Please note: this blog was published in March 2020 and its content is based on what was correct at the time of writing. As a result, some of the facts and opinions may no longer be current or relevant.
Positivity is often in the minority when it comes to news articles and reports, why not take some time to find out more about one of the companies in our Ethical Investment Plans that are doing some good for the environment and society.
In this edition, we’ll take a look at Ørsted, which is held in the Pictet Global Environment Opportunities fund, a recent inclusion in our ethical plans.
The finance stuff 📈
Company value: £35 billion
Share price: £83
2019 Profits: £633.52 million
What does Ørsted do? 🤷
Ørsted is one of the biggest players in offshore wind, making up 25% of the whole sector globally1. Formally known as Danish Oil and Natural Gas (DONG Energy), Ørsted has completely turned their business model on its head, becoming a global leader in offshore wind energy and leaving behind a dying business model based on fossil fuels.
Offshore windfarms have many of the similar advantages that onshore windfarms have. The key differences are that offshore winds tend to be faster and more reliable, which leads to a much larger supply of stable renewable energy.
In 2017, Ørsted sold its oil and gas business to focus on offshore wind. Since 2006, Ørsted has reduced its carbon footprint by 86% and by the end of 2025, the company aims to be completely carbon neutral.
With 6,500 employees across 68 locations around the world,2 Ortsed was recently crowned the most sustainable company in the world, beating the likes of Tesla and Google3. That's certainly something they can shout about but watch the volume levels and noise pollution!
What positive impact is Ørsted having? 🌱
Offshore wind has gathered momentum over the years, you can say it's sweeping the globe. By the end of 2019, Ørsted's offshore wind farms generated 6.8GW of energy and have a further 3.0GW under construction. To put it into context, 1GW is enough power for the homes of 2 million people.
In addition, Ørsted has 5.0GW of planned wind farm construction. The company’s target is 15GW of offshore wind energy capacity by 2025, enough to power more than 30 million people around the world, which is the equivalent to almost half the population of the UK!
It isn’t just about cutting carbon emissions, however. Gender diversity across all parts of the business, including the board, has historically been difficult to achieve in the energy sector. In its 2018 Corporate Responsibility Report, Ørsted introduced a Diversity and Inclusion Steering Committee to identify and address inequalities across the company, focusing on removing any barriers women may come across in terms of promotions or access to jobs. In 2018, the end-to-end hiring process was reviewed by an independent expert to ensure it was fair and inclusive whilst attracting and benefitting from diverse candidates.
What Ørsted has to say 📣
"We’re ranked the most sustainable company in the world in the Corporate Knights 2020 Global 100 index of most sustainable corporations. A decade ago, we were one of the most fossil fuel intensive energy companies in Europe.
The Global 100 top rank is a humbling recognition of our transformation from a fossil-fuel based energy company to a global green energy company in the past decade. 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."
What Pictet think… 🤓
“Both the need to rapidly reduce CO2 emissions and rapid technological progress are driving a strong expansion in renewable energy. Offshore wind in particular has grown at an annual 30% between 2010 and 2018. This electricity source represents a significant potential as experts estimate it could eventually supply the equivalent of all electricity consumed today. It is often politically easier to implement than onshore wind and is attractive because it can provide higher and more predictable supply during times of increased energy consumption.
The company is expected to experience around 20% annual earnings growth until 2025 on the back of rapidly growing demand for sustainable offshore wind energy. Its growth, scale and experienced leadership enable lower operating and maintenance costs. The company’s principal environmental contribution is on the climate change dimension, as it contributes to the transition to a low/zero carbon economy.”
To wrap up 🎁
Ørsted has embarked on an enormous journey of self-discovery and it’s not often you see a villain become a hero. A company which was one of the leading carbon emission contributors in Europe, to then become awarded the most sustainable company in the world, is certainly an achievement to be proud of. By leading the way in offshore wind energy, and with ambitious but attainable sustainability targets in the years to come, Ørsted may become the benchmark that other companies strive to emulate in a time where it has never been more important to act sustainably.
2: Page 22 - Orsted Sustainability Report 2019
Please remember the value of your investments can go down as well as up, and you could get back less than invested.