The energy sector, emitter of a third of global greenhouse gases, has pioneered the path towards decarbonization. As with any strategic disruption, not all energy companies are facing this transition with equal success. I see three types of companies based on their anticipation and transformation of their business model:
- Winners. A good example is the Danish energy company Ørsted, which more than 10 years ago began to abandon fossil fuels to become a world reference in renewable energy. Ørsted has a goal of achieving net zero emissions (scopes 1 and 2) by 2025. Its market capitalization has tripled in the last 5 years.
- Contenders. They are not in leading positions, but they can arrive on time if they succeed in putting new low-carbon business lines into practice, combining innovation, alliances, and investment in transformative projects.
- Laggards. They may be running late. They try to fit decarbonization initiatives within the limits of their activity. Delay is costly, these players usually have to assume unattractive investment prices.
Companies from other sectors have the opportunity to incorporate the experience and learning of energy companies for their own transition towards decarbonization. The strategies of companies in sectors under transformation, such as agrifood, environmental or transport will determine the Winners, Contenders or Laggards in the near future.
Beyond the numerous ESG rankings, what essentially defines a Winning company is its commitment to the net zero emissions goal and a new business model to achieve it. This is where Sustainability and Strategy converge.