Business leaders need to act now to meet the demands of science, government, investors and society at large.
Climate tech is an umbrella term for a handful of sectors where innovative digital technologies are being deployed to address climate change.
Tap each bubble or click on legend items to learn more
Low-GHG air transport, shipping, light and heavy duty road transport; micro-mobility electric vehicles; batteries/fuel cells
Removal and storage of greenhouse gases (GHG) from the atmosphere; systems for monitoring and managing the carbon footprint of organisations or governments
Low-GHG alternatives to traditional inputs (e.g., chemicals, steel, plastics); transformative circularity; recycling and materials efficiency solutions
Food production methods that replace carbon-intensive animal-based products; low-GHG farming practices; low-GHG fertilisers; reforestation
High-efficiency fittings, fixtures, and heating and cooling; smart management of energy consumption; low-GHG construction processes
Renewable energy generation; grid management; production, development and distribution of alternative fuels; high-efficiency, energy-intensive electronics
Recording or analysis of earth and climate data for use in reducing emissions; low-GHG satellites and sensors
Boardrooms are being asked not just for targets but also for climate transition plans. Already more than US$50tn assets under management (AUM)—close to half of total AUM—is currently held by investors that have pledged to drive decarbonisation. Corporate boards and banks are being asked to present not just targets but their transition plans to reach net zero. Asset owners and managers are increasingly awake to the threat of significant value erosion and multiple compression on carbon-intensive assets, and to the value creation upside for companies pioneering products and services aligned with a net-zero future.
To address these demands, business leaders need a credible approach—and even those with existing net-zero commitments need a plan to tackle the toughest decarbonisation challenges. Many, for example, are notably vague when addressing how the company will transform their value chain emissions, such as downstream emissions from products, services and investments. Of the 160 companies in the Climate Action 100 initiative (chosen for their significant greenhouse gas [GHG] emissions), 43% now have net-zero pledges in some form. But just 10% of these companies’ targets directly address their most material Scope 3 (value chain) emissions—which means most will need to go further.
This requires a wholesale transformation, one that touches every part of a company’s business and operating model. Building on a net-zero ambition, companies have to ensure accountability at the top, realign their corporate growth strategy with net zero, adapt their operating model and supply chain to support the transformation, invest in innovation, provide the necessary financing, and prioritise transparency and engagement. Success will require that the CEO, the CFO, the chief innovation officer, the chief risk officer and other top corporate leaders join the sustainability chief, alongside a substantial investment in the right skills.
Although the magnitude of change required may seem staggering, technology has the potential to upend the status quo and catalyse radical improvement. Net-zero commitments can boost the odds of those breakthroughs taking place, because each commitment represents a new customer in need of solutions to help meet its goals. Consider, for example, the One World Alliance of airlines, which committed to net zero by 2050. Making that pledge meant betting on zero-emission aircraft technologies that don’t yet exist at scale—in this case, commercial passenger aircraft that can be run on sustainable aviation fuels and green hydrogen in the next ten to 15 years.
Venture capital investment in climate tech increased 4,200% between 2013 and 2018, though 2019 experienced a small drop-off, concomitant with wider VC investment trends.
The technology we need will come from a wide array of organisations, including new and emerging companies. Notably, as we found in a recent study, the rate of early-stage investment into climate tech is growing fast—in fact, five times faster than the rate of venture capital investment more broadly. During the past seven years, the aggregate funding for climate tech companies, the rate of start-up creation and the average size of funding have all increased. Between 2013 and 2019, early-stage venture funding for climate tech companies reached US$16.3bn—an increase of 3,800%. Corporate investors are becoming particularly important actors.
This embrace of innovation offers a path to progress, and that’s good news as we embark on what will be the decisive decade for climate action. Society will expect business leaders to act: According to the Edelman Trust Barometer 2021, 66% of respondents believe CEOs should take the lead on creating change, instead of acting only when governments impose change. Achieving aggressive net-zero goals will build on this momentum (whereas failure to act will erode it). Leaders will have to pull the future into the present in order to execute a profound and rapid transformation the likes of which the world has never seen, but urgently needs.
Want more insights on the big issues facing business and society in the year ahead? Sign up here and be the first to read our future articles. You’ll also receive complimentary access to the latest digital edition of PwC’s strategy+business magazine, our award-winning management publication for decision makers in businesses and organisations around the world.
Want to know more about the experts behind the articles? Our series offers the latest thinking from senior leaders across our global network. From ESG transformation and the future of work to AI applications and digital currencies, our authors’ insights draw on decades of experience to help businesses across industries look ahead and take on tomorrow’s greatest challenges.Get to know our authors
Get your business ready for what comes next
Using our market leading studies, data, and expert analyses, we pinpoint the forces making an immediate impact on your business—and empower you to reinvent the future by examining global macrotrends, exploring sector-specific shifts, and discovering the latest technological tools to drive change.Find out more here