Case Study / 14 Nov 2011

McKinsey & Company

McKinsey commissioned Trucost to analyze resource risk across a range of sectors.

Trucost provided detailed analysis on the resource dependencies of different sectors for McKinsey’s ‘Resource Revolution: Meeting the world’s energy, materials, food, and water needs’.

Trucost benchmarked 186 FTSE 350 companies on the risk to their profits from the costs of oil, coal, wheat and cotton embedded in their supply chains. This exercise discovered that a 10 percent increase in the price of these resources has a 2 percent impact on pretax profits. Of all these companies, CPG-related sectors were the most affected. In the case of food producers, for example, a 10 percent increase in the price of these commodities had a 13 percent impact on EBITDA.

“With the help of Trucost, we have assessed how the price of a common basket of CPG goods might change if it were to reflect the costs of its environmental impact in terms, for example, of carbon emissions and water use that are currently unpriced in most cases”

Insights

Resource Revolution: Meeting the world’s energy, materials, food, and water needs (publication)