Business is no stranger to smokestack energy giants loudly shouting their commitment to clean and renewable sources of power, but such claims rarely stand up to close analysis.
Not so in the case of DONG Energy, deserving winner of the Masters of Reinvention award: in 2006, DONG Energy was just such an old-school operator, reliant on coal for 60% of its electricity output, but by 2015 that figure had dropped to 29%, while the contribution of offshore wind and gas had risen from 6% to 39%. While many oil and gas majors are dialling back efforts to go green in the face of economic uncertainty and thinner margins, DONG remains fully committed to a clean, low carbon future – its carbon emissions are already down 52% since 2006, and the company says they will be cut by 92% by 2023 as its investments in offshore wind power continue to bear fruit.
All in all a remarkable transformation for a company formed in the early 70s by the Danish government, to manage the country’s oil and gas resources. Danish Oil and Natural Gas remained committed to fossil fuels until the noughties, when a growing realisation of the scale and importance of the opportunities in clean power led to the formation of DONG Energy and a radical shift towards ‘green, independent and economically viable’ renewable energy sources. Including not only offshore wind, but also biomass and advanced waste-to-power activities, too.
Its strategic transformation was sealed earlier this year by the sale of its entire legacy upstream oil and gas operations to Ineos for £1bn. It is even going to change its name, ditching the historic hydrocarbon echoes of its DONG acronym in favour of new monicker Orsted (Hans Christian Orsted being a Danish born physicist who did pioneering work on electromagnetism in the 1820s).
‘Dong was originally short for Danish Oil and Natural Gas,’ Thomas Thune Andersen, chairman of the board of directors, said in a statement in October. ‘With our profound strategic transformation and the divestment of our upstream oil and gas business, this is no longer who we are. Therefore, now is the right time to change our name.’
In a world where every established player fears disruption, DONG is a great example of how the ‘incumbents’ dilemma’ – the unwillingness of established leaders to exploit new developments for fear of losing the business they already have – can be tackled in an innovative, bold and commercially successful way.