Ørsted, Denmark’s leading energy company, based in Fredericia, is ranked “the world’s most sustainable company” for 2020 by Corporate Knights’ Global 100 Index.
- The Global 100 “World’s Most Sustainable Company” Report 2020
- The Global 100 ‘World’s Most Sustainable Company” Ranking 2020
Ørsted has transformed itself in a decade from being a fossil fuel-based energy company into being a world leader in green energy and sustainable practices.
Henrik Poulsen, CEO of Ørsted says “As the global leader in offshore wind, we’ve substantially grown our business while significantly reducing our carbon emissions. We have reduced our carbon emissions by 86%, and by 2025, we’ll be carbon neutral in our energy generation and operations. We also have a target of achieving a carbon neutral footprint by 2040.”
“Green energy is now cheaper than black energy. This is a real turning point, because green energy has become the economic choice. This gives the world a unique opportunity to take real action against climate change and create a world that runs entirely on green energy.” says Poulsen
Transforming an energy company the size of Ørsted has not been easy, but it was necessary. We made the decision to change our business based on the realisation that fossil fuels were neither environmentally nor financially sustainable. Our key drivers for combating climate change are:
Phase out coal
Our business was initially based on fossil fuels, and we were one of the most coal-intensive energy companies in Europe. But we dismantled our fossil fuel business and now focus entirely on renewables. We’ll completely phase out the use of coal by 2023 and generate nearly 100% green energy by 2025.
Offshore wind energy
We develop offshore wind, onshore wind, solar energy and storage solutions, and are the global leader in offshore wind. Through innovation and large-scale deployment of offshore wind technology, we’ve helped bring down the cost of offshore wind. Today, it’s cheaper than newly built coal- and gas-fired power plants in most parts of the world. It’s a game changer that has lifted the offshore wind industry from a niche to a global and rapidly growing industry with the potential to deliver green energy to hundreds of millions of people.
“While we’re proud and grateful to be ranked the most sustainable company in the world in 2020, we’re also painfully aware that the world must speed up green action to stay below the 1.5°C limit for global warming outlined in the Paris Agreement on climate change.
Countries and businesses must take active, ambitious steps to reduce their emissions and help the environment – and they must act now. We believe that our transformation is proof that change is possible. Join us in creating a world that runs entirely on green energy: https://go.orsted.com/Act-now”
Here is an extract from this year’s report, telling the Ørsted story:
A decade ago, offshore wind power was one of the costliest forms of electricity generation in the world, and even its leading exponent was dominated by fossil fuels – right down to its name.
DONG (Danish Oil and Natural Gas) may have opened what was then the world’s largest offshore wind farm in 2009, but the company was also widely acknowledged – and considered itself – as one of the best developers of coal-fired power plants. Since then, it has undergone one of the business world’s most radical transformations and got itself a new name, Ørsted – after the Danish physicist Hans Christian Ørsted, who discovered electromagnetism in 1820.
“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,” says CEO Henrik Poulsen. “If you look at the transformation of the company, it has been dramatic.”
Asked why he thinks Ørsted topped the Global 100 ranking, he suggests that it could be “the sheer scale of the transformation and the speed – the fact that we have done all this within a decade.” “All this” is having reduced its CO2 emissions by more than 80% since 2006 and earning the title of the most sustainable company on the planet.
The company, which produced 85% of its energy a decade ago from fossil fuels and 15% from renewable energy, has reversed that proportion and has a target to “essentially become carbon neutral” by 2025.
“That was important in terms of being a purpose-driven company,” Poulsen adds, “but it is just as important that we managed to do this while demonstrating good shareholder-value creation and strong return on capital employed. Our return on capital is 300 to 400 basis points higher than the European average. Since Ørsted joined the stock market through the world’s second-biggest initial public offering of 2016, the company’s value has more than doubled to $US 40 billion.
“Running the company just for profit doesn’t make sense, but running it just for a bigger purpose is also not sustainable in the long term. Doing good and doing well must go together.”
The transformation has not been an easy one. “Over the past eight or nine years, we have been gradually disassembling the very core of the company and using the cash from that to accelerate the build-out of our leadership position in offshore wind. It has been a dramatic change. Some people have left when we divested, and others have been part of a huge growth journey.”
While the journey has been challenging at an operational level, the company was at least confident it was heading in the right direction. “We were helped by the underlying trends in society. We need to fundamentally change the global energy system from black to green energy. What we saw as an opportunity is now really required,” Poulsen says.
At the same time, the company can justifiably claim to have played a key role in turning offshore wind from an expensive, unviable but interesting technology to a central part of the mainstream energy mix. “Even five years ago, it was no more than a niche. Now it’s a significant part of the future green-energy system. It’s a transformation not just for our company, but a significant contributor to the broader green energy transformation.”
The industry has developed faster than even those involved thought possible, Poulsen points out. In 2013, the industry set a target of reducing costs for offshore wind by 35 to 40% by 2020, but that was achieved in 2016. “We thought 35 to 40% was an ambitious target, but costs fell much faster than we expected. When we set out to change a decade ago, we thought the transformation to green energy would be complete by 2040. But we will reach that 2040 target 20 years earlier than we originally envisioned.”
Given the scale and speed of its transition, Ørsted has become a poster child for the transition to a low-carbon economy, something that Poulsen embraces. “I hope we can be an inspiration to others, yes. Both in terms of the radical nature of our transition and the speed.”
“When you look at the challenge we face as a global community – to halve our emissions by 2030 even though we have not yet had a single year in which emissions have fallen – it’s clear that all companies must become more ambitious with their timeline for action,” he says. “Companies setting a 2050 target for emissions reductions need to reconsider whether they can do it faster and go further. What we have shown is that you can be much more radical than you might think.”
Maersk, the Danish shipping business, was another traditional company trying to compete in an increasingly digital and disrupted world. It struggled to understand how to respond to a new generation of shipping innovators, alternative transport providers, and digital disruptors.
And then it thought again.
Last year I interviewed Jim Hagemann Snabe, chairman of Maersk, on stage at the Thinkers50 European Business Forum in Odense. Snabe had recently joined the board after a career largely in technology, with SAP and Siemens, and also as digital advisor to the World Economic Forum.
How would he turn an old shipping line into a digital business, I asked him?
Soon afterwards Maersk started exploring blockchain, and how it could revolutionise the traditional processes of shipping goods around the world – everything from the intensive paperwork required through every port, to tracking just in time goods that need to find their way rapidly around the world to market.
Today AP Moller-Maersk, as it is more formally known, describes itself as an integrated container logistics company, connecting and simplifying trade to help our customers grow and thrive, with a dedicated team of over 76,000, operating in 130 countries, the largest shipping company in the world.
However change is never easy, particularly in a traditional business where most workers have done the same jobs in the same ways for many years. The speed and glamour of Silicon Valley or Shenzhen might seem far removed.
This is it’s way of engaging people, inside and outside Maersk, in its future:
“We are not doing this halfway.
We are going all the way. Challenging ourselves to stay ahead of the curve for our customers. Pushing boundaries to connect and simplify their supply chains.”
This is your brain
It is your reptilian brain that holds you back. When new opportunities arise and you want to go all the way. It has been like this for millions of years.
That’s why change is hard.
It’s a neurological fact
Watch professor of psychology, Henrik Høgh-Olesen, explain why the reptilian brain fights change and how to work around it to evolve.
We are going all the way – pushing the boundaries to discover new and valuable connections between people, processes and data to find new paths to growth for our customers.”
Here are three examples of projects within the transformation:
Example 1: Maersk Spot
Imagine if a restaurant was like shipping
You wouldn’t accept complex booking, overbooking nor price uncertainty. So why do it in shipping? Introducing Maersk Spot with loading guarantee, easy online booking and a fixed price at booking.
We believe it’s shipping the way it’s meant to be, and we hope you think the same. Take a closer look and see how to get your cargo moving the simplest way.
The only way the plastic issue can be alleviated is by working all together, contributing with the best of our capabilities and engaging ourselves into groundbreaking solutions. This is the main reason for Maersk to keep supporting The Ocean Cleanup in the relaunch of its upgraded drifting system to the Pacific.
We sail the oceans every day and see the plastic problem growing. At current levels, by 2050 our oceans will contain more plastic than fish. With an estimated 5 trillion pieces of plastic waste littering all major ocean basins. This crucial problem is a high priority on our agenda. That´s the reason why Maersk Supply Services keeps providing offshore project management and vessel operations support to a re-developed offshore cleaning system.
They spent three months at the Pacific Ocean testing and collecting relevant data. Due to a structural malfunctioning of the cleanup system, The Ocean Cleanup took the decision to return to port earlier than planned to -based on findings and data- upgrade the system.
Following six months of onshore work, The Ocean Cleanup is now ready to re-send its upgraded passive drifting system to the Great Pacific Garbage Patch, located roughly midway between California and Hawaii.
In Maersk we believe that, setbacks like this are inevitable when pioneering new technology and we know that, being in port has provided The Ocean Cleanup with the opportunity to make upgrades to a system that it is expected to be back at the Great Pacific Garbage Patch by the end of June 2019.
Example 3: TradeLens
TradeLens is an open and neutral industry platform underpinned by Blockchain technology, supported by major industry players. It is a Maersk and IBM solution formerly known as Global Trade Digitization (GTD), is a trade platform for containerized shipping, connecting the entire supply chain ecosystem. Some of the benefits include:
- An open, neutral, and distributed platform underpinned by Blockchain technology
- Seamless, permissioned document and data sharing with a common access control structure
- Ecosystem participants access the platform through open APIs
The TradeLens platform integrates trade data from industry partners onto a common, secure business network, and will provide real-time, secure access to end-to-end supply chain information to all actors involved in a global shipping transaction. Using the platform, you can publish events related to a consignment (shipment) or transport equipment (container), and set up subscriptions to be notified when events occur that match your subscriptions.
TradeLens allows you to manage the documents involved with a consignment. Submitted documents generate events for your documents. This adds to the complete view of activities involved with your consignment or transport equipment. The TradeLens document functions could be used as part of the process of submitting filings for the import and export of goods by enabling end users to securely submit, stamp, and approve documents.
You can use TradeLens directly through REST APIs, or through the Shipment Manager UI. The Shipment Manager (SM) component provides a web user interface to interact with the platform. You can view the events related to a consignment, and perform operations on documents.
Blockchain addresses the underlying challenges inherent in collaborating across a distributed, fragmented supply chain ecosystem:
- Shared Ledger – Append-only distributed system of record shared across business network
A network of industry participants maintains a distributed, permissioned ledger with copies of document filings, relevant supply chain events, authority approval status, and full audit history; every change results in a new, immutable block
- Smart Contract – Shared business logic governing what transactions may be written to the ledger
Cross-organizational business processes, such as import and export clearance, are pre-programmed and built into Blockchain and distributed to and executed on the network, preventing any member from changing the business logic
- Privacy – Ensuring appropriate visibility; transactions are secure, authenticated and verifiable
Cryptography enables permissioned access so only the parties participating in a specific consignment can submit, edit or approve related data
- Trust – Transactions are endorsed by relevant participants
Information such as documentation filings and authority approvals can only be changed if endorsed by the parties taking part in the consignment; full audit history maintained on the Blockchain