Orsted: world-leading sustainability

Orsted energy company logo

Who is the world’s most sustainable company? What sector are they in? How do you even achieve sustainability? And how long does it take to become so sustainable?

There’s a lot to unpack here. But the best way to answer these questions is to think about why we need companies to be more sustainable in the first place.

As humans, we’ve fuelled the rapid development of modern economies by unearthing and burning ancient organisms, or fossil fuels.

Oil, coal, natural gas stoked our first steam engines, power plants, airplanes and cars. They played a role in the creation of practically every modern product you can imagine.

While fossil fuels aren’t necessary for our wellbeing, we’ve arranged things so they’d underpin our modern lives.

But there’s a problem with fossil fuels: we’re burning too much of them too fast, releasing tens of billions of tons of climate-warming gases into the air every year.

How fast are we burning them? Well, what took nature hundreds of millions of years to bury, we dug up and put back into the atmosphere in a century or two.

A more precise way to measure the breakneck speed of our combustion is to look at the concentration of CO2 in the atmosphere. It turns out we’ve increased atmospheric CO2 levels by a factor of 1.5 in a century and a half.

To give real meaning to these numbers, it’s best to find a comparable time in Earth’s history.

As it turns out, the most ‘recent’ time when CO2 levels were close to what they are today was 3.3 million years ago. (During that period, CO2 levels were still 10-20% lower than today.)

Temperatures on Earth 3.3 million years ago were 3°C warmer and sea levels were 20 metres higher.

Now, you might wonder why we’re not seeing these effects today with our higher CO2 levels. The answer is, it takes decades and centuries for Earth to catch up to a rapid spike in CO2 concentrations.

In other words, this window into the distant past tells us about the future, not the present.

But who’s burning all that fuel?

We know that three quarters of greenhouse gas emissions come from burning fossil fuels for power, heat, cooling, transport, and industrial processes.

On the production side, only 100 fossil fuel companies are responsible for 71% of emissions. On the consumption side, 0.54% of the world’s population (40 million people) emit 14% of lifestyle-related global greenhouse gases.

Simply put, our fossil fuel-powered affluent lives are at the heart of climate change.

The scientific community is clear and vocal about the mechanics of the problem. They’re also clear about the solution: keep fossil fuels in the ground.

But to do that, you need people, governments and businesses who dare to care about each other and the environment.

The world’s most sustainable company knows that technology is the application of scientific knowledge. In this case, that knowledge is nested in climate science.

And they know about that science from experience, because they used to be in the business of burning fossil fuels.

You see, the world’s most sustainable company is an energy company based in one of the world’s most affluent nations.

That company is the Danish renewable energy provider Orsted.

Born in 1972 as Dansk Naturgas, later renamed DONG (Danish Oil and Natural Gas), the formerly state-owned energy company relied heavily on fossil fuels from the outset.

In the mid-70s, however, OPEC’s oil embargo hit the company’s bottom line. And so, DONG had to transition from oil to a cheaper fuel. Along came coal.

As a result, DONG quickly became a literal dark cloud over Denmark’s history, single-handedly emitting one-third of the country’s total CO2 emissions by the 2000s.

Fossil fuel companies have known about the implications of climate change for a long time. So, the choice for any energy business going into the 21st century was a straightforward one: merely acknowledge that change is inevitable or actually change.

In 2009, DONG chose the latter and came up with a plan. By 2040, they would flip their energy generation mix from 85% fossil fuel and 15% renewables to 85% renewables and 15% fossil fuels.

In general, things went well. So, a few years down the line, Orsted added some new targets. By 2020, they would,

  • reduce the carbon intensity of their generation by 44% (compared to 2006); and
  • reduce the cost of their offshore wind by 35-40% (compared to 2012).

They achieved both targets several years early. In fact, things were going so well, science-based targets became like collectible items to the company. Orsted vowed they would,

  • only use certified sustainable wooden biomass for their CHP plants by 2020;
  • phase out coal by 2023;
  • turn their car fleet 100% electric by 2025;
  • install 30GW of renewable energy by 2030 (enough for 55 million people);
  • halve their supply chain emissions by 2032;
  • and become entirely carbon neutral by 2040.

These newer and bolder targets aren’t just pipe dreams either.

They were borne out of remarkable early successes achieved by both the company and the global renewable energy market.

During this past decade, the levelized cost of electricity from wind dropped 70%. Solar plunged by 90%. These made solar and onshore wind the cheapest source of new-build generation for two-thirds of the world.

Rising carbon taxes further tipped the scale towards renewables.

(Unfortunately, none of this means we’re on track to reach the climate goals of the Paris Agreement. But, at least, the potential is there for large-scale solar, onshore and offshore development.)

Meanwhile, DONG renamed itself Orsted and began speeding past its own sustainability targets – carving out a 30% global market share in offshore wind along the way.

As of today, Orsted has reduced its coal consumption by 91% and reduced its carbon emission by 86% (compared to 2006).

That 85/15 target?

Orsted achieved it 20 years early. The company now generates 86% of its energy from renewable sources, all thanks to nearly 10GW of installed renewable capacity. (That’s enough to meet the energy needs of 15 million people.)

In a short decade, Orsted pulled off a truly Cinderella-type transformation.

As CEO of the company Henrik Poulsen puts it,

“In the past 10 years, we have transformed from a company that had fossil fuels at the core of its business to being essentially a pure-play renewable energy company.

What we have shown is that you can be much more radical than you might think.”

It’s very telling that when Corporate Knights first launched its Global 100 list of the world’s most sustainable companies five years ago, Orsted wasn’t even included.

Today, they sit at the top as the world’s most sustainable company.

The question you may be asking right now is whether any of this pays. The answer is, yes.

Since the company joined the stock market in 2016, its shares skyrocketed. The share price during the initial public offering was 235 Danish kroners. Last we checked (July 20, 2020), it was 879 DKK per share.

Essentially, renewable energy is a good investment, because investing in a truly sustainable energy company is an investment in the environment. And that’s a savvy way to spend your money.

But what’s equally striking about the company is the clarity of their communications.

Reading their sustainability report is like listening to a distinguished professor explain climate science in the clearest possible way. Orsted’s public-facing messaging is highly accessible.

Their nationally recognised disclosures also read like confessions, which tells you exactly what it is they’re trying to avoid: greenwashing.

For instance, they admit it’s difficult to substitute oil for starting up their CHP machines. Neither do they have all the solutions to make their offshore operations fully carbon neutral. They also regret to admit that they’re currently tied into long-standing gas purchase agreements.

They are by no means perfect.

Still, we’re more likely to forgive these imperfections when operational transparency is backed by real actions.

As a former fossil fuel company, Orsted is headquartered in one of the world’s most affluent nations. By definition, they used to embody the root problem of climate change.

But by recognising this, and turning things around, they’ve shown the world that a better future is indeed possible. That’s how you become the world’s most sustainable company.

2020-07-21T19:28:40+00:00July 21st, 2020|Dare to Care, Inspiration, Work|

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