How we work with sustainability: methodology and impacts

We have a systematic approach for identifying, prioritising, and addressing the sustainability themes that affect – and are affected by – what we do as a company. This allows us to integrate sustainability throughout our business, as we work towards a sustainable future for our stakeholders and our business.  

Every year, we conduct a sustainability themes analysis. This allows us to identify, assess, and prioritise the themes that are material to our stakeholders and our business in a rapidly changing sustainability landscape. 

The analysis considers both the impact that we have on our surroundings, and the impact that these themes may have on us as a business. It’s a key strategic tool that allows us to continuously improve our understanding of what is material and to respond accordingly. 

We updated our approach to this analysis in 2022 to better understand our impact on our surroundings and how to work with the themes in practice.

Jump ahead to see the five most material themes identified in 2022

Download the full results of our 2022 analysis

Our six-step approach 

Our approach involves the following six steps, which you can read more about below: 1) mapping sustainability themes material to our stakeholders and business, 2) prioritising them according to the principle of double materiality, 3) anchoring them in our governance structure, 4) developing them into sustainability programmes, 5) realising them in our daily work, and 6) reporting on our progress.  

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  1. Mapping

We engage with our stakeholders on a continuous basis to make sure we always have an up-to-date understanding of themes material to our stakeholders and business.  

Our key stakeholder groups are: 

  • Governments and corporate customers
  • Current and future employees
  • Investors and joint venture partners
  • Communities
  • Policymakers (e.g. regulators, international standard-setting bodies)
  • Energy opinion shapers (e.g. think tanks, international organisations, NGOs)

Once a year, we collect these insights through workshops and conversations with stakeholder-specific and subject-matter experts across our business. 

In 2022, we improved our understanding of our stakeholders’ perspectives by developing a more individualised approach for collecting insights. This was to ensure that we thoroughly understand what matters to each individual stakeholder group and why.

The mapping gives us a thorough and updated overview of the sustainability themes that could affect our stakeholders and our business.  

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2. Prioritising

Once we’ve mapped the themes, we assess how each one affects our stakeholders and our business, prioritising them accordingly. 

This step is guided by the principle of double materiality: considering both the impact that we as a business have on the environment and society, and the impact that each theme may have on us as a business. 

To assess the first aspect, we consider the level and intensity of attention each theme has received from our stakeholders. To assess the second, we consider the reputational, operational, and regulatory risks and opportunities each theme could pose. This is illustrated in matrix 1 below. 

Then, to understand what type of action to take on each theme, we compare the novelty of stakeholders’ expectations of Ørsted with our current ability to meet these expectations. To do this, we introduced a new matrix in 2022, identifying what type of action is most appropriate for each identified theme. Should we continue or strengthen our efforts, build new capabilities, or continue to observe, closely following developments in expectations and potential impacts? This is illustrated in matrix 2 below. 

Our approach to mapping themes and defining our responses
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3. Anchoring

We anchor the prioritised themes in our internal governance structure, through top management approval.

This gives our Group Executive Team and Board of Directors a systematic overview of the most important sustainability themes and enables them to make decisions on how to best address them through sustainability programmes

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4. Developing

We address our most important sustainability themes through our dedicated sustainability programmes. Based on the outcome of our annual themes analysis, we either update existing programmes or develop new ones. 

A sustainability programme focuses on key challenges and opportunities within one or several sustainability themes. It consists of targets and indicators, concrete actions to meet them, a clear governance structure, and supporting policies. We report on the progress of each programme on a continuous basis. 

Accountability for each of our sustainability programmes is placed with a member of our Group Executive Team to ensure prioritisation, progress, and delivery of targets. 

Currently, we have a portfolio of 18 programmes. You can read more about each one on pages 13-41 of our 2022 sustainability report

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5. Realising 

Our sustainability programmes allow us to integrate sustainability themes into our daily business practices, making sure we continuously translate expectations into our work. 

In practice, this means developing concrete targets and understanding the actions necessary to reach them, as well as assigning clear responsibility for execution as described above. 

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6. Reporting

We publish our annual sustainability report to communicate on our strategic direction, the progress of our programmes, and the challenges we face. 

We also publish key ESG performance data quarterly and annually and provide ongoing communication on progress and challenges across our programmes. 

This is key to ensuring transparency, giving our stakeholders an opportunity to hold us accountable and scrutinise our sustainability performance. Reporting also serves as the basis for continued dialogue on the sustainability themes that are material to our business. 

2022 analysis: five themes of most material impact

1. Carbon emissions from renewable energy supply chains 

Impact on surroundings 
There are carbon emissions tied to the manufacturing, installation, and operation of our renewable energy assets. These activities account for the majority of carbon emissions throughout the life cycle of our renewable energy assets. In order to maximise the climate benefits of our renewable energy and deliver science-aligned climate action, we must work to reduce our supply chain emissions. 

Impact on our business 
Our assets and operations are exposed to both direct and indirect effects from climate change. Direct impacts include physical damage from extreme weather events. Indirect impacts include disruptions to our supply chains and potentially supply shortages. 

Our response 
We’re taking leading action to decarbonise our supply chains through our programme ‘Decarbonisation of supply chain and natural gas wholesales’. 

In addition, we build resilient assets that can withstand the climate they’re operating in during their expected lifetime. 

2. Biodiversity and local ecosystems 

Impact on surroundings 
Constructing and operating renewable energy assets can impact local environments wherever they’re built. These impacts can be temporary, such as noise from construction, or more permanent, such as habitat loss resulting from the installation of offshore wind foundations. If not addressed correctly, there’s a risk of negatively impacting surrounding natural environments. 

Impact on business 
If we fail to address and manage the biodiversity impacts related to our business, we risk project delays or cancellations. 

Our response 
We continue to ramp up efforts to make sure our projects contribute positively to nature through our programme ‘Energy projects with net-positive biodiversity impact’. 

3. Circular resource use

Impact on surroundings
Building green energy assets at the scale and speed required is dependent on the use of raw materials and water, which are already under pressure. If not handled responsibly, this can lead to adverse impacts on both the environment and people. 

Impact on business 
The materials needed for renewable energy are increasingly in demand, potentially leading to increased competition, higher costs, and supply chain bottlenecks. If we can’t access the materials we need, we face severe risks in terms of project delays, cost increases, and reduced stakeholder confidence. Creating a more circular value chain brings an opportunity to lower our dependency on raw materials and build a resilient supply chain. 

Our response 
We work to build a strategic circular approach through our programme ‘Circular resource use’. 

4. Communities 

Impact on surroundings 
As the build-out continues, renewable energy structures will become part of more and more communities. Many of these have concerns, needs, and expectations that we must listen to and address. If built right, in balance with community expectations and ensuring respect for human rights, renewable energy projects have massive potential to revitalise communities. 

Impact on business 
Failing to understand and address the concerns and expectations from the communities in which we operate can cause permitting and construction delays, lead to the abandonment of planned projects, or damage our reputation as a trusted build-out partner able to drive a just transition. 

Our response 
We’re strengthening our strategic approach through our programme ‘Thriving communities’. 

5. Human and labour rights 

Impact on surroundings 
Our business impacts the lives of people across our own operations, our supply chains, and communities. As we continue to grow, we need to make sure that we respect human rights in everything we do and that no one is adversely impacted, specifically in regions or industries where regulations are weaker. 

Impact on business 
If we do not ensure that labour and human rights are respected across our operations, supply chains and communities, we risk severe regulatory and reputational damage to our business, and potential supply chain disruptions causing project delays. 

Our response 
This theme forms the basis for our sustainability focus area on people. We work specifically to strengthen our human rights due diligence approach through our programme ‘Human rights management and integration’. 

Our portfolio of sustainability programmes 

Science-aligned climate action 

  • Decarbonisation of supply chain and natural gas wholesales 
  • Decarbonisation of energy generation and operations 
  • Reliable and secure energy infrastructure 

Green energy that revives nature 

  • Energy projects with net-positive biodiversity impact 
  • Circular resource use 
  • Healthy water systems 
  • Sustainable use of biomass 

A green transformation that works for people 

  • Thriving communities 
  • Skills and talent for the green transformation 
  • Human rights management and integration 
  • Responsible sourcing of minerals and metals 
  • Diverse and inclusive renewable energy sector 
  • Safe and better ways of working 

Governance that enables the right decisions 

  • Mobilisation of sustainable finance 
  • Embedding sustainability in our operating model 
  • Responsible business partners 
  • Responsible tax practices 
  • Responsible business conduct 

Sustainability report 2022

Green energy to power lasting positive impact

Discover how our renewable energy solutions are contributing to a planet where nature and people thrive