Net Zero Business Models

1THE NET ZERO OPPORTUNITY

“Every company and every industry will be transformed by the transition to a net zero world. The question is, will you lead, or will you be led?”¹

—Larry Fink, Chairman and CEO, BlackRock

The shift from a fossil fuel–based economy to a net zero emission one is the biggest transformation project in human history (the Great Transformation). The global economy needs to achieve net zero emissions by 2050 to limit the rise in global temperature that began with the Industrial Age to a manageable 1.5°C. McKinsey & Company estimates that achieving a net zero emissions economy under the Net Zero 2050 scenario from the Network for Greening the Financial System will require $275 trillion of cumulative investments in physical assets alone by 2050.^2,3

The Great Transformation is huge, but humanity has successfully transformed the basis of the economy before. The global economy previously transitioned its primary energy source from wood to coal and from coal to oil. Such transitions, however, were gradual and haphazard. The necessity to preserve a habitable planet for our children and grandchildren provides special urgency to the Great Transformation.

We have identified four strategic pathways companies can choose to achieve a net zero business model and commercial success in the Great Transformation, which we call the four “Pathways” and discuss at length in Part III, Chapters 5 through 10 (see Exhibit 1.1.). We briefly introduce the four Pathways here to emphasize ...