Inclusive & Sustainable Growth In G20 Economies | McKinsey’s Insights – 2023

ClimateAngels | Sep 05, 2023

“ The agenda for Sustainable Development and Inclusive Growth represents the collective vision for G20 Economies and the world at large—a world where every soul can thrive while the planet Earth flourishes, and prosperity is within life’s reach. It’s a global pact, reminding us that we are all connected, and our actions impact one another, whether near or far. Deep dive into this article to discover how by acting together we can achieve this shared goal.”

seedling-are-growing-from-rich-soil-with-digital-arrow-graph-suggesting-sustainable-growth

What Common Grounds Foster Sustainable and Greener Practices for G20 Economies?

Well! This common ground can be likened to a playground, focusing on ‘economic empowerment’ or ‘unprecedented economic growth.

Fast-paced economic growth can help countries, particularly fast-growing economies like India, address economic imbalances among sectors.

With optimum economic power, G20 countries (Germany, Russia, Brazil, France, South Korea, Mexico, Italy, Saudi Arabia, the U.S., India, Canada, Turkey, Indonesia, Australia, South Africa, China, Japan, the U.K., Argentina, as well as the European Union.) and its members can find ways to address both poverty and climate change, and that too with utmost effectiveness. That’s because this group accounts for world’s 75% global trade and 80% of gross world product (GWP).

McKinsey’s recent insights into growth and societal benefits have briefly outlined many crucial notes that can help businesses, governments, investors, and venture capitalists (VCs) in the G20 economies bring change for good.

This article is about that and more. Let’s see what McKinsey & Co. has compiled so far into 2023 and what the upcoming G 20 summit in New Delhi has for sustainable and inclusive growth in G-20 countries.

Driving Sustainability & Inclusive Growth In G20 Economies

Accelerated global growth offers a unique opportunity to tackle two key societal goals that humanity is grappling with – raising living standards and combatting global warming. However, achieving these objectives without hurdles is challenging.

Latest research from McKinsey Global Institute (MGI) outlines steps to close empowerment gaps while boosting net-zero investment to 8% of global GDP in a decade. For this, business innovation plays a critical role, generating half of the required resources.

The group of twenty (G20) economies demonstrates the impact of growth, technology, and finance in narrowing these gaps.

Here are the Key Nine Insights from McKinsey research:

1. Sustainable economic growth can address poverty issues, as well as the mitigation of the adverse effects of climate change. It can be achieved if there are strategies in place to balance these objectives.

2. Closing the empowerment gap and allowing people to afford essential needs while increasing net-zero investment to 8 percent (8%) of global GDP annually over the next decade can be a viable goal.

3. Businesses and market economies have the potential to generate half of the required resources for these goals through growth and innovation.

4. G20 economies can play the crucial role of growth, technology, and finance in minimizing the empowerment gap and boosting net-zero investments in G20 countries.

5. New healthcare opportunities, clean/climate technologies, manufacturing advancements, and modern construction methods hold promise for promoting greener and more resilient housing and mass transit.

6. Plausible scenarios for global economics in the next decade vary widely, making it essential for business leaders to prepare for different potential futures.

7. The automotive industry is undergoing significant transformations, showing the need for resilience and sustainable supply chains.

8. Generative AI (gen AI) has the potential to add up to $4.4 trillion to the global economy annually, presenting significant economic as well as numerous job opportunities.

9. COP28, the United Nations’ annual conference on climate change, will feature the first “global stocktake” to assess progress since the Paris Agreement in 2015.

What is the main Agenda of G20 Economies?

As already discussed, the main agenda of G20 economies revolves around two fundamental goals: raising living standards worldwide and addressing the pressing issue of climate change.

Recent trends, including slower global growth and the potential disruptions caused by technologies like artificial intelligence (AI), highlight the need for more robust action in these areas.

G20 economies like India aim to make significant progress in improving living standards globally while also accelerating climate investments in low-emissions initiatives to meet their net-zero commitments by 2050. However, India is set to achieve the net zero transition by 2070.

Narrowing Empowerment Gaps In G20 Economies: What are the Pathways to Progress?

Human civilization has made a significant progress reducing extreme poverty, but now it’s time to aim meet all the essential needs of people and help them achieve economic security—this is what is call “economic empowerment.”

In G20 countries, there are over 2.6 billion people, with more than half of this population actively working to surpass the economic empowerment line.

Countries like India and South Africa have over 75 percent of their population below this line, while even in more advanced places like Europe and North America, it’s 20 to 30 percent.

To bridge this gap, G20 countries need to spend an additional $21 trillion by 2030, about $2 trillion per year, or 30 percent more than 2020 spending after government transfers.

india-g20-economies-statistics-for-sustainable-and-inclusive-growth

Source: McKinsey Research – McKinsey Global Institute (MGI)

Accelerating Low-Emissions Investment for G20’s Net-Zero Commitment by 2030

To reach the net-zero greenhouse gas (GHG) emissions target by 2050, G20 economies must invest an additional $35 trillion this decade.

CO2 emissions need to drop by around 50% by 2030, necessitating substantial upfront investment in transitioning to a low-emissions economy.

Emission reductions vary by country and income level, with high-income economies like Germany, Canada, and the United States needing significant cuts as compared to the developing nations in G20 group.

Currently, G20 economies collectively emit approximately 31 Gigatons of CO2 annually, and they must make substantial progress toward net zero by 2030.

Also, it is estimated that, offensive mode by global leaders in this regard could generate $12 trillions of revenue by 2030.

india-g20-ex6-01: Stats for inclusive and sustainable growth in g20 economies

Source: McKinsey Research – McKinsey Global Institute (MGI)

Biz Innovation & Growth Can Halve G20’s Economic Growth Gaps

Economic growth and heightened business innovation will be central factors for all G20 economies, irrespective of their income levels. These elements are poised to make substantial contributions, addressing roughly 80% of the empowerment gap and 35% of the essential increase in net-zero investments.

india-g20-ex6-01: Stats for inclusive and sustainable growth in g20 economies-2023

Source: McKinsey Research – McKinsey Global Institute (MGI)

G20 Economies: Learning from Success Stories

G20 countries are making unprecedented efforts to close empowerment and net-zero investment gaps.

Key Initiatives include:

Employee training

Affordable housing for all

Quality Nutrition

Advanced Healthcare

Education improvements at all level

Promising examples are:

– From Ohio’s job-matching program to India’s digital ID success, where over 94% of the population is now documented, facilitating easy access to financial services..

– Vienna and Hong Kong’s land value capture models have improved housing access.

– China and Brazil lead in forest restoration and poverty reduction through innovative programs.

To achieve net-zero emissions, scaling green technologies and retiring carbon-heavy assets is crucial. Progress is evident in electric vehicles (EVs) sales and hydropower’s steady contribution to Latin America’s energy mix.

What will play a central role in mitigating economic empowerment and net zero gaps in G20 countries?

Growth, technology, and finance are the backbone for closing G20’s economic empowerment and net-zero gaps.

High-growth sectors like healthcare and renewables (green energy) promise economic prosperity and align with empowerment and net-zero objectives. Innovations span clean tech, climate tech, EVs, batteries, and advanced healthcare services.

Technology, notably AI and broadband, enhances productivity across enterprises and governments. Ensuring ample capital, especially in less developed nations, is crucial.

Also, evolving financing methods and private capital collaboration will be vital for scaling and accelerating priority projects, bridging empowerment and net-zero divides.

What Can be Expected from the latest G20 Summit – 2023 in India?

The G20 Summit 2023 in India, chaired by Prime Minister of India, aims to focus on key priorities, including green development, inclusive growth, and technological transformation.

Image Shows: Bharat Mandapam, Pragati Maidan, New Delhi - A Building to host g20 countries in 2023

In Image: Bharat Mandapam, Pragati Maidan, New Delhi | Source: Wikipedia

The agenda emphasizes climate finance, United Nations’ sustainable development goals (SDGs), and women-led development.

There’s also discussion about the African Union’s potential inclusion in the G20, with support from member nations. India’s presidency seeks to address global challenges, such as climate change and debt restructuring, in a human-centric development approach, fostering cooperation among G20 countries.

However, it wouldn’t be less than a surprise if the upcoming G20 Summit can provide an emphasis on the following five questions that remain unanswered to date:

Q-1: How can we reduce capital costs for climate tech and net-zero technologies and enhance their competitiveness against fossil fuels?”

Q-2: What strategies can increase capital flow from advanced to emerging economies to address empowerment and net-zero investment gaps?”

Q-3: Is there interest in developing innovative financial instruments aligned with sustainability and inclusion objectives?”

Q-4: Can stronger incentives promote productivity and skills development in G20 countries, recognizing the significance of economic growth?”

Q-5: Are there opportunities to advance global carbon markets to accelerate progress toward net-zero goals by 2050?”

Anyway, the article here concludes and let’s hope for the best!

Inclusive & Sustainable Growth In G20 Economies | McKinsey’s Insights – 2023

ClimateAngels | Sep 05, 2023

Driving Sustainability & Inclusive Growth In G20 Economies

Here are the Key Nine Insights from McKinsey research:

What is the main Agenda of G20 Economies?

Narrowing Empowerment Gaps In G20 Economies: What are the Pathways to Progress?

Accelerating Low-Emissions Investment for G20’s Net-Zero Commitment by 2030

Biz Innovation & Growth Can Halve G20’s Economic Growth Gaps

G20 Economies: Learning from Success Stories

Key Initiatives include:

Promising examples are:

What will play a central role in mitigating economic empowerment and net zero gaps in G20 countries?

What Can be Expected from the latest G20 Summit – 2023 in India?

More Climate Change and Sustainable Growth Insights for You

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