Net Zero Business Models

8PATHWAY TWO, OPTION TWO: COMPLETE TRANSFORMATION OF THE BUSINESS MODEL

“We want to create a world that runs entirely on green energy—in a way that works for people and planet.” ¹

—Mads Nipper, Group President and CEO, Ørsted

The second transformation strategy of Pathway Two takes a bold, enterprise‐wide transformational approach. This strategy develops a long‐term strategic plan to transform a company into a net zero enterprise. The objective is to reinvent or redesign completely the company’s business model, and quite possibly its purpose and vision. Developing new no‐ and low‐carbon products and services naturally flows from reinventing or redesigning the business model.

Pathway Two, Option Two companies need to combine comprehensive climate risk management over a long‐term planning horizon with scenario analysis and cash flow forecasting. Pathway Two, Option Two companies also need to rethink their capital allocation strategies (see Exhibit 8.1).

EXHIBIT 8.1 Pathway Two, Option Two

COMPLETE TRANSFORMATION OF THE BUSINESS MODEL

Ørsted

Fifteen years ago, Ørsted was a fossil fuel–based oil and gas company based in Denmark with high carbon intensity. Since 2006, Ørsted has transformed its business model from being one of the most carbon intensive oil and gas energy providers in Europe to being a global leader in renewable energy. The company has made a complete end‐to‐end ...