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Sustainability was the theme of the day at a pan-Nordic Nordea event last week bringing together corporates, government representatives as well as our own ESG experts to discuss how to drive the transition to a net-zero economy.
In the opening panel session, Nordea’s CEO Frank Vang-Jensen, Ørsted’s CEO Mads Nipper and Minna Aila, SVP Sustainability and Corporate Affairs in Neste, had an open-hearted conversation on the many dilemmas corporates struggle with today. Should you end relationships with clients and suppliers that are less ambitious in their ESG strategies? Does government regulation support firm and fast execution? And what kind of leadership and culture does it take to shift a company’s mindset to a sustainable bottom line?
The first part of the panel focused on what corporates can do to balance the risks and opportunities that come with the transition to a new economy. Only a few companies can leave their business models untouched if the goals of the Paris Agreement are to be met.
Mads Nipper described Ørsted’s transformation over the last 10 years, from being one of the most fossil fuel-intensive energy companies in Europe to having 90% of its heat and power generation based on renewable energy. That strategy has required consistency when it comes to plant closures, divestments and investments, and today makes Ørsted the world's second largest investor in renewable energy, with around 6 billion euros in annual investment.
Despite the swift switch to climate-friendly energy, the company still has work ahead to realise its full ESG ambition, according to the CEO:
“It’s not only about decarbonation, which is our business, but also about addressing all the other sustainability challenges around green energy, from biodiversity and our impact on nature to ensuring that we, also from a social dimension, help retrain the workforce from sunset industries like oil and gas,” Mads Nipper explained.
It’s about moving towards a more regenerative economy where business practices are based on building and restoring rather than exploiting or destroying.
Neste’s transformation is somewhat similar but spans 20 years. The company started off as a locally based oil refinery and has since grown into the world’s leading producer of sustainable aviation fuel and renewable diesel. An early ESG pioneer, more than 90% of the company’s profit came from renewables already in 2020. This year Neste announced that it’s studying to turn its conventional oil production site in Finland into a renewables production site. That step reflects the company’s determination to transform every part of its business rather than leaving less future-proof parts behind.
“It’s about fighting climate change and adapting as well, which is risky and costly for many companies, and maybe moving towards a more regenerative economy where business practices are based on building and restoring rather than exploiting or destroying ,” Minna Aila said.
Nordea was the first Nordic bank to set mid-term sustainability targets for 2030. CEO Frank Vang-Jensen emphasised that Nordea’s role as bank is to actively engage with and support customers in their transition, but also to say no when there is not enough progress. He also pointed out that some decisions can have a built-in dilemma: Saying no to a company that does not perform well on the environmental side might have a negative impact on the surrounding society, hurting the S in ESG.
In addition to discussions on business risks and opportunities, much of the dialogue centred around leadership and culture. All three panellists confirmed that the biggest challenge right now is to accelerate the transition, and a prerequisite is closing the “say-do gap” in the behaviour of employees, executives and decision makers.
CEO of Ørsted, a role he has held since January 2021. He also serves as Vice Chairman of the Confederation of Danish Industries and as a Danish representative in the Business and Sustainable Development Commission. He contributed to the UN’s conversion of the 17 sustainable development goals (SDGs) into business goals.
SVP, Sustainability and Corporate Affairs at Finnish sustainability champion Neste, where she is also a member of the Executive Committee. She is also a Board member at DFDS A/S. Her track record in the field of sustainability spans 20 years.