Source page: McKinsey & Company
Commentary
Banking on decarbonization
Sustainability | Financial services
February 14, 2023 – Private financial institutions will be vital in the global transition to net-zero greenhouse-gas emissions by 2050, with up to $275 trillion of investment needed for physical assets. Senior partners Daniel Mikkelsen and Daniel Stephens and colleagues note that as much as 55 percent of investment needs could be met by private financial institutions, with commercial banks providing up to $2.6 trillion annually and institutional investors adding as much as $1.5 trillion.
To read the article, see “Financing the net-zero transition: From planning to practice,” January 13, 2023.
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Visual form
Treemap.
Layout / body structure
The page uses one square treemap with a left-side bracket for private investors and smaller categories stacked to the right and bottom. The reading order is from the largest finance sources toward the thinner funding categories.
What is being compared
It compares sources of low-emissions-asset investment, including banks, institutional investors and private funds, households, state-owned enterprises, development finance institutions, governments, state-owned finance institutions, multilateral climate funds, and nongovernmental organizations.
Measurement system
The values are measured in billions of dollars, and area encodes both the size of each financing source and its share of the 6.4 trillion dollar total.
Visible structure inside the graphic
Banks occupy the largest single block on the left, institutional investors and private funds form the next major private-investor block below, and the rest of the chart is partitioned into progressively smaller public and household categories on the right edge and base.
Main takeaway from the visual
Private finance dominates the treemap, especially banks and institutional or private-investment pools, which makes it visually clear that the net-zero capital burden cannot be met primarily by public or multilateral channels.
Key standout values or extremes
The total investment need is 6,400 billion dollars. The private-investor bracket is about 3,500 billion, or 55 percent of the total. Within that, banks contribute about 2,000 to 2,600 billion and institutional investors, private equity, venture capital, and infrastructure funds add about 950 to 1,500 billion.
Controls / sequence, when applicable
This is a static chart image with no in-chart controls to operate.
Companion media, when applicable
There is no separate companion audio or video; the chart image is the full visual on this page.