On this page: Opportunity | Solution | Impact
The Opportunity
Reducing farming’s carbon footprint
AGCO Corporation is a global leader in the design, manufacture and distribution of agricultural machinery and precision ag technology. It operates manufacturing sites across Europe, Asia, South America, and the US, selling under the Fendt, Massey Ferguson, and Valtra brands. The global company is on a mission to revolutionize farming and significantly cut down its environmental footprint, with ambitious goals to slash its Scope 1 and 2 emissions 55 percent by 2033 and 90 percent by 2050.
“The agriculture industry is a key part of the solution to combatting climate change,” says AGCO Senior Vice President, General Counsel, Chief ESG Officer, and Corporate Secretary Roger Batkin. “We’ve committed to bringing smart solutions to our farmer customers to increase sustainable agricultural practices across the globe.”
The agriculture industry is a key part of the solution to combatting climate change.
To address these challenges, AGCO has utilized Catalyst Zero, McKinsey’s end-to-end decarbonization tool that identifies cost-effective options to reduce carbon emissions. AGCO collaborated with the Catalyst Zero team to create an integrated and automated version of its marginal abatement cost curve (MACC) generator, which compares the cost and emissions impact of different traditional and tech-enabled abatement strategies.
The Solution
Transparent carbon accounting powered by AI
To streamline this process and address challenges more systemically, Catalyst Zero partnered with Amazon Web Services (AWS), AGCO’s existing cloud solutions platform. McKinsey and AWS worked together to build and put in place Catalyst Zero’s latest MACC capability, which solves the challenge of often messy and inconsistently formatted raw data coming in.
The only way companies are really going to abate carbon is to know exactly where it’s coming from and be able to account for it.
Using machine learning, advanced analytics, and AI, Catalyst Zero reduces the time and cost to build or update MACCs by up to 90 percent. It works by processing 300,000 emissions data points from multiple enterprise resource planning (ERP) systems with minimal manual intervention.
“We are helping AGCO work toward fulfilling its decarbonization commitments,” says McKinsey Partner Eric Hannon. “The only way companies are really going to abate carbon is to know exactly where it’s coming from and be able to account for it. We’re helping AGCO lay that foundation for unprecedented granularity around its carbon baseline, which in turn enables selection of the most impactful and financially viable decarbonization levers.”
Catalyst Zero’s web-based interface offers easy access to baseline carbon data, granular MACCs, and detailed insights into decarbonization levers. Powered by machine learning, it automatically converts raw data from AGCO’s ERP systems into actionable decarbonization initiatives or precise emission data, making it easier for executives to stay updated with fast-changing climate technologies and economics.
To date, McKinsey has generated over 5,000 MACCs across geographies and industries, underscoring the firm’s broad and deep experience in decarbonization strategies.
“Our decarbonization experts and analytic tools help ensure the right data is in place to start,” says McKinsey Senior Asset Leader Tim Vroman. “This makes sense of unstructured data and quickly identifies emission hot spots.”
The Impact
A more strategic and efficient decarbonization process
AGCO’s use of Catalyst Zero is both improving the accuracy of emissions baselining and decarbonization analytics and greatly accelerating the process. Using the Catalyst Zero tool, AGCO can obtain insights in just one week, significantly cutting down on the previous eight-week process.
In addition to improving operational efficiency and sustainability reporting, this is also enhancing strategic decision-making. By deepening its understanding of decarbonization strategy across various business units and regions, AGCO will be able to execute these initiatives more cost-efficiently. For example, the tool is helping identify a 10 percent reduction in costs associated with reaching AGCO’s decarbonization target.
AGCO’s journey with Catalyst Zero is a testament to the power of innovative technology in driving sustainability and operational excellence.
The partnership with McKinsey and AWS is also enhancing AGCO’s capabilities, providing sustainability training for key functions like purchasing, product engineering, and IT. In tandem, AGCO is focusing on implementing key decarbonization initiatives, such as transitioning to electrified tractors and identifying tech-enabled levers to reduce Scope 3 emissions in its supply chain.
“AGCO’s journey with Catalyst Zero is a testament to the power of innovative technology in driving sustainability and operational excellence,” says AGCO Global Sustainability Manager Haley Engelberth. “This not only saves countless hours in reporting and updating; it also helps move everyone to action more quickly.”
Let’s Connect
Cindy Levy
Eric Hannon
