Good Eggs: Vestas

An insight into the impact of your investments 🌍
Wind turbines | Wealthify
Reading time: 7 mins

Energy is a critical pillar of society and the global economy as we know it. Our energy usage is so weaved into our everyday lives you’d be forgiven for taking it for granted now and again. Everything from your morning cup of coffee, to your daily commute, or being able to switch the lights on to read to your loved ones at night, is powered by energy. With the effects of climate change increasingly apparent, the question of how we obtain this energy has grown in relevance, and rightly so. The global use of energy sources reliant on fossil fuels has undoubtedly led to global warming on our beautiful planet, and, on the current trajectory, the abundance and diversity of life is under threat. The year 2020 tied 2016 as the warmest year on record since 1880, when record keeping began1. The signs are clear, with negative record breaking in - ice sheet melting, ocean temperatures and sea levels. Our only chance of halting this crisis, is by rapidly changing the way we use and generate the power of our everyday lives. Using natural forces to power the future generations is the only sustainable answer, and Vestas through its manufacture and maintenance of wind turbines is at the forefront of using one of nature’s oldest forces – wind - to power our harmonious future with the earth.

Our Ethical Investment Plans include Vestas, which is held in the Pictet Global Environmental Opportunities Fund.

 

The finance stuff 📈
Company value: £25.3bn
Share price: £125
2020 Profits: £680.4mn

 

What does Vestas do? 🤷
The origins of Vestas go all the way back to 1898, but the Danish company only becomes known as Vestas in 1945, with the firm officially selling and installing its first wind turbine in 1979. At the time, a tailwind of favourable legislation in the US, which included the Public Utility Regulatory Policies Act of 1978, promoted strong growth, with the company becoming a standalone, listed entity through the 80s and 90s2.

Today the company is a market leader in the manufacture, installation, and maintenance of large-scale wind turbines, being the only company to have 100 GW of wind turbines in its care in 2020. This capacity is spread over 80 countries and 5 continents, emphasizing the global scale of Vestas3.

 

What positive impact is Vestas having? 🌱
The Vestas mantra is to make sustainability part of everything they do. The company has consistently ranked in the top 50 of the world’s most sustainable companies, with a ranking of 37 in the 2020 edition, which is impressive given the strength of the competition4. In 2020 alone, the company’s turbines avoided 186 million tonnes of CO2 emissions which is equivalent to the greenhouse gas emissions of 125 million passenger vehicles over 1 year2. Astounding!

The company’s sustainability goals can be classified in four main areas:

  1. Carbon neutrality by 2030 without using carbon offsets. Vestas is aiming to lead the effort to reduce its impact on the value chain emissions by this date.
  2. Producing zero waste turbines by 2040 through the implementation of a full circular economy in the manufacture and consumption of its turbines.
  3. Aiming to become the safest, most inclusive, and socially responsible company in the energy industry. The company has nearly 30,000 employees around the globe.
  4. Leading the transition to the global use of renewable energy, by driving change across the value chain and developing partnerships where needed to build the case for renewable energy, not just wind power2.

 

What Vestas has to say 📣
“Urgency is central to the sustainability debate. As a global community, we must be aware of the ticking clock, and the overwhelming burden that economic development places on our natural resources. Having integrated sustainability into our governance, daily operations, and cross-functional working groups, we address this head on by raising the ambition levels for our industry. This year, we became the first renewable energy manufacturer to have our climate target confirmed as being in line with the 1.5°C scenario of the Paris Agreement by The Science Based Targets initiative. The announcement followed our ambitious target to become carbon neutral without the use of offsets by 2030 – a target towards which we have already made significant progress by cutting our global carbon footprint by 33 percent. Primarily, we achieved this by sourcing 100 percent of our electricity from renewable sources. But we also replaced 35 percent of our benefit cars with plugin hybrid and electric vehicles and introduced 127 electric or sustainably fuelled vans to our service fleet in just one year. By 2025, we will only use zero-emission vehicles in our benefit car and service vehicle fleet. Responding to the urgency of the climate crisis is our highest priority, and we will continue to calibrate our ambitions to deliver what the world needs, when the world needs it.”

Vestas Executive Management Team
Corporate Responsibility Report, 2020

 

What Pictet think… 🤓
“Vestas is driving the energy transition forward by focusing on three core business areas: onshore wind energy solutions (of which it is the #1 provider in the world), service solutions (#2) and offshore wind (#1). Formed in 2014, Vestas’ joint venture with Mitsubishi Heavy Industries Ltd., MHI Vestas Offshore Wind A/S aims to become a market leader in offshore wind power.

We believe the wind turbine market has a strong growth potential going forward, due not only to the current momentum in demand for wind energy, but also to related trends specific to the production of turbines. Most notably, the wind turbine market has been seeing less and less competitors, resulting higher industry consolidation and better economies for the remaining larger players including Vestas.

A 62 percent increase in electricity demand globally will almost triple global generation capacity, attracting USD 13.3 trillion in investments by 2050, of which USD 5.3 trillion and USD 4.2 trillion are expected to go to wind and solar energy respectively. Annual investments into new wind capacity are expected to roughly be doubled in the years 2031-35 compared to 2019-20.”

 

To wrap up 🎁
With climate change upon us, Vestas is leading the way in providing large scale, end-to-end sustainable solutions to the wind power industry. Energy generation and consumption lies at the heart of the global economy, and a massive shift to using the nature’s forces to cater for our needs is under way. One cannot underestimate the importance and required urgency of this shift away from fossil fuels, and in turn the importance of companies like Vestas that are the forefront of this transition. We are confident the company will continue to be a leader in driving global energy sustainability for many years to come, enriching the lives of its employees and future generations.

 

References:

1: https://climate.nasa.gov/vital-signs/global-temperature/

2: https://www.vestas.com/~/media/vestas/investor/investor%20pdf/financial%20reports/2020/q4/sustainability_report_2020.pdf

3: https://www.renewableenergymagazine.com/wind/vestas-becomes-the-first-company-to-install-20190109

4: https://www.corporateknights.com/reports/2020-global-100/2020-global-100-ranking-15795648/

 

Please remember the value of your investments can go down as well as up, and you could get back less than invested.

 

Share this article on:

Wealthify Customer Reviews