Louise Dudley
While the utility sector is not renowned for its ESG credentials, some companies are pioneering the new technologies that will drive the sector in the years to come, cleaning up energy production in the process. One such example is Dong Energy, a leading provider of wind power and a shining reflection of the benefits of responsible energy production.
Concern
Dong Energy was founded in 2006 when six Danish power companies merged. The company has described its business at the time of the merger as one of the most coal-intensive utilities in Europe. It also owned a large number of oil and gas resources. This exposure to fossil fuels posed significant investment risks.
First, the accelerating pace of global warming, and the broadening understanding of it, meant that governments were becoming increasingly likely to limit fossil fuel burning on an absolute basis.
This scenario would leave traditional energy producers with ‘stranded assets’: unusable resources which are prematurely written down, resulting in a significant financial loss. This operational risk has become particularly acute following COP21, the United Nations’ climate conference in 2015, where representatives of 195 countries committed to limiting global warming to two degrees Celsius above pre-industrial levels.
