Ørsted’s renewable-energy transformation
To stop climate change, companies in every industry must rapidly reduce their carbon emissions. That is no easy task, but a few businesses show it can be done. Ørsted, an energy company based in Denmark, stands out as an example. Twelve years ago, when it was called DONG Energy, the company earned most of its revenues by selling heat and power, 85 percent of which came from coal. Then, in 2009, management announced a major strategic shift: the company would seek to generate 85 percent of heat and power from renewable sources by 2040.
Ørsted invested aggressively in offshore wind and phased out coal. By 2019, it had become the world’s largest producer of offshore-wind energy. The company also raised its renewable-generation share to 86 percent—hitting its target 21 years ahead of schedule.
In an interview with McKinsey, the CEO of Ørsted’s offshore-wind business, Martin Neubert, tells the story of the company’s transformation: the strategic decision that started it all, the changes it went through, and the outlook for the future. (The remarks below have been condensed and edited for clarity.)