The most sustainable company in the world is a Danish one

State of Green
By State of Green, January 21, 2020

The Danish renewable energy giant Ørsted has been named as the world’s most sustainable company in 2020. Topping Corporate Knight’s annual global index of the world’s 100 most sustainable corporations, Ørsted is also joined by four other Danish companies, three of which are placed in the top six.

As opinion leaders, governments, corporate titans and civil society meet in Davos for the World Economic Forum’s annual meeting, Canadian-based organisation Corporate Knights has released its annual Global 100 Most Sustainable Corporations in the World Index. The release is fitting, given that the theme of this year’s WEF meeting is stakeholders for a cohesive and sustainable world. Discussing how to assess progress on the Sustainable Development Goals and the Paris Agreement is a key element of the meeting.

Branding itself as the voice for clean capitalism, Corporate Knights has been compiling the annual index since 2005. The index is gathered by scoring publicly-listed companies that had a gross revenue of at least $PPP-currency $1 billion in the 2018 fiscal year, across 21 key performance indicators that encompass resource management, employee management, financial management, clean revenue and supplier performance.  Only publicly available information can be used to assess the companies. Furthermore, the index is the only one to consider all industries and geographies in the initial screening phase.

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And the winner is…Denmark?

Danish companies can rejoice over the 2020 index. While Ørsted has jumped three places from number four in 2019 to be awarded the title of the most sustainable company in 2020, last year’s top performing company, Chr. Hansen, which also hails from Denmark, is ranked number two in the 2020 index. Coming in at number six is another Danish company, Novozymes, making it the first year in the index’s history that three Danish companies occupy spots in the top ten. Not to be forgotten, the world’s largest wind turbine manufacturer, Vestas, and Novo Nordisk, also feature in the list, at 34 and 58 respectively. Vestas and Novo Nordisk have featured in the index since its inception in 2005, while Ørsted is a relatively late entrant and only placed 70 in 2018.

What explains Ørsted’s rocket-like ascent? To give you an idea of the company’s journey, it is instructive to note that until 2017, it was a state-owned entity known as DONG (Danish Oil and Natural Gas). Known more for developing coal-fired power plants, it changed its name partly to reflect it was divesting itself of its oil and gas assets, but primarily to highlight that the company was in the middle of a radical reorientation from being a black energy provider to a green one.

The move has borne fruit. Now known as one of the world’s leading developers of renewable energy with a focus on offshore wind, Ørsted has managed this journey in the space of just ten years. On track to become virtually carbon neutral by 2025, Ørsted has managed to reduce its carbon emissions stemming from energy production and operations by 83 per cent compared to 2006 levels.

Commenting on the results, Ørsted’s CEO Henrik Poulsen stated:

“We’re immensely proud to rank as the world’s most sustainable company. From our origins as a traditional fossil fuel-based energy company, we’ve transformed into one of the largest renewable energy companies in the world. Every day, we deliver green energy solutions at scale to combat climate change, the defining challenge of our time.”

According to Corporate Knights, Ørsted was placed first due to the company because the company increasing the share of revenue earned from renewable energy by 10 per cent from 58.4 per cent to 68.1 per cent. At the same time, carbon productivity and water productivity grew more than 50 per cent due to cuts in absolute carbon emissions and lower water use combined with higher revenues.

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The most sustainable companies are also best performing companies

In releasing the index, Corporate Knights highlight the salience of environmental and climate issues to investors, making the case that there now exists complete recognition of the fact that so-called environmental, social and governance (ESG) issues have a huge impact on a company’s financial performance.

The index supports this analysis: The Global 100 index has outperformed the benchmark MSCI All Country World Index (ACWI) since its inception. Not only do the companies in the Global 100 have a longer average lifespan (83 years compared to 49 for the ACWI index), they also have better gender diversity ratios, more equal CEO/employee pay ratios and most significantly, higher carbon productivity, where they earn more revenue per tonne of CO2 emitted.

The 2020 winner, Ørsted also performed well on indicators such as the amount of taxes paid and a gender diverse board.

This all goes to show what State of Green has always maintained: namely that we believe the most prosperous companies will also be the ones that are the most sustainable.

Sources: Corporate Knights,  Ørsted

Photo credit: Ørsted

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