McKinsey ramps up sustainability focus with third 2021 acquisition
Strategy consultancy McKinsey & Company has boosted its sustainability capabilities with the purchase of Material Economics. The move is the company’s third acquisition in the sustainability space this year, and comes after McKinsey launched an ESG consulting practice in 2021.
Since the Paris Agreement, nations around the world have been issuing net-zero targets – with net-zero meaning achieving a balance between the greenhouse gases put into the atmosphere and those taken out – by 2050. In line with this, a raft of professional services firms have set their own net-zero targets within varying time frames.
As one of the world’s three largest strategy consultancies, McKinsey & Company needed to align with this client need effectively; and to that end, in May it launched a new practice specialising in sustainability and ESG work. McKinsey Sustainability focuses on four key decarbonisation levers, which include helping clients to drive a ‘brown to green’ transition of the global economy’s installed base; building new green businesses and innovations; retiring and repurposing the highest carbon intensity assets; and scaling nature-based solutions by scaling voluntary and compliance carbon markets.
At the time of McKinsey Sustainability’s launch, the MBB giant committed to investing in the platform over the next four years, focusing on client service, knowledge and capability building, alliances, pro-bono investments, and acquisitions. Earlier in 2021, this led to the acquisition of sustainability firm Vivid Economics and its sister company Planetrics – adding a team of around 130 consultants and staff to McKinsey in the UK, the Netherlands and the US. Now, McKinsey has followed that up with a third purchase in the sustainability consulting sphere.
Commenting on the acquisition of Material Economics, Tomas Nauclér, co-leader of McKinsey’s Sustainability Practice, stated, “By combining Material Economics’ capabilities and assets with McKinsey’s extensive network, we can broaden and deepen our sustainability offerings, and accelerate our ambition to create a global engine for sustainability operating from the region. We will be able to help clients with cutting-edge perspectives on circularity, detailed CO2 abatement strategies, and ultimately net-zero transformation.”
Material Economics is based in Stockholm, Sweden, and specialises in ESG consulting. Its group of more than 30 experts help clients develop sustainability strategies with a focus on “circularity,” detailed and data-driven approaches for sustainable materials systems in companies and across industries. As part of the deal, CEO Per-Anders Enkvist, along with his co-founders Per Klevnäs and Robert Westerdahl, join the firm’s sustainability practice. Each of them, as it happens, is already a McKinsey alumnus, bringing their career journey full circle.
Notably, Enkvist formerly led McKinsey’s work related to climate change, and co-developed the firm’s greenhouse gas abatement cost curve, which included more than 30 national iterations. It remains one of the most used and quoted tools for thinking quantitatively about the economic, business, and social implications of mitigating climate change. As companies find simply transitioning to renewable energy is not always enough to meet net-zero targets, it is this kind of methodology that Enkvist is excited to promote as part of McKinsey once more.
He commented, “Some 45% of global greenhouse gases 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.”
