 | Our best ideas, quick and curated | JUNE 10, 2022 | | This week, how quantum computing has the power to revolutionize the fight against climate change. Plus, the ever-expanding CFO role, and three questions for the director-general of the World Trade Organization. | | | | | Getting back on track. The daunting climate challenges we face can make the future feel overwhelming for many people. But there are technologies out there—and companies pursuing solutions—that give cause for hope. Here, we look at the emerging technology of quantum computing, and how it could transform the economics of decarbonization and become a major factor in limiting global warming to the target temperature of 1.5°C. | | From millennia to minutes. Quantum computing leverages the laws of quantum mechanics to produce exponentially higher performance for certain types of calculations. (As an example, factoring a 2,048-bit prime number with today’s supercomputer takes about one trillion years, but with quantum, that calculation could take about a minute.) Even though the technology is in the early stages of development, experts estimate that the first generation of fault-tolerant quantum computing will arrive later this decade. Even now, breakthroughs are accelerating, investment dollars are pouring in, and start-ups are proliferating. | | Tackling the hard stuff. Quantum computing could help to reduce emissions in some of the most challenging or emissions-intensive areas, such as agriculture or direct-air capture, and could accelerate improvements in technologies required at scale, such as solar panels or batteries. In “Quantum computing just might save the planet,” McKinsey looks at how its computational powers could also be harnessed to make the production of cement emissions-free, improve electric batteries for vehicles, develop better renewable solar technology, use green ammonia as a fuel and a fertilizer, and more. | | In aggregate. Quantum-computing use cases in five key areas could help pave the way to a net-zero economy. By 2035, these use cases could eliminate more than seven gigatons of carbon dioxide equivalent from the atmosphere a year, compared with the current trajectory, or in aggregate more than 150 gigatons over the next 30 years. | | Glass half full. The transformation of the global economy that’s needed to achieve net-zero emissions by 2050 will require an exceptional mobilization of resources, expertise, and funds. While that transition is fraught with risks and volatility, it will also bring growth opportunities, as decarbonization creates efficiencies and opens markets for low-emissions products and services. Quantum computing, which can solve specific problems that have long been considered insoluble, could help put the goal of limiting global warming within reach. | | |  | | | | INTERVIEW | | A Singapore conglomerate gets singular-minded | | Keppel Corporation, which started off as a shipyard in the 1960s, has reinvented itself several times over the decades, from expanding into the offshore-rig business to ultimately focusing on energy and the environment, urban development, and asset management. Now, CEO Loh Chin Hua is on a mission to transform Keppel, one of Singapore’s leading conglomerates, into a future-ready organization with strong purpose and relevance. “I don’t think transformation is just a matter of providing a narrative,” he told McKinsey in a recent interview. “You have to show that you can execute well.” | | | | | | MORE ON MCKINSEY.COM | | Marketing in the metaverse | The metaverse represents an opportunity to engage consumers in entirely new ways while pushing internal capabilities and brand innovation in new directions. Here’s how organizations can think about their metaverse marketing strategies for the future. | | Reimagining the future of financial-services headquarters | All industries are rethinking the future of the office, but the stakes are uniquely high for financial-services firms, which are grappling with how to reorient their offices around learning, inclusion, and innovation. | | What’s fueling Pakistan’s emerging start-up ecosystem | With a young, English-speaking population and a fast-growing, tech-savvy middle class, Pakistan has many ingredients for a thriving start-up ecosystem. How can it live up to its entrepreneurial potential? | | | | | | | How has the pandemic affected the global economy and world trade? | | The most visible impact has been disruptions to supply chains. When the pandemic struck, many businesses decided there was going to be a long or deep recession and they pulled back on investment plans. The massive amounts of fiscal stimulus, particularly in developed countries, and monetary-policy easing created unprecedented demand for goods. That was also heightened by the shift to e-commerce. So we have a supply–demand mismatch that has led to the kind of supply chain issues that we’ve seen. | | After the initial dip in global trade, the value of trade declined by about 8 percent. We’ve now seen a rebound based on this higher demand. For the first time, trade is growing faster than GDP. | | As global trade recovers, how do we foster development and shape more inclusive patterns across the world? | | While trade has rebounded, there’s a real divergence across the world. You see North America, Europe, and Asia bouncing back strongly, but South America, the Middle East, and Africa are rebounding more slowly. | | What is responsible for this divergence, and how do we make the recovery more inclusive? There are two factors. One is the amount of fiscal stimulus and monetary-policy easing that economies have been able to do. And the other factor is access to vaccines. That’s why I have emphasized that trade policy is vaccine policy. If we want a more inclusive recovery, we’ve got to sharply reverse the vaccine inequality that we see now. | | A situation in which 66 percent of people in wealthy countries are vaccinated but only single-digit vaccination numbers in low-income countries isn’t going to do it. An IMF study showed that if we can vaccinate 70 percent of the world by mid-2022, we’ll add $9 trillion to the world economy by 2025. That’s a big piece of creating an inclusive recovery, but we’re not there yet. I think trade has been, and will be, quite instrumental to this recovery. One, in getting vaccines and vaccine inputs from where they are made to where they are needed, and outputs to where they are needed. Two, trade can be part of a sustainable recovery, helping external demand in countries that are recovering faster be available to those that are not. | | What are some of the opportunities to expand trade that have emerged from the crisis? | | If we look specifically at Africa, the African Continental Free Trade Area is a market of 1.3 billion people. We need to now make use of that to be able to develop certain industries. If we want to trade more, we need to add value to products. We cannot continue selling the same raw materials or barely processed products if we want to move forward. So there’s a huge opportunity on the continent. | | But the perception of risk on the continent has not changed. The perception of risk far outweighs the actual risk in investing. When you tell people that in some countries, you can get more than a 30 percent rate of return on investment, they don’t believe you. Getting the IFC, the World Bank, and other multilaterals to put in place instruments that can give comfort to investors would help mitigate those risks. | | Another opportunity relates to digital trade, which underpins so much of the world economy. Creating rules around the use and adoption of digital technologies also helps small enterprises (many helmed by women) compete. And of course one of the ways that enterprises survived during the pandemic was through digital trade, which can also help developing economies increase their participation in world trade. | | — Edited by Barbara Tierney | | | | | BACKTALK | | Have feedback or other ideas? We’d love to hear from you. | | | | | Did you enjoy this newsletter? Forward it to colleagues and friends so they can subscribe too.
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