Α devilish duality: How CEOs can square resilience with net-zero promises

Amid turbulence on the path to net zero, leaders will have to be much nimbler to balance resilience with an energy future that is secure, affordable, and clean. Five actions can help.

What a difference a year makes. In November 2021, business leaders showed up in force in Glasgow at the UN Climate Change Conference (COP26), pledging to take on the challenge of reaching net-zero greenhouse-gas-emission goals by 2050. While no one believed that the path to net zero would suddenly become easy, commitments made to target nearly 90 percent of CO2 emissions for reduction signaled that the private sector was truly engaged. Then major new headwinds began swirling: surging inflation, war in Europe, energy insecurity, and a potential global recession. Still, governments pressed ahead, passing major climate legislation packages in Europe and the United States. More than 3,000 companies have made commitments on net-zero pathways.

At the time of COP26, McKinsey released a perspective on the requirements needed to secure a net-zero carbon emission transition.1 It was clear, given the challenges to deploying capital at scale, managing economic dislocations, and scaling up supply chains and infrastructure, that the path would not be linear and would include slowdowns and backstepping. Ultimately, sustainable systems are more value creating than traditional ones. But countries and companies must balance trade-offs among net-zero commitments, affordability for citizens, and security of energy and materials supply.