First, the good news. Extreme poverty has dropped sharply around the world in the past 30 years: Almost 40% of the global population lived in extreme poverty in 1990; now it’s less than 10%. That translates to hundreds of millions of people freed from hunger and severe deprivation.
Yet, the future merits a higher bar. How many people can meet all of their basic needs, including decent housing, healthcare and education? How many are still one emergency away from slipping back? How many have the resources to choose how they live, work and spend? As leaders of the G20 gather in Delhi, these questions should be top of mind.
According to McKinsey Global Institute research, approximately 4.7 billion people worldwide, including 2.6 billion in the G20, live below the economic ‘empowerment line’. This empowerment line is based on each country’s cost of living and is defined as being able to afford the essentials listed above; for India, the empowerment line is set at $12 a day (in purchasing power parity terms). Despite our remarkable economic achievements over the past three decades, more than a billion Indians live below this standard. At the same time, India and the rest of the G20 face another pressing imperative: limiting global warming.
The moment calls for addressing both issues. We believe that jump-starting sustainable and inclusive growth can improve the quality of life for people and be of aid to the planet. This will not be easy—and it certainly will not be cheap.
McKinsey estimates that reducing G20 emissions by half by the end of the decade, in line with the 2015 Paris Agreement, will require its members to invest $35 trillion towards closing the net-zero investment gap, over and above current spending. Lifting everyone to the empowerment threshold within the same time frame would mean boosting the spending power of the poorest segments by $21 trillion. Together, this adds up to about 6% of the G20’s annual GDP.
Economic growth is the single biggest determinant of how far we can get: Baseline economic growth of 2.5% paired with accelerating growth through higher productivity and innovation could bridge about half the G20’s combined empowerment and net zero investment gap. This would lift incomes, create many better- paying jobs, and ensure workers are equipped to step into them. It would also expand the financing capacity to pay for the net-zero transition and spur innovation to reduce its costs.
The private sector’s contribution is critical: Closing the empowerment gap without involving businesses would be impossible. In India, we estimate that growth and accelerating business-led innovation could close about 90% of the empowerment gap. That would put us well within reach of delivering a decent standard of living for all by 2030. Businesses are also critical to the financing and innovation that the net-zero transition requires.
Fortunately, there is momentum to build on. Private-sector initiatives can be sustainable, inclusive and profitable. For example, India is a leader in electric two-wheelers, which already account for about 15% of the country’s two-wheeler sales; with costs falling and support rising, that share could become 70% by 2030. Meanwhile, the scale-up of solar energy has been truly remarkable, rising 6,000-fold from 2010 to 2022. Cheap and easy access to solar energy—most of it from private sources—means less drudgery for women and girls, fewer instances of respiratory ailments associated with smoky indoor cooking, and more time for children to study. In healthcare, there are also successful private-sector initiatives. Apollo Hospitals, for example, has created an integrated digital network to provide accessible and affordable services of high quality, while also providing a platform for growth and profitability.
India can also learn from success stories in other countries: Consider Türkiye’s public-private affordable housing projects, or Renault and BMW’s efforts to create truly circular production systems that minimize waste, energy use and emissions. India should also watch closely how steelmaker Arcelor Mittal advances its decarbonization strategy, including its planned construction of a zero-carbon plant in Spain.
None of this diminishes the role of government: Local, state, and national governments create the conditions under which businesses operate. They can also bring innovation to basic services. In fact, other countries are taking notice of how Aadhaar, India’s digital identification infrastructure, has helped deliver government benefits more efficiently and fostered financial inclusion. The city of Indore in Madhya Pradesh could be a role model for many other urban municipal authorities in developing countries in how to transform the management of trash and human waste.
The most sustainable solutions, in all senses, come when businesses and governments work together. In India—and across the G20 in general—accelerating sustainable and inclusive growth is everyone’s business.
This article originally appeared in Mint.