As net zero has become an organizing principle for business, executives are on the spot to lay out credibly how they will deliver their transition to net zero while simultaneously building and reinforcing resilience against the certain volatility of ongoing economic and political shock.
Prices are rising across the globe, driven by the energy crisis in Europe, the growing food crisis resulting from the invasion of Ukraine, and a recovery from the COVID-19 pandemic that has been faster than expected, and, though welcome, has put pressure on supply chains. The outlook is ominously recessionary.
There is a growing perception that net zero comes at the expense of affordability, with a zero-sum trade-off. The universal problems of supply chain and talent shortages complicate the equation, particularly as deployment for the new assets and infrastructure needed for the net-zero transition pick up. This, in turn, could result in price spikes for the key inputs needed for the net-zero transition. Companies also face growing challenges in securing the parts, labor, and specialized skills they need to execute on net-zero commitments. From heat pumps to recycled textiles and insulation installers to carbon management data scientists, companies are struggling to match supply to customer demand.
There is a growing perception that net zero comes at the expense of affordability and that there is a zero-sum trade-off. The universal problem of the supply chain, labor, and talent shortages complicates the equation, particularly as deployment for the new assets and infrastructure needed for the net-zero transition pick up.
This article was originally published on McKinsey.com