The leader’s

guide to value
in motion
Get ready for AI, climate change and
other megatrends to shift value pools,
reconfigure industries and redefine the
top management agenda.

by Ryan Hawk, Jeroen van Hoof,

Nicki Wakefield and Allen Webb

April 29, 2025

Preface In early 2023, PwC’s 26th Annual Global CEO Survey revealed
something striking: 40% of the 4,410 CEOs surveyed said their
organisations would not be economically viable in ten years’
time if they continued on their current course.

A lot has happened since then: we’ve seen a surge in generative AI investment,
capabilities and deployment. We’ve sweated through the hottest years on record—
first in 2023, and then again in 2024. Geopolitical tension is on the rise, and
globalisation is in retreat. Developments like these make it increasingly urgent to
reinvent your business so you can be among the winners today and tomorrow.

That urgency also has shaped PwC’s agenda for management research. We’ve
continued asking CEOs about the longevity of their companies—the percentage
who say if they don’t change, they’ll die is rising. We’ve looked at corporate
performance; it’s a winner-takes-most world, with leaders making mutually
reinforcing investments to drive innovation, speed and flexibility. And we’ve
assessed the changing shape of global industries. The ‘Value in motion’ initiative
is a critical next step in our effort to help leaders navigate this fast-shifting
environment. It shows that:

• As megatrends collide, industries are reconfiguring. How we move, feed and care
for ourselves; build and make things; and fuel society—they’re all in transition.
So is how we fund and insure, connect and compute, and govern and serve to
enable those transitions. Companies will be reinventing their business models in
response, with more than US$7 trillion changing hands in 2025 alone.
• The value in motion within and across these market spaces is creating exciting
growth opportunities for companies, along with uncertainties, as the world
navigates divergent scenarios. AI-driven productivity growth, for example, could
boost the size of the 2035 global economy by as much as 15% or as little as 1%
versus today’s expectations.
• Companies will thrive during the decade ahead by innovating their business,
operating and energy models; by competing in new ways on technology,
on trust and for sources of scarce supply; and by turning obstacles into
enablers of reinvention.
• All this places new demands on leaders: embracing uncertainty. Understanding
how interconnected the forces driving change are. Thinking exponentially about
the possibilities ahead. And then mobilising resources to seize them.

These findings rest on more than 12 months of PwC research. We hope the
conclusions from that research—summarised in the perspective that follows; in
‘Reinventing your company for growth’; and in the ‘Value in motion’ immersive
digital experience—will help you and your leadership team set an exciting agenda
for the dynamic decade ahead.

Marco Amitrano
Alliance Senior Partner,
PwC UK and Middle East

Paul Griggs
Senior Partner,
PwC US

Petra Justenhoven
Senior Partner and Chair,
PwC Europe and PwC Germany

Mohamed Kande
Global Chairman,
PricewaterhouseCoopers
International Limited
 01

Introduction
 The leader’s guide to value in motion | 01 Introduction PwC 5

Introduction Global business leaders are rightly preoccupied with tariffs,

trade and geopolitics. Uncertainties about market access,
input costs and supply chain viability pose big questions about
near-term company performance. They also hold an additional
danger: the potential to take over the top management agenda,
overshadowing forces that will have an enormous long-term
impact and that need attention now.

Our aim in this article, which builds on multiple PwC research efforts and untold
thousands of hours of working together with our clients, is to provide an antidote:
a simple, rigorously substantiated guide that helps leaders navigate the value in
motion in the global economy. The starting point is understanding what’s really
going on, which is actually pretty straightforward.

Three massive discontinuities are taking place simultaneously. One of them—

the fracturing of the post–Cold War geopolitical order—is making headlines every
day. The other two are deep economic shifts that are already reshaping the global
growth environment: artificial intelligence and physical climate risk. AI is creating
the potential for a productivity revolution to supercharge growth. Simultaneously,
the rising frequency of flooding, drought, heat stress, wildfires and other physical
climate risks is about to impact some of our baseline assumptions about economic
growth. This article focuses primarily on these economic changes, which are a big
deal for global business leaders. Despite all the net-zero pledges, despite the
Business Roundtable’s revised Statement on the Purpose of a Corporation, despite
principled withdrawals from Russia following its Ukraine invasion, growth remains
one of the most, if not the most, important priorities and performance metrics for
CEOs everywhere.

Innovation is catalysed by both opportunities and constraints. And it will emerge

as AI and climate change interact with each other and with other advanced
technologies, with fracturing geopolitics, and with other megatrends such as ageing
populations and social inequality. The magnitude of the forces at work will spur
fundamental innovations in business, operating and energy models. Taken together,
 The leader’s guide to value in motion | 01 Introduction PwC 6

About the research these forces hold the potential to reconfigure the global industrial system into what
This article rests on we’ve begun calling new domains of growth: zones of economic activity and value
more than 12 months creation, where companies collaborate in imaginative ways to meet human needs.  
of research led by Allen
Webb, managing director
and Insights Leader for Enormous amounts of value will be in motion within and across these domains,
PwC Global Thought
Leadership (GTL). creating both exciting growth opportunities and significant uncertainties. These
Contributors to the core will directly influence the shape of the domains and, ultimately, whether the world
research effort included
capability centres from becomes a more or less prosperous place. Over the past 12 months, PwC has sought
around the PwC network: to quantify the impact of all this on the global economy of 2035. That time frame is
economics (PwC UK);
sustainability, climate highly relevant for today’s leaders, because the decisions and actions they take now
excellence and ecosystem will shape the outcomes of the next ten years, even though that time frame is beyond
strategy (PwC Germany);
climate risk modelling the typical detailed planning horizon.
and Responsible AI
(PwC US); and the GTL’s
research and editorial What’s the real productivity potential of AI? How does it compare to the costs of
teams. Industry experts physical climate risk, and of transitioning to a lower-carbon future? What’s the
on PwC’s Global Clients
& Industries (GC&I) team scale and scope of the domains forming around how we move, feed ourselves,
and thought leaders on build and make things, care for ourselves and others, and fuel and power society?
issues including business
model reinvention; How do we fund and insure, connect and compute, and govern and serve to enable
data, technology and AI; industry reconfiguration? The answers to all these questions lie at the heart of the
sustainability; and trust
all provided insights future leaders must navigate. By creating an integrated economic fact base and
that were critical to the using it to inform three plausible scenarios for growth, we’ve sought to quantify the
initiative. For additional
detail on research uncertainty facing leaders. Doing so provides a useful alternative to the hyperbole
methodology and and guesswork that too often characterise conversations about the future.
contributors, see: ‘Value
in motion: Methodology.’
The leader’s guide to value in motion | 01 Introduction PwC 7

Our research shows that the

global economy could be nearly

15%
bigger than expected in 2035 if AI
delivers a jolt to productivity comparable
to the productivity booms ignited in
the past by foundational technologies
like electricity.
Such gains would depend on the fundamental rewiring of functions and tasks in
organisations, which will come about only if the AI really works, it’s responsibly
deployed, and it’s therefore deeply trusted. The AI growth dividend also depends
in part on the global economy replacing the tasks AI takes over with new ones for
people to perform.

AI will also require a lot of electricity. Happily, analysis undertaken by PwC experts
(see ‘Could net-zero AI become a reality?’) suggests that over time, the additional
energy required by data centres for expanded AI adoption and productivity growth
could be offset by AI-identified energy-efficiency opportunities in the rest of the
economy. That said, AI-driven productivity benefits are far from certain. Under
less optimistic adoption and task creation scenarios, the AI dividend could drop—
to 8%, or even 1%.
The leader’s guide to value in motion | 01 Introduction PwC 8

Securing a sizeable AI dividend could counteract a range of economic challenges

associated with climate change. The estimated toll of Los Angeles’s January
wildfires—US$250 billion and counting—is a timely sign that climate-linked
events are imposing rising economic costs. Over the next decade, the trajectory of
those costs won’t depend on near-term emissions, according to detailed analysis
by PwC economists and climate-risk modelling experts. Recent academic research
from the Potsdam Institute for Climate Impact Research in Germany reaches
similar conclusions. Integration of that external research with PwC’s economic
modelling suggests physical climate costs could make the global economy nearly
7% smaller in 2035 than it would be in the baseline, ‘business-as-usual’ model.

Looking out further than 2035, the economic impact of physical climate
risk could fall with more aggressive decarbonisation—which also has costs:

PwC analysis shows that the economic cost of

assets written off, or ‘stranded,’ by decarboni-
sation efforts could exceed 3% of global GDP
by 2035.
Given the magnitude of change required for simultaneous, large-scale
decarbonisation and productivity growth from AI, we describe this scenario as
a Trust-Based Transformation. Other outcomes are also possible—like a Tense
Transition, in which a smaller AI dividend is largely cancelled out by climate costs,
or Turbulent Times, where growth dips as tech disappoints and sustainability
efforts fall by the wayside. Which scenario actually comes to pass will depend
partly on the direct, collective actions of business leaders, and partly on the
geopolitical forces they will be reacting to and, over time, can help shape.

These growth dynamics, and the magnitude of the value at stake, mean that
companies will have to innovate their business, operating and energy models
rapidly. They’ll also need to compete in new ways on technology, on trust and
The leader’s guide to value in motion | 01 Introduction PwC 9

for sources of scarce supply. And they’ll need new playbooks for transforming
obstacles into enablers of change: by unblocking leaders and resources,
acquiring critical capabilities, and reappraising tax and regulatory strategies.
(For a more detailed description of these moves, see ‘Reinventing your
company for growth.’) To take bold action, leaders will have to adopt fresh
mindsets: embracing uncertainty to make smart choices about where and
how to compete; taking a big-picture view of the forces at work and bringing
it into the top management agenda; and thinking exponentially about the
possibilities before us. Leaders able to think and act in these ways have an
opportunity not just to thrive in any scenario but to tip the scales towards more
promising global outcomes that will boost growth, safeguard the future of the
planet, and make life better for citizens today and for future generations.
 02

Domains
of growth
 The leader’s guide to value in motion | 02 Domains of growth PwC 11

Domains To understand why it’s plausible for new domains of growth to take shape today,
of growth let’s go back to the formation of our industrial system, which took place in a
relatively short period of time in the mid- to late-19th century. Alfred Chandler,
the Harvard Business School historian who brought rigour to the emergence of
managerial capitalism in books such as The Visible Hand, carefully defined the
underlying forces at work: a ‘revolution in transportation and communication’
and a ‘revolution in distribution and production’ took place as the application of
energy—first coal, then oil, gas and electricity—to business activities generated a
wide range of process, product and service innovations.

These 19th-century ‘revolutions’ were serious economic changes: before them,

productivity and economic growth were slow. Afterwards, they rose steadily.
Before them, companies were small. Afterwards, they became large and
professionally managed, necessitating managerial advancements such as the
organisation chart, modern accounting practices and the multidivisional company.
Before them, industries such as the railroads, consumer packaged goods,
department stores and vertically integrated steel and oil production did not
exist. Afterwards, they did—and still do, along with their offspring, such as
aircraft, cars, chemicals and pharmaceuticals.

Changes ahead
Economic shifts like the ones that gave rise to today’s industrial system are
infrequent—they happen maybe once in a century, not once in a decade. Yet
we are standing on the cusp of two.

AI-fuelled productivity growth

The exponential growth in AI capabilities is creating the potential for an
intelligence revolution that could be as significant as the physical one unleashed
in the 1700s by the advent of the steam engine, and extended by the 19th-century
revolutions in transportation, communication, distribution and production.
The leader’s guide to value in motion | 02 Domains of growth PwC 12

There has never been a cognitive

productivity tool like AI, and we’re only
beginning to see what it can do.
When you receive a summary of a video meeting, moments after it ends, with no
human intervention, you’re seeing a mundane but useful example. The AI bot
embedded in your meeting software just saved a colleague 20 minutes or so. Multiply
those savings times tens of millions of meetings every day, and you free up millions
of hours that can be put to better use.

But that’s just scratching the surface. Coming soon: AI ‘agents,’ instructed and
supervised by humans, to handle routine customer inquiries, produce first drafts
of software code and turn human-powered design ideas into prototypes. Already,
Unilever’s legal team is using the company’s AI systems to boost efficiency,
streamline work and reduce reliance on external service providers for contract
drafting, compliance audits and IP-related issues. Similarly, Samsung uses AI
chatbots for customer service across its product lines, including mobile devices and
home appliances. These bots help answer questions and provide technical support.
SoftBank is using AI tools to help develop new technology by creating prototype
models from ideas provided by humans.

Then, consider the way all these different technologies interact with one another.
AI may prove an amplifier and an accelerant of other new technologies, including
biotechnology and advanced sensors, and smart materials. For instance, AI’s ability
to analyse large amounts of data, make predictions and automate tasks holds the
potential to dramatically enhance drug discovery, diagnostics, energy efficiency,
predictive maintenance in manufacturing, quality control processes, robotics, traffic
and logistics optimisation, and much more. Japan’s Yaskawa Electric, for example,
uses AI in combination with robotics technologies to enhance the capabilities
of its industrial robots. AI enables more precise and adaptive manufacturing
processes, improving automation and efficiency in production environments.
The State Grid Corporation of China (SGCC), one of the world’s largest utility
The leader’s guide to value in motion | 02 Domains of growth PwC 13

companies, uses AI alongside smart grids to better analyse and predict energy
consumption patterns and to balance power supply from multiple sources.

What we’re talking about is an AI-driven improvement in how resources like

workers, machines and materials are used together to produce things. There’s
a healthy debate underway about the pace and extent of economic impact that
AI will generate. How big could it be? PwC economists defined an upper bound
by bringing AI adoption estimates, along with an associated productivity ‘uplift’
coefficient derived from recent academic research, into their general equilibrium
model. They found that a positive AI ‘shock’ of this magnitude could boost 2035 real
global GDP by nearly 15% over ‘no-shock’ estimates. That’s more than 1 percentage
point of incremental growth per year—on par with the growth increment the world
began enjoying with 19th-century industrialisation. However, we’d be the first to
acknowledge that this is a thought experiment, not a forecast.

Climate constraints
There’s a counterweight to the AI-fuelled productivity dividend: the carbon-intensive
growth model that has long fuelled global development has changed the climate in
ways that are starting to affect economic health.

Just as an instant meeting summary brings the productivity potential of AI to

life, the rising frequency and severity of cyclones, droughts, floods, heatwaves,
hurricanes, tornadoes and wildfires make physical climate risk extremely real. So do
the hundreds of billions in climate-related losses reported by insurance companies,
despite rapidly rising rates in risky geographies, and isolated examples of climate-
related corporate distress like the bankruptcy of Pacific Gas and Electric (PG&E)
following the 2018 Camp Fire in Northern California.

PwC climate experts and economists sought to quantify the magnitude of that
impact. For example, we looked at the productivity impact of heat stress, the
impact of warming on arable land and the impact of factors like these on economic
growth under different emissions scenarios to 2035. One inescapable conclusion
The leader’s guide to value in motion | 02 Domains of growth PwC 14

was that there isn’t much we can do to affect the climate-related damage the planet
experiences over the next ten years: the results of our analysis were nearly identical
regardless of what emissions pathway we modelled. A second was that it is devilishly
difficult to translate quite granular, local climate risk possibilities into systematic
global macroeconomic results. Simply put, we weren’t able to capture a full economic
picture through the aggregation of disconnected, bottoms-up results.

Academic researchers have been labouring to quantify more precisely the wide range
of climate hazards and macroeconomic transmission mechanisms. One recent study
by researchers at the Potsdam Institute, whose methodology and data are still under
review, was incorporated late last year into the forward-looking scenarios of the
Network for Greening the Financial System (NGFS), a consortium of more than 100
central banks and financial supervisors. We followed the NGFS’s lead to create a
conservative baseline for economic growth. Without this adjustment, and without
The leader’s guide to value in motion | 02 Domains of growth PwC 15

an AI-driven productivity dividend, PwC economists anticipated real global GDP in

2035 to be about 33% larger than it is today. With the climate damage adjustment,
that figure drops to roughly 26%.

Innovation and industry reconfiguration

To briefly recap: AI capabilities—on their own and in combination with other
emerging advanced technologies—create enormous new possibilities for innovation,
productivity growth and economic uplift. Simultaneously, physical climate risk will
soon impose meaningful, new economic constraints. The way those forces come
together will create an impetus for change that we believe will reconfigure the
global industrial system. That bold claim rests not just on AI and climate risk, but
also on the fact that they will interact with other forces in demand, supply and
the potential for companies to meet human needs through broader and deeper
ecosystem collaboration.

Demand
As powerful megatrends propel the global economy, preferences are evolving and
consumers are demanding new value propositions. Ageing societies and increasing
income inequality, for example, are giving rise to needs for in-home services and
delivery; concierge healthcare; and ‘barbell’-shaped product, brand and pricing
architectures. Simultaneously, AI is enabling faster, deeper data analysis, as well as
enhanced design, rapid prototyping and testing. The Japanese technology company
Teijin, for example, uses AI algorithms to analyse large volumes of data, including
historical sales data, market trends and customer feedback. These algorithms
identify patterns and correlations that might not be immediately apparent to human
analysts. Machine learning models then help the company to better predict demand
patterns and optimise inventory levels. Coca-Cola, meanwhile, is using TensorFlow,
an open-source machine learning development platform, to analyse large datasets,
derive insights and improve marketing strategies. Customers will expect greater
variety, customisation and quality as a result.
The leader’s guide to value in motion | 02 Domains of growth PwC 16

Heightened climate concerns are creating additional pressures. A 2024 PwC survey
found that global consumers are ready to pay extra to support sustainability—as high
as 9.7% more for sustainably produced or sourced goods. As physical climate risk
imposes growing costs in the years ahead, it’s easy to imagine further impetus for
new value propositions, because consumers increasingly will recognise connections
among human behaviour, climate risk, and macro and personal economic outcomes.

Supply
Creating new customer value propositions amid tricky cross-currents will
increase stress on organisations. Geopolitical fragmentation is challenging the
global value-creation system in which today’s business leaders grew up. Potential
consequences include market disruption, broken value chains, and reduced
access to scarce materials such as copper and lithium for companies in some
regions. Ageing populations in most western economies and much of East Asia
The leader’s guide to value in motion | 02 Domains of growth PwC 17

are driving skills shortages, boosting costs, and creating a need for organisational
and operational innovation to make better use of technology. And physical
climate risk is disrupting supply chains and increasing production costs.

Few companies have all the capabilities they need to respond to these forces.
Fortunately, they don’t have to. Digitisation has been reducing transaction costs,
enabling companies to integrate with customers and suppliers, blurring traditional
sector boundaries, and giving rise to new business models. Those dynamics brought
us ride-sharing, peer-to-peer property rental, and other disruptive propositions,
and they hold great potential for large, existing organisations that seek to compete
more effectively by borrowing the capabilities of partners.

AI can further reduce the cost of interacting with other organisations—

decreasing search and information costs, analysing historical pricing data to
streamline negotiations, facilitating scheduling and communications, and
monitoring compliance and agreements. Consider, for example, the potential of
AI to simplify real-time data and insight exchanges between drug companies and
regulators, enabling even more targeted discovery efforts and reducing late-stage
surprises. Or the global retailer using AI to speed decision-making and reduce
downtime in its supply chain operations, which is smoothing interactions with a
wide range of ecosystem partners. Not flashy, but it can be an invaluable tool for
collaborative effectiveness.

Domains of human need

Delivering new value propositions creates a growing need for companies to
evolve their value-creation models, often in collaboration with organisations from
far-flung industries. What does this look like in practice? Consider the bustle of
activity as carmakers, battery innovators, tech players, charging station operators,
and many others develop electric vehicles and their supporting infrastructure.
Dozens of partnerships and other arrangements are bringing disparate players
together to serve changing customer needs. By drawing on the immense power of
collaborative ecosystems, these companies are accomplishing things together they
never could alone.
The leader’s guide to value in motion | 02 Domains of growth PwC 18

Now zoom out, and you can see a constellation of players trying to serve a basic
human need: how we move. At a time of uncertainty and transition, focusing on
basic needs is quite clarifying. What customers want, need, expect and prefer—and
how companies, along and with others, meet those needs—is changing in difficult-
to-predict ways. But the basic human needs—food, shelter, healthcare, mobility,
affordable goods—remain. So does the need for energy, funding, connectivity and
computing power, and governance so our industrial system can meet these needs.

Focusing on human needs is a different way of looking at our industrial system. It

organises that system into broader and deeper value pools (‘domains’) in which
companies meet human needs by combining their own capabilities with, and
engaging with, ecosystem partners in new ways. Those new value pools will reward
heightened specialisation with new technology combinations that create positive
feedback cycles as well as products and services that weren’t previously possible.
Aerobotics, a precision-farming innovator based in South Africa, has integrated a
new array of tools and capabilities: namely, drones, cameras, polymers, brushless
motors, communications infrastructure, software, AI pattern recognition, machine
vision, data analytics, knowledge about when fruit is ripe, and the ability to
differentiate between pests and harmless insects. This combination of necessary
technology has now surpassed a threshold of economic viability, and low transaction
costs have enabled Aerobotics to assemble a new value proposition.

We bring this view to life analytically by mapping traditional economic sectors today
(on the left side of the chart on the next page) to those core human needs (on the
right), scaled up to 2035.
 The leader’s guide to value in motion | 02 Domains of growth PwC 19

As industries reconfigure, new domains

of growth are emerging

Industries and sectors, 2023 Domains, 2035

Total value of sectors Total value of domains
$105.28tn $132.54tn

Agriculture, forestry and fishing

Mining and quarrying Make
Manufacturing
Energy utilities
Build
Water and waste
Construction Feed
Wholesale and retail
Transportation and storage
Care
Hospitality Move
Information and communication Fuel and Power
Financial services
Govern and Serve
Real estate
Professional, scientific and technical services Fund and Insure
Public administration and defence
Education Connect and Compute
Human health and social work Other
Arts, entertainment and recreation

Source: PwC research and analysis

This simplified graphic suggests just how much value will be in motion amid the
large-scale reconfiguration underway. Because these domains bring together a wide
range of economic sectors, they are naturally larger than the traditional sectors and
create new growth opportunities for a wide range of companies within and across
them. That is why we call them domains of growth.
 03

Opportunities
and uncertainties
 The leader’s guide to value in motion | 03 Opportunities and uncertainties PwC 21

Opportunities The fragmenting and recombining lines in the chart speak to two fundamental
and realities at the heart of industry reconfiguration. First, opportunities. Industries and
uncertainties companies don’t change for the sake of change. They evolve as new market dynamics
alter the set of available opportunities, as leaders invent and seize new possibilities,
and as competitors respond with moves of their own. Second, uncertainty. Massive
as the impetus for reconfiguration is, its pace and extent, particularly over the next
decade, is uncertain. We’ve tried to capture the implications of that uncertainty by
developing three divergent scenarios for future growth.

Opportunities within and across domains

To understand what could happen within domains, consider how we build:
As technology creates new opportunities to construct and operate buildings more
efficiently, traditional activities such as real estate, construction, and building
management will be joined by innovation spaces such as smart, sustainable
buildings; build tech and data; and smart city infrastructure. For example, IKEA,
the Swedish housewares manufacturer and retailer, has ventured into urban
planning and smart city solutions through initiatives underpinned by AI-enabled
data insights, generative design algorithms, and predictive analytics. PwC research
suggests that a decade from now, this grouping of activities could represent US$14
trillion in value added to global GDP.

The domains also hold tremendous potential for companies in sectors such as
financial services and telecommunications, whose businesses cut across and enable
all of them. The telecommunications sector offers a series of compelling possibilities,
such as providing traffic management systems and the related communications
infrastructure for smart cities (how we move), making plays in wearable devices
and telehealth services (how we care), creating connectivity to authenticate
the provenance of the food supply with blockchain technologies (how we feed),
providing real-time data and analytics from connected buildings (how we build),
or scaling cross-border smart grid systems that facilitate regional energy sharing
and trading (how we fuel and power).
The leader’s guide to value in motion | 03 Opportunities and uncertainties PwC 22

Economic uncertainties
Exciting as all this sounds, there’s quite some distance between the industries
of today and the domains of tomorrow. As our colleagues described in a recent
strategy+business article, a multitude of factors—including massive investment
needs, interdependencies among thousands of players, missing regulations, slow
technology adoption, reluctance to abandon legacy assets and massive investment
requirements to replace them—could slow the pace of change. Although these
factors are far too diverse and complex to measure across the global economy, we
undertook to create economic proxies for the wide range of uncertainties at play,
in two ways.

AI uncertainties

Artificial intelligence is only part of the

industry reconfiguration story. Still, if AI
fails to deliver a positive productivity shock,
the range of possibilities for innovation and
growth will diminish, reducing the pace and
extent of domain formation.
A critical variable is whether leaders and companies trust it enough that they become
comfortable fundamentally rewiring the functions and tasks of their organisations.
That trust will rest both on how well the AI works and on the responsibility with
which it is being harnessed within and outside company walls. For AI to disappoint,
it doesn’t need to run amok or take control of humanity. Rather, it comes down
to whether leaders conclude that the risks of deep integration in the core of the
business outweigh the likely productivity benefits.

In addition, there’s the critical question of what leaders and organisations do with
the productivity gains, whatever their size, made possible by AI. In economic terms,
it’s a matter of whether the business innovation sparked by AI creates more new tasks
for people to perform than the number of tasks it destroys.
The leader’s guide to value in motion | 03 Opportunities and uncertainties PwC 23

Decisions and actions by thousands of individual leaders, their organisations,

policy-makers and standard setters will shape the direction of travel. We sought to
capture this variability in our economic modelling in two ways. One was by varying
assumptions about the productivity impacts of AI adoption. The other was by varying
assumptions about task creation as AI takes on tasks currently performed by people.

Climate uncertainties
Climate change brings two critical uncertainties to the decade ahead. One is the
magnitude of economic cost associated with physical climate change. The other is
our response: will the growing economic cost of physical climate risk cause business
and government leaders to decarbonise more aggressively? Or will we enter a vicious
cycle in which the growing costs of climate damage undermine our capacity to fund
the decarbonisation that would create more favourable future economic conditions?
Time will tell.
The leader’s guide to value in motion | 03 Opportunities and uncertainties PwC 24

What we can do today is to understand the economics of those choices. In a

previous, separate research effort, PwC highlighted the large gaps between existing
technologies, infrastructure and investment—and the higher levels needed for rapid,
large-scale decarbonisation. (For example, annual clean energy investment would
have to rise substantially from US$1.8 trillion in 2023 to US$4.6 trillion in 2030,
according to International Energy Agency estimates.)

The flip side of uncertainty around the bridging of that gap is uncertainty
about the writing off, or ‘stranding,’ of assets replaced by those new investments.
PwC climate change experts translated data from market-standard climate
transition scenarios (principally from the NGFS and the International Energy
Agency) into a range of possibilities about renewable energy ratios, prices for fossil
versus renewable energy sources, and stranded assets over the decade ahead.
Our economists then brought this data into their general equilibrium model. This
enabled them to estimate the cost under different decarbonisation scenarios of
retiring carbon-intensive assets used for activities such as electricity generation,
manufacturing and mining. The general equilibrium model used by our economists
assumes that any stranded assets would be replaced by less-carbon-intensive ones,
creating puts and takes in terms of sector-level investment, consumption, and output
for different scenarios.
 04

Three
tomorrows
 The leader’s guide to value in motion | 04 Three tomorrows PwC 26

Three Over the decade ahead, the uncertainties we’ve just described will collide and
tomorrows interact with other major forces at work to shape the growth environment. Although
a wide range of outcomes is possible, we’ve focused on three scenarios to bring the
future to life. These scenarios differ from many that abound in management writing,
techno-forecasting, climate science and works of fiction because they only go out to
2035. That’s not enough time for, say, an eco-tech-utopia to emerge, or for acrid skies
and flood zones to dominate the landscape.

But we will build momentum, in the next ten years, towards one of those outcomes—
with significant implications for the operating environment facing global business
leaders. Each scenario is based on different assumptions about the key AI and
climate variables fuelling our economic modelling efforts. All of the scenarios can be
compared against a baseline projection that assumes a ‘business as usual’
approach, in which historical economic trends continue without significant
deviations, over the next decade. The results are not predictions of the future;
they are simply a means of analysing the potential impact of those varied
assumptions on future economic performance.

Trust-Based Transformation
In this scenario, the integration and responsible use of advanced technologies
enables widespread productivity growth and task creation while supporting
sustainable solutions and innovation. Frameworks for trust (including global
standards and cooperation) would be part of this picture. The economic benefits of
AI would significantly exceed the stranded assets costs associated with ambitious
decarbonisation, leading to growth rates higher than our baseline expectations for
economic growth, even adjusting for climate-related economic damages.

Tense Transition
It’s easy to imagine a world where national and regional interests take centre
stage; where sustainability efforts are restrained; and where technology is more
fragmented, less trusted, and less able to deliver on the productivity potential of
AI. Growth would be status quo at best, with AI gains nearly offset by the costs of
The leader’s guide to value in motion | 04 Three tomorrows PwC 27

physical climate change. The energy transition would proceed more slowly,
stranding fewer assets in the near term and setting the stage for larger physical
climate risks in the future.

Turbulent Times
The third scenario assumes a future of atomised (local and individual) interests,
disruptive and divisive technology, and suspended sustainability efforts. Conflicts,
instability and heightening uncertainty could conspire to diminish trust in
technology and the economic benefits it generates; to create tasks more slowly
than they are automated away, reducing employment; and to neglect sustainability
measures at the cost of the future. Tensions over free or fair trade continue to
fracture geopolitical alignments and hinder international collaboration. Growth in
this scenario could dip below the baseline expectations.

In the near-term, tariffs and rising geopolitical tensions seem to be taking us further
from a trust-based world. Perhaps, though, the longer-term economic advantages
of working together will cause the pendulum to swing back. And although it’s
impossible to know now which tomorrow will emerge, the uncertain future in no
way diminishes the importance of the new domains of growth. As Ilya Prigogine, the
Belgian chemist who studied chaos in the physical world, famously said, ‘Uncertainty
is at the very heart of human creativity.’ Indeed, today’s uncertainty is pushing all of
us, as individuals and organisations, to explore exactly the types of new ideas and
solutions that are at the heart of the domains.
 The leader’s guide to value in motion | 04 Three tomorrows PwC 28

Growth opportunities in three scenarios, 2023–35

Baseline,
Expectations for baseline growth 32.6%
business-as-usual
scenario
Physical climate constraints -6.8%

Climate-adjusted baseline 25.8%

Trust-Based
Transformation AI-fuelled productivity growth 14.7%

Assets stranded through

-3.3%
decarbonisation efforts

New growth expectations 37.2%

Tense Transition
AI-fuelled productivity growth 7.7%

Assets stranded through

-2.4%
decarbonisation efforts

New growth expectations 31.1%

Turbulent Times
AI-fuelled productivity growth 0.8%

Assets stranded through

decarbonisation efforts
-1.7%

New growth expectations 24.9%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Source: PwC research and analysis

 05

The reinvention
agenda
 The leader’s guide to value in motion | 05 The reinvention agenda PwC 30

The To prepare for any of the three tomorrows, leaders should get ready now by
reinvention creating a holistic agenda for innovation, competitive advantage and removing
agenda obstacles to reinvention. Many will also need to expand their perspective to
embrace uncertainty, take a systems view of the forces at work and think
exponentially about the possibilities ahead.

Priorities for continual reinvention

System-wide change is underway, and that means companies need to become
as dynamic as the forces at work around them. In practical terms, this means
three things. First is igniting innovation in their business, operating and energy
models. Second is mastering emerging sources of advantage by competing in new
ways on technology, on trust, and for scarce supply. Third is addressing blockers
of reinvention, which often founders on the shoals of inertia, capability gaps,
decision-making breakdowns, or mismatches between business goals and regulatory
realities. Transforming obstacles like these into enablers such as capability-
driven deals, well-aligned tax and regulatory strategies, empowered leaders, and
entrepreneurial organisations will help determine the pace and extent of change
for companies, industries and society. In a companion article, ‘Reinventing your
company for growth,’ we’ve described in more detail how to tackle these priorities,
illustrated by examples of companies who have already embarked on the journey.
 The leader’s guide to value in motion | 05 The reinvention agenda PwC 31

Make the moves

that matter Innovate
your Compete
business on tech
model

ere n
w h at io
Innovate Compete
your on

er y ov

Se
operating trust

ev inn

ize van
model

ad
i te

c o t ag
Ign

mp e
Innovate Compete

et i
your energy for scarce

t iv
model supply

e
Turn
Turnobstacles
obstacles
into enablers
into enablers
Unblock Reappraise
Strengthen
leaders tax and
critical
(and human regulatory
capabilities
capital) strategy

Source: PwC research and analysis

Effective action plans begin with a realistic assessment of a company’s current

state. Because companies perform progressively—today’s performance provides the
foundation for tomorrow’s—some companies will be better positioned than others
to thrive in new growth domains. For example, until lagging companies modernise
their data and address their technical debt, they won’t be able to make full use of
AI, and they’ll struggle to thrive in emerging business ecosystems. The upshot:
companies that are behind now are likely to be further behind later—regardless of
where they choose to compete—unless they have a plan to remediate, then reinvent.
The leader’s guide to value in motion | 05 The reinvention agenda PwC 32

Mindsets for a prosperous future

To act differently, leaders also need to think differently about uncertainty,
the interrelated forces at work and the exponential possibilities ahead.

Embrace uncertainty
Leaders hoping to nurture, build and scale ideas and solutions need to navigate
uncertainty effectively so they can achieve economies of scale and scope, and make
good choices about where to compete.

The size of the domains, magnitude of

opportunity within them, and pace of
innovation will be influenced by the scenario
that takes shape over the decade ahead. It’s
always easier to carve a big slice of a larger pie.
Strategic participation in domains of growth will become even more important
in less favourable scenarios, because players who see beyond traditional industry
and sector lines will be more likely to identify ways to leverage and integrate
their capabilities to gain economies of scope and grab growth opportunities.

At the same time, the attractiveness of specific opportunities will vary based on the
future we choose. Looking again at ‘how we build,’ it’s easier to imagine, say, real-
time data gathering and analysis from networks of connected buildings in a world
of Trust-Based Transformation; or to see the merit of specialised insurance products
to cover risks of building damage due to social instability and cyberattacks in
Turbulent Times. There also are likely to be no-regrets moves for multiple scenarios,
such as the pursuit of building material recycling and intelligent lighting systems.
To illustrate these and other possibilities, we’ve mapped a broader set of forward-
looking opportunities against different states of the world for ‘how we build’ below.
An immersive digital experience maps opportunities for all of the domains.
 The leader’s guide to value in motion | 05 The reinvention agenda PwC 33

Innovating ‘how we build’ in an uncertain world

Trust-Based Transformation Tense Transition Turbulent Times

Cloud-based, AI-enabled time and project Specialised insurance products to cover

management software for architects risks from social instability and cyberattacks

Real-time data gathering and analysis

from connected buildings

Provider of modular construction products

Energy-saving building control for office towers and public buildings

Construction 4.0 consulting firm

Source: PwC research and analysis

Geopolitical uncertainties, with their implications for global business strategies

and for the attractiveness of pursuing market opportunities or conducting
business activities in different regions, are an increasingly important element of
these dynamics.

Take a big-picture view

Leaders who understand the mutually reinforcing nature of the forces at work
today will be better positioned to navigate the dynamic systems they are part
of. They’ll recognise, for example, that AI and other advanced technologies
are broadening and deepening the potential for business and operating model
innovation, both of which will drive industry reconfiguration and put value in
motion. They’ll understand the need to support AI advances and transformations
in mobility, manufacturing and power with investments in energy grids, energy
storage and hydrogen grids, not to mention the use of carbon capture and storage.
The leader’s guide to value in motion | 05 The reinvention agenda PwC 34

They’ll also see that climate risks are heightening the competition for scarce
global resources and elevating the importance of energy innovation, both of
which are reinforcing the transformation of business models, operating models
and industry restructuring. And they’ll appreciate that feedback loops abound,
with business and operating model opportunities stimulating further technology
innovation; energy and supply chain innovation boosting climate resilience; and
industry reconfiguration accelerating the spreading of product, process and service
innovation from leaders to fast followers.

Think exponentially
It’s often been said that one of the great frailties of the human mind is the inability to
understand the exponential function. This is a time for leaders to stretch themselves
and their management teams to break through that limitation. Doing so is crucial,
because there are exponential qualities associated with both AI and its interaction
with other advanced technologies, and with the possibility that climate risks will
compound in a nonlinear fashion. Industry reconfiguration will reflect both of these
effects, making an exponential mindset invaluable for leaders hoping to gain an
advantage on competitors.

An exponential mindset also puts us in a position to recognise that we may be having

the wrong debates about the future we are creating. The question isn’t whether
we can generate enough clean energy to power AI. It’s how to scale and leverage
AI to boost energy efficiency in the economy as a whole. It’s not about whether we
can afford to decarbonise, but about how to channel the productivity and growth
dividend associated with AI into investments today that reduce costly climate risks in
the future. And it isn’t about scarcity and zero-sum gains. It’s about working together
to enable win-win breakthroughs, within and across domains, that create a more
prosperous future.
The leader’s guide to
value in motion
www.pwc.com/leaders-guide-value-in-motion

Authors:
Ryan Hawk
Global and US Industrials and Services Leader, PwC United States

Jeroen van Hoof

Global Energy, Utilities and Resources Leader, PwC Netherlands

Nicki Wakefield
Global Clients and Industries Leader

Allen Webb
Insights Leader and Managing Director in Global Thought Leadership,
PwC United States

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