operations, and reputations. Proactivity in these areas presents major opportunities.
4. Unleashing the power of the private sector
The private sector holds the key to progress through developing and deploying solutions, mobilizing investment, and transforming operations. This is not limited to start-ups. Incumbents are playing an increasingly important role: investments in climate-driven growth businesses by large capital-intensive companies increased sixfold between 2019 and 2023, reaching $683 billion. Clear strategies exist for incumbents to pursue profitable, climate-focused growth.
The Path Forward
The energy transition is under way, but much more is required. Emissions reductions, affordable and reliable technologies, and sustainable resources are all essential for success. The competitiveness of companies, industries, and countries will be tested. The debate has moved beyond why we must act; the critical question now is how.
Read the latest issue of McKinsey Quarterly which aims to build a shared understanding of what it will take to succeed, offering leaders the insights to deploy human and financial capital wisely, create lasting value, and contribute to a more sustainable future.