FRESH TAKES ON BIG IDEAS

When McKinsey Quarterly published its first issue, more than 60 years ago, global temperatures were still near the long-term average, global population was less than half what it is today, and the ideas that led to the internet were just emerging. Businesses back then faced a very different set of decisions.

Sixty years from now, we can expect at least as much change. What forces will shape businesses and the world in 2085? Three come to mind: climate adaptation, demographic shifts, and transformative technological innovation. 

Given the path the world is on today, the effects of climate change will be undeniable by 2085. Alongside ongoing efforts to cut emissions, adapting to higher global temperatures and more extreme weather events will be essential. Changes to building and infrastructure standards—such as requiring building materials that can withstand wind or flooding, or moving electrical transmission and distribution lines underground—will be necessary. So will shifts in agricultural practices and crop choices in many regions to accommodate new climate conditions. As some parts of the world become too hot for outdoor work, people will need to work differently, and waves of migration may occur as people leave extreme temperatures behind.
 
The scale of what will be needed to address these changes is enormous, and the requirements raise an intergenerational issue. Spending to adapt now is an investment in the well-being of the next generation, but the benefits will not accrue immediately. Ultimately, customers will pay more as businesses spend on adaptation.

Demographic shifts caused by falling birth rates and longer lives are underway, particularly in advanced economies. Their impact will be widely felt by 2085, which is just about when the United Nations projects that the global population will peak at just above ten billion, two billion more than today—though the number of global annual births already peaked in 2012. More than half of population growth over the next quarter century is expected to be in sub-Saharan Africa. By 2100, the ratio of working-age people to senior citizens in many regions will drop dramatically. In India, for instance, it is 9.8 today but will fall to 1.9 by 2100.
 
Businesses and governments have not really grappled with what these profound population shifts will mean for them. Many forecasts make growth assumptions for energy consumption, shipping capacity, or travel, for example, that may not be realistic. Demographic change could take pressure off resources available per capita and reduce emissions but threaten growth—including the ability to fund the energy transition and to support the well-being of older people. There is no question that these shifts will be a major factor in determining what the world is like 60 years from now.

“The United Nations projects that the global population will peak at just above ten billion, two billion more than today, by 2085.”

Finally, innovation will be a huge force. By 2085, nuclear fusion may finally happen, offering a clean, plentiful, and safe energy source. It’s likely that there will be breakthroughs in materials that could offer new substitution options throughout the supply chain, including for capturing and converting carbon. Quantum computing may be a reality and could dramatically accelerate automation and the cycle of innovation. There is immense potential for these innovations to increase productivity and help solve many resource problems.

Each of these forces is inevitable, but how the world responds to them is an open question that will determine which version of the future it gets. Sixty years is plenty of time for black-swan events that could reframe everything. Many people may suffer from climate-driven displacement or economic losses. The coming demographic shifts create challenges for growth and elder care. And some innovations could be used in harmful ways, including for war. 

Even so, these forces could align in a profoundly beneficial way for humanity and for businesses. Investment not only in carbon abatement but also in adapting to the climate of the future could stabilize living and economic conditions. Changing demographics could alter the resource consumption patterns that put pressure on the climate and the environment. Innovation could create a clean, low-cost energy system. With the application of AI and quantum computing to food systems and to medicine, quality of life could increase, extending the average lifespan.

Businesses tend not to think this far ahead, but many companies have had successful histories over more than 60 years, and most business leaders want to steward their companies toward lasting success. Companies with critical operations in climate-exposed areas will need to think about how to protect them. For sectors like agriculture, banking, insurance, and power, adaptation will be central to strategic planning. For other sectors, climate forces may be felt indirectly, but companies will still need to plan for their impact.

Companies that adapt to the coming population changes sooner can benefit from being ahead of the curve. They will need to accommodate an aging workforce while also competing to attract a smaller pool of early-career workers. Making innovation a big part of companies’ strategies will position them for success on many timescales.

Even without specific plans, business leaders should begin to spread awareness and understanding of these forces. By working together, they can build momentum toward success by the time the Quarterly celebrates its 120th anniversary.

ABOUT THIS AUTHOR

Humayun Tai is a senior partner in McKinsey’s New York office.