This year, McKinsey & Company celebrates its 40th anniversary in Belgium with a series of virtual inspiration sessions. For the event, McKinsey is inviting Belgian leaders to discuss trends that are shaping the future of this country. AmCham Belgium met with Nicolas Denis, Partner at McKinsey & Company, for a preview of the sustainability session on May 27, 2021. More information on the event and the registration link can be found in this interview.
Sustainability is a popular topic, but why did you choose it as a topic to focus on during a session in celebration of McKinsey’s anniversary in Belgium?
Nicolas: Transitioning towards a carbon-neutral economy will have far-reaching implications, which are not always fully understood. As a result, we felt this was an important conversation to have. The belief that the ‘carbon bill’ will be presented to industry and passed on to consumers still lives on, but it is not accurate. Costs will be unevenly distributed, and this unequal distribution is likely to impact the competitiveness of high-carbon laggards within certain industries.
At the same time, it is safe to say that we are beyond the 1.5° Celsius conversations: most understand and acknowledge the need for decarbonization and the risk of inaction. We see that decision-makers are embracing the need for climate action. Over half of global gross domestic product (GDP) is now generated in countries that have net-zero mandates. Low-carbon innovation is accelerating as we see worldwide investment into the deployment of innovative technologies, which is leading to lower costs for green technology.
The biggest challenge we now face is deployment. How can organizations achieve this in a cost-optimal way? When we were considering our anniversary celebration, it felt logical and appropriate to try and provide as many people as possible with inspiration on how to take action on this important matter.
Let’s ask the question which also serves as the title for your inspiration session: How can Belgian companies contribute to a more sustainable future?
Nicolas: Let me start by framing the challenge for our country. Belgium has reduced its greenhouse gas emissions by approximately 10% since 2005. That is significant progress, but we will need to take much bolder action to meet the goal of a 55% reduction by 2030 and carbon neutrality by 2050. All sectors of the economy will need to decarbonize in parallel to meet these goals.
While consumers can make an impact on an individual level through more sustainable choices in day-to-day life, it will be up to businesses to drive the structural changes that will accelerate the sustainability transition.
Many companies are taking action on energy efficiency, innovation and green business building – but Belgian businesses will have to step up their efforts. Not only do they need to understand the risks, but they should also capture new opportunities which arise from the energy transition. Retaining a competitive advantage will require a thorough understanding of decarbonization levers and optimal pathways towards net-zero in view of market dynamics.
So, what can Belgian companies do? It starts with alignment: sustainability needs to become an integral part of the strategic roadmap for the organization, both from a risk and an opportunity perspective. This then requires the proactive reallocation of capital and people to deliver on this roadmap – for instance, by investing in innovation and decarbonization technologies that are specific to their sectors. Finally, executives could consider engaging with policymakers and industry peers to build industry or sector coalitions to solve the toughest challenges.
If we move fast, we will be able to enjoy the societal and economic benefits of such a transition. Failing to act means that we will not achieve our 2050 ambition. In theory, our GDP intensity per km² and geographical advantages should allow us to scale an energy transition faster than many other countries in Europe. This is an advantage we will need, because most European countries have gotten much closer to their decarbonization targets than we have.
How then is McKinsey supporting companies in this sector?
Nicolas: Sustainability is important for all sectors, but the possible approaches to manage risks, capture new opportunities and make our world more sustainable vary across industries. We combine deep sectoral knowledge and sustainability expertise to ensure that companies can choose an approach tailored to the needs of their organization.
We work on sustainable transformations in a holistic way. We look beyond the technical side of a transformation and ensure that the commercial, operational and organizational dimensions are being considered.
What can attendees expect from the Inspiring Belgium session on May 27?
Nicolas: We want this event to inspire: the insights we share aim to motivate attendees to take action within their organizations. That is why we have invited leaders from different sectors to share their views in a short vision keynote speech, followed by a panel debate to further explore these ideas.
I am very honored to be joined by Mr. Max Jadot, CEO and Chairman of the Executive Board of BNP Paribas Fortis, and Mr. Chris Peeters, CEO and Chairman of the Executive Committee of Elia Group. They lead in sectors that will play a critical role in the sustainability transformation of our economy. Finance is now one of the single most important drivers for change as the difference between ‘Environmental, Social and Governance’ (ESG) compliant and non-compliant financing increases. Electrification, represented here by Elia Group, will play a pivotal role in transforming many sectors, including manufacturing and transportation. I am looking forward to the insights that can flow from a conversation between such a renowned expert in the financial sector and an equally inspiring energy sector expert.
My personal hope for the session is that it will be the start of many more conversations on sustainability and that we will see broad action in the years to come – because this is a challenge that is simply too important not to tackle.
About the interviewee
Nicolas is a partner in McKinsey’s Brussels office. He supports clients in the fields of sustainable agriculture and fisheries, land use and biotech, and also works on topics involving biofuels, biochemicals and bioenergy. In addition, Nicolas advises government bodies on sustainable economic development, agriculture and food security, especially in developing and emerging countries.