McKinsey is looking to lead in sustainability space in 2022

By Kate Birch
Following the launch of its ESG practice in May, McKinsey has made three acquisitions, as it looks to lead in the sustainability space in 2022 and beyond

There is no doubt that 2021 will go down in history as the year when net-zero targets became mainstream, not just in G20 governments, but also in business. As ESG rose to the top of the business agenda and COP26 played out in Glasgow, more and more companies joined the race to net zero.

To help them reach their net-zero targets, leading strategy consultancy McKinsey has been strengthening its own sustainability capabilities this year, setting up a dedicated ESG practice and making three key acquisitions to boost its sustainability strengths. 

“Our aim is to be the largest private-sector catalyst for decarbonisation”, said McKinsey upon the launch of the practice. “The transition to a net-zero economy will increase the basis of innovation and competition. Those who act now will be advantaged, and we will help our clients ensure they are among these sustainability leaders.”

To achieve this, McKinsey has been hard at work this year building on its ESG capabilities, including unveiling a new practice specialising in sustainability work, and making three acquisitions to beef up its sustainability, ESG and climate change capabilities. 

Launch of sustainability practice

McKinsey Sustainability is a client-service platform aimed at helping all industry sectors transform to get to net-zero by 2050 and to cut carbon emissions by half of 2030. The practice is targeting four main decarbonisation levers, helping clients to:

1. Drive a ‘brown to green’ transition of the global economy’s installed base

2. Build new green businesses and innovations

3. Retire and repurpose the highest carbon intensity assets

4. Scale nature-based solutions by scaling voluntary and compliance carbon markets

Along with the launch of this new practice, McKinsey has committed to investing in the platform over the next four years, with a focus on client service, knowledge and capability building, alliances, pro-bono investments, and acquisitions. 

Acquisition of Vivid Economics and subsidiary Planetrics

Earlier in 2021, McKinsey acquired sustainability company Vivid Economics along with sister company Planetrics, a double acquisition designed to help clients navigate climate change.

The acquisition of Vivid Economics, which has become one of the leading players in the sustainability economics consulting space since its founding in 2016, boosts McKinsey’s ESG practice in the UK, US and Netherlands with 130 experts. Specialising in strategic advisory and economic policy for sustainability topics, Vivid supports clients on everything from market design, economic regulation and sustainable development, to net-zero transactions, renewable energy, climate resilience, carbon markets and transaction advisory. 

Along with this acquisition, McKinsey has purchased Vivid Economics’ subsidiary Planetrics, a team of 10 professionals providing data analytics services and solutions for climate change scenario planning in the financial services industry. 

Together, they bring expertise, analytics and experience to McKinsey, helping to accelerate the firm’s existing sustainability, risk and resilience capabilities and talent. 

According to Dickon Pinner, senior partner at McKinsey, this acquisition “will enable us to help clients across all sectors and geographies transform themselves to successfully navigate the risks and opportunities presented by the economy-wide transition to a more sustainable future”. 

Acquisition of Material Economics

In December 2021, McKinsey took a further step towards fully servicing its clients’ sustainability demands with the acquisition of Material Economics.

Specialising in ESG consulting, and with 30 experts under its belt, Stockholm-based Material Economics helps clients develop sustainability strategies with a focus on circularity, detailed and data-driven approaches for sustainable materials systems in companies and across industries.

Bringing expertise into the McKinsey practice will help the consultancy in helping its clients “with cutting-edge perspectives on circularity, detailed CO2 abatement strategies, and ultimately net-zero transformation”, says Tomas Naucler, co-leader of McKinsey’s Sustainability Practice. 

Joining the McKinsey sustainability practice, Material Economics CEO Per-Anders Enkvist, says: “Some 45% of global greenhouse gasses arise from the production and use of basic materials, products, and food… Company after company now finds it must address these challenges in their own production, supply chains, and business models. These issues have long been the focus of our work at Material Economics. I am really excited to join forces with McKinsey to have even more positive impact from the expertise and knowledge we have built up."

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