How McKinsey is Charting its Path to Net Zero: Highlights from the 2023 ESG Report

McKinsey & Company has published its 2023 ESG report entitled ‘Accelerating Sustainable and Inclusivity Growth for All’, detailing global efforts to promote sustainability and inclusivity. The report highlights McKinsey’s partnerships with clients, colleagues and communities to advance societal progress.

Here are the most important lessons McKinsey’s progress in 2023focusing on their efforts to decarbonize the economy.

Unlocking real value: McKinsey’s decarbonization strategy

The net-zero transition is transforming the global economy, creating new markets and threatening others. Leaders must reduce emissions, provide affordable energy and materials, ensure reliable energy systems and increase competitiveness.

McKinsey has prioritized sustainability and has been working with clients on decarbonization and building climate resilience for more than a decade. The company is committed to helping all sectors reach net zero by 2050 and achieve the goals of the Paris Agreement. McKinsey uses proprietary tools, thought leadership, talent and cross-sector collaborations to drive innovation and growth.

The company works with entrepreneurs and start-ups to quickly scale up technological innovations. It also works with banks and investors to decarbonize portfolios, and works with high-emitting sectors to reduce emissions and costs. By scaling green businesses and accelerating decarbonization, organizations can quickly meet their climate commitments, with progress measured in months rather than decades.

McKinsey is meeting the climate crisis head-on by mapping its path to net zero, with the following progress at a glance:

McKinsey’s progress towards Net Zero

Reduction of Scope 1 and 2 emissions

McKinsey has made significant progress toward achieving net zero emissions by addressing Scope 1 and 2 emissions, which make up 2% of their 2019 baseline. By 2023, they will have reduced absolute Scope 1 and 2 emissions by 56%.

The consultancy also focused on electrifying their fleet, with a notable increase in global electric vehicle usage from 4% in 2019 to 32% by the end of 2023.

The company’s commitment to sustainability extends to making office spaces more sustainable: 64% of global office space is LEED certified and 55% is LEED Gold or Platinum certified. The move to renewable electricity has been successful, as McKinsey achieved its goal of purchasing 100% renewable electricity two years ahead of schedule, with 98% of purchasing compliant with RE100 criteria.

In addition, McKinsey has conducted comprehensive assessments of water, waste and biodiversity, taking proactive measures to minimize water use and reduce the use of single-use plastics.

In addition, the company drives change through local initiatives involving more than 1,100 Green Team members. They contribute to reducing the company’s carbon footprint through various activities, such as achieving office Environmental Management System certification, eliminating single-use plastics and promoting vegetarian options in office canteens.

In summary, reducing Scope 1 and 2 emissions results in the following major progress:

• Electrifying corporate-controlled vehicles: 32% share of electric vehicles
• Making office space more sustainable: 64% LEED certified
  buildings
• Transition to renewable electricity: 100% renewable
• Driving change through local initiatives: more than 1,100 Green Team members

Reducing Scope 3 emissions

Scope 3 emissions mainly come from air travel, hotels and ground transport. In 2023, Scope 3 business travel emissions fell by 56% per FTE compared to the 2019 baseline. Efforts are underway to work with suppliers to further reduce Scope 3 emissions.

• Putting a price on emissions:

As of January 1, 2023, McKinsey has introduced a global internal carbon tax of $50 per tCO2e on all air travel. The compensation is calculated based on flight emissions and will be extended to all emission categories in 2024.

This allowance supports carbon-related purchasing, including carbon removal and sustainable aviation fuel (SAF), while also raising colleague awareness of the carbon footprint.

• Promoting sustainability in aviation:

Collaborative efforts with airlines, fuel producers and aviation stakeholders aim to make air travel more sustainable. SAF is considered critical, with procurement efforts focused on market building and learning from experience.

Initiatives include participation in SAF RFPs and bilateral purchases of SAF certificates, resulting in significant emissions reductions. A total of 7,500 tonnes of CO2e was reduced through four SAF reductions, equivalent to 3% of greenhouse gas emissions.

Thanks to all the efforts McKinsey has made to reduce CO2 emissions and the progress made, the company has managed to reduce its emissions against the targets shown below.

Tackling residual emissions with carbon credits

Offsetting residual emissions remains a key focus for the multinational consultancy through carbon credits.

Since 2018, they have invested in carbon avoidance and removal projects certified by international standards such as the Gold Standard and Verified Carbon Standard, in addition to Climate, Community & Biodiversity Standards (VCS+CCBS), to offset the emissions they still cannot eliminate.

McKinsey continually reviews its carbon credit project portfolio with third-party due diligence to ensure effectiveness.

In 2023, the company enhanced its approach by diversifying its supplier base, refining its scoring system based on internal quality criteria and working with external partners such as BeZero, Carbon Direct and Sylvera for additional feedback.

The sustainability champion also increased its share of carbon removal credits to 50%, investing primarily in nature-based solutions to tackle climate and biodiversity crises. Additionally, the company made its first technology-based disposal purchase to scale up biochar technologies.

Ultimately, McKinsey wants to transition to removing 100% of remaining emissions by 2030. They will focus on nature-based solutions and a blended carbon price of approximately $29/ton.