Running kids on grass

Green energy for the planet and its people

Green energy for the planet and its people

Sustainability report 2021

Table of Contents
  • Sustainability at our core
  • Our sustainability priorities
  • Our progress across sustainability programmes

We can make green energy a force for positive change – far beyond delivering zero-emissions energy

The role of businesses is undergoing a radical shift. Today, people across society – from customers and investors to local communities and NGOs – expect businesses to fundamentally do good, rather than only making a profit. At Ørsted, our experience is that doing good business and solving environmental and social challenges go hand in hand. We have proven this over the last decade, where our work to transform our business from a traditional fossil-intensive energy company to a green energy leader established a new business platform for us.

Birte Hansen, one of our marine environment experts, in dialogue with Mads Nipper, CEO, on the importance of gaining experience from small-scale biodiversity projects towards delivering a net-positive impact from all new energy projects from 2030 at the latest.

At COP26 in Glasgow, Scotland, in November 2021, I witnessed how businesses are becoming still more engaged in making things better. The sheer appetite from businesses across sectors to help solve the global climate crisis was striking – as was the unprecedented engagement from a wide range of societal groups, spanning companies, NGOs, investors, indigenous leaders, activists, and, not least, the younger generation, which will need to endure the consequences of the decisions we make today.

The COP26 outcomes kept the hope to avoid the catastrophic, uncontrollable, and irreversible consequences of global warming alive – but just barely. Despite some progress, national leaders fell short of making all the necessary decisions to heed the unequivocal warning from the UN’s IPCC 2021 report that, unless we take profound and immediate action, we are heading towards a global temperature increase significantly above 1.5 °C.

Rapid emissions reductions, please

We have no time to waste if we are to deliver the emissions reductions the world so desperately needs. Greater national decarbonisation pledges backed by clear action plans are urgently needed. As companies, we have tremendous responsibility and the power to help deliver the critical 1.5 °C pathway. The proliferation in corporate net-zero targets over the past three years is a positive sign and absolutely necessary. However, it is how we get to net-zero that makes the difference.

With the new Net-Zero Standard launched by the Science Based Targets initiative (SBTi), we now have a global framework and a leading standard for aligning corporate net-zero targets with climate science. The standard spells out that rapid action is needed to halve emissions before 2030 and that businesses need to start concentrating on reducing emissions rather than being overly reliant on offsets.

Taking science-aligned climate action

Since more than 73 % of global greenhouse gas emissions come from the production and use of fossil fuel-based energy, shifting to renewable energy is the most effective action that global society can take to reduce emissions and fight climate change. At Ørsted, we want to help create a world that runs entirely on green energy. We see our role as that of a core contributor and catalyst for changing the way the world is powered.

Our science-based emissions reduction targets enable us to do just that. Over the past 15 years, we have transformed from a fossil fuel-based energy company to a global leader in renewable energy. We are well on track to become carbon-neutral in our energy generation and operations (scope 1-2) by 2025, and we will see our greenhouse gas emissions intensity reduced by at least 98 % compared to 2006. In 2021, we became the first energy company in the world – and one of only seven companies globally – to have our target of reaching net-zero emissions across our full value chain (scope 1-3) by 2040 validated by the SBTi as science-based.

Our underlying carbon reduction targets allow us to continue scaling our renewable energy business while working to decarbonise our supply chain, phase out trading in and sale of natural gas, and, in doing so, help businesses and governments realise their net-zero ambitions

Green energy for the planet and its people

The scale of green energy needed to fight global warming is massive. Estimates by the International Renewable Energy Agency (IRENA) suggest that the installed base of renewable energy capacity will have to grow more than tenfold by 2050 to drive the decarbonisation of global energy systems. This will be a colossal undertaking impacting global ecosystems and people, both locally and throughout supply chains. If done right, we believe the green build-out holds unprecedented opportunities for positive change – opportunities to create growth in economies, revitalise local communities, and make a net-positive contribution to biodiversity. We can make green energy a force for positive change – far beyond delivering zero-emissions energy

However, this will not come automatically. It requires that all actors involved become sensitive to the sustainability challenges present in all phases of green energy projects – from mining materials to manufacturing, construction, operations, and, eventually, decommissioning. If we succeed with this and work together to solve the challenges, we can use the green transformation to drive positive change far beyond generating zero-emissions energy. At Ørsted, we want to lead the delivery of sustainability benefits to our customers and beyond. We want to create a world that runs entirely on green energy, and we want to do it in a way that works for the planet, and for its people. This is why we are further strengthening our approach to delivering environmental and social benefits from our renewable energy projects.
The increased underwater activity in and around Block Island Wind Farm in the US has made it a popular spot for both commercial and recreational fishing.

Green energy in balance with nature

Climate change is projected to be the biggest driver of biodiversity loss in the coming decade. Already, the variety of life found on land and at sea is facing extreme threat, with 70 % of species already lost over the past half-century and another 25 % facing extinction – a figure that will double by the end of the century if we do not act. Biodiversity is our life support system, and, like our climate, it is in crisis.

Both renewable energy and biodiversity are critical to the future of life on Earth. Constructing and generating renewable energy can, however, also affect nature. That is why we have set ourselves the ambition to deliver a net-positive impact on biodiversity across all the new energy projects we commission from 2030 at the latest. Instead of merely minimising negative impacts on biodiversity, we want to ensure that our renewable energy installations leave nature healthier than before. We already have experience to build on, including the artificial habitats we have installed at our offshore wind farm Borssele 1 & 2 in the Netherlands and in the Danish Port of Grenaa in partnership with WWF Denmark to help preserve the cod stock, which is an important but locally near-threatened part of the marine ecosystems in the North Sea and the Kattegat. Now, we have put in place a dedicated programme to ensure we find the solutions that deliver – from the outset of every new energy asset – the outcome that science tells us must be achieved.

We have also joined the Science Based Targets Network’s Corporate Engagement Program to help develop targets for nature that are aligned with scientific demands. Across industries, we need shared tools and guidance to understand and measure our impact and dependencies on biodiversity, land, water, and the ocean, and for stakeholders to be able to keep us accountable.

In addition, we have announced an immediate ban on the landfilling of wind turbine blades, which are the main components of a wind turbine and for which there is lack of widely available recycling solutions. As part of our push towards a more circular use of resources, we commit to reusing, recycling, or recovering all decommissioned blades.

While we do not yet have all the answers on how to deliver circular energy projects with a net-positive impact on biodiversity, we are convinced that leadership means doing what is right, even when the path forward is not clear.

The green transformation must work for people

Beyond transforming our global energy systems, the build-out of renewable energy will soon reach a scale at which it can fundamentally reshape the way our societies look and operate. Getting there holds the potential to positively impact the lives of millions of people across supply chains and local communities, as well as the employees working to make it happen.

This year, we have dived further into the role our company should play in driving a build-out of green energy that works for people. We consider it our responsibility, and it is essential to build support for new energy projects. It is, however, not straightforward. Social challenges are complex, and they often demand a deep understanding of local contexts. As a renewable energy company, our ambitions are to run a responsible business that respects human rights and promotes inclusion of diversity, to partner with local communities to ensure a just transition to green energy, and to play an active role in developing the next generation of talent in the new energy age.

We have work ahead of us if we are fully to realise those ambitions. This year, we started by strengthening our approach to human and labour rights by updating our policies and bolstering due diligence. We took the first steps to build an increasingly diverse and inclusive organisation by setting new ambitions for gender equality, and we sharpened the way we can support resilient and thriving local communities. In Taiwan, for example, to support the development of local supply chains and the creation of new jobs, we initiated the Wind Power Supply Chain Platform, matching local small- and medium-sized companies with demand for products and services during the construction, operation, and maintenance of our offshore wind farms. And in Maryland in the US, we partnered with Crystal Steel Fabricators to establish Maryland’s first offshore wind steel fabrication centre, which will enable around USD 70 million in supply agreements and create nearly 50 new local jobs.

Integrating sustainability at every corner

To make business a force for good, all our decisions and processes need to pull in the same direction towards sustainability. This year, we took important steps to further support this. We extended how sustainability is integrated into the Executive Committee’s remuneration, and we will implement an updated remuneration scheme effective from 2022 designed to support our delivery of core sustainability commitments and our sustainability leadership performance, and to push new frontier sustainability practices. We also signed our first sustainability-linked loan – a revolving credit facility – where the interest rate depends directly on our ability to reduce our carbon emissions and deliver on our ambitious green investment programme.

The journey to true sustainability has just begun

At Ørsted, all of our work is informed by our strategic commitment to the UN Sustainable Development Goals and based on the United Nations Global Compact’s ten principles for corporate sustainability.

We have 30 years of experience in renewable energy, and we are one of the five largest renewable energy companies in the world. For four years in a row, we have been named the most sustainable energy company in the world by Corporate Knights. Yet, we acknowledge that our journey towards becoming a truly sustainable business has only just begun.

In this report, we present what we think are our most urgent sustainability challenges and our priorities to push our sustainability work forward. It is an open invitation to all of our stakeholders – and particularly politicians, competitors, and investors, who play a crucial role in enabling a rapid build-out of green energy – to engage and consider what they can do to promote a green energy build-out that delivers tangible solutions to the sustainability challenges we face.

If we understand the sustainability challenges and opportunities linked to a global green energy build-out, set clear expectations for each other, and collaborate to get it right, we can make the green transformation a force for positive change together, far beyond delivering zero-emissions energy – to the benefit of our planet and its people.

Mads Nipper
Group President and CEO

Ørsted employee construction
Sustainability at our core

Integrating sustainability throughout our business

On this page we present our systematic approach for integrating the most important sustainability themes into our business