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What reaching net zero means for marketing
Companies will have to do much more than they have pledged to if the earth is to avoid the most catastrophic effects of the climate crisis – all levels of their operation, including marketing will be involved, according to a new report by management consultancy McKinsey.
Why it matters
“Achieving net-zero emissions by 2050 would entail a fundamental transformation of the global economy,” the report states. While it will cost a lot of money, there are opportunities to be found, but the task will not only involve marketers communicating what their companies are doing, but in helping to change behaviour among citizens/consumers. These skills will be critical to business’s management of this transition.
What it says
- In short, companies will need to increase capital spending by $3.5 trillion every year until 2050 – a 40% increase on current investment levels to reach $9.2 trillion – if global temperature increases are to be held to just 1.5C, the point at which we avoid climate emergency.
- Effectively, that’s half of corporate profits that need to go toward the climate effort.
- Because the effects of climate change are global, every company and every sector will have to make an important transition, even though some will be hit harder than others.
- “These effects would be front-loaded”, the report states. “Spending would need to rise to almost nine percent of GDP between 2026 and 2030 from about seven percent today before falling”, the report continues.
Most affected industries
In terms of carbon, McKinsey finds the following industries will have to make the biggest changes:
- Power: responsible for 30% of CO2 emissions.
- Industry (including steel, cement, chemicals, fuel refining): 30% of CO2 emissions.
- Mobility (road, rail, aviation, maritime): 19% of CO2 emissions.
- Buildings (including heating): 6% of CO2 emissions.
- Agriculture: 1% of CO2 emissions, but 38% of methane, and 79% of N2O emissions, both of which are greenhouse gasses.
- Forestry: 14% of CO2 emissions.
- Waste disposal and treatment: 23% of methane and 3% of N2O emissions.
Transitions in these industries are likely to have a massive impact on jobs, with about 185m lost. However, certain industries must be greened; this process will create an estimated 200m jobs.
Why it matters to marketing
Companies like the Danish energy company Ørsted provide instructive case studies for making profound transitions to net zero while protecting the business.
While Ørsted’s story articulates a huge technical challenge, the role of marketing was complex and important. As much a story of the discipline’s ability to galvanise employees as its ability to quel investor jitters.
Setting and, more importantly, articulating strategies now that can achieve the 1.5C goal will require thorough marketing expertise. Now’s the time to get clued up.
“The economic transformation required to achieve net-zero emissions by 2050 will be massive in scale and complex in execution, yet the costs and dislocations that would arise from a more disorderly transition would likely be far greater.
“The required economic transformation will not only create immediate economic opportunities but also open up the prospect of a fundamentally transformed global economy with lower energy costs, and numerous other benefits—for example, improved health outcomes and enhanced conservation of natural capital.
“The key issue is whether the world can muster the requisite boldness and resolve to broaden its response during the upcoming decade, which will, in all likelihood, decide the nature of the transition.”
Sourced from McKinsey, WARC
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