In 1979 a Danish manufacturer of household appliances, agricultural equipment and hydraulic cranes turned its hand to wind turbines.
By Anna Väänänen, Senior Portfolio Manager, Mirova
Forty years later it has installed over 66,000 wind turbines with 100-gigawatt capacity in over 80 countries and on five continents – enough to power 83 million lightbulbs1.
Vestas2 could have spent the last forty years focussing on manufacturing the most energy-efficient household appliances, agricultural equipment, and hydraulic cranes. It could have refined its production processes to minimize the use of plastics and recycle wastewater. And, it could have fostered a strong culture of good working practices, health and safety and clear policies and procedures from everything from workplace injuries to whistleblowing.
But the reason Vestas has had such a significant and positive impact on the fight against climate change is thanks to its decision to help solve an environmental problem.
Not Solved in Laboratories
Problems like climate change and biodiversity loss will not be solved in a laboratory. Instead, they will be solved by the companies that take these new technologies and innovations, commercialize them and then scale them up. It’s a process. Take Hydrogen for example. Technologies like hydrogen electrolysis and fuel cells have been around for decades – the first hydrogen fuel cell vehicle was in fact created in 19663 – but these technologies are only now starting to be both commercialized and applied as a means to decarbonize industrial processes and transportation.
It takes pioneering companies to show the way forward. Those with the right talent, the right science, and the right partners. These companies commercialize the conceptual, they make the theoretical viable. Then, soon after, others follow. Later, industries develop. And finally, adjacent industries adapt and adopt the products until they become almost ubiquitous.
The New Reality
World leaders have assembled in Glasgow this month for COP 26 in a bid to unite behind two primary goals – secure global net-zero by mid-century and keep 1.5 degrees within reach and adapt to protect communities and natural habitats. If these goals are to be met, the world needs more companies like Vestas. The new reality is, however, that we cannot afford to wait the forty years that it took Vestas to go from washing machine maker to wind turbine behemoth.
If we are to have any chance at meeting the objectives set out in the Paris Agreement we need to find many, many more of these types of companies and supercharge their growth by getting them access to the capital they need. We also need to foster collaboration and ensure that the entire value chain moves at the same speed. Continuing with the example of hydrogen, we need to ensure that hydrogen supply, fuel cell manufacturing, vehicle production and refueling networks develop in lockstep.
(Source: Hydrogen Council, July 2021, click on the graphic to enlarge)
There is still hope. Earlier this year, a joint venture between a Korean truck maker and a Swiss energy company launched a pilot joint venture bringing together 46 hydrogen-powered trucks and 25 companies specializing in logistics, distribution, and supermarket fulfillment. In just 11 months, the fleet racked up over 1 million kilometers of driving, refueling at nationwide filling stations and saving over 630 tonnes of CO2 in the process4.
This is a laudable venture and shows what is possible but compare that to over 3 trillion ton-kilometers traveled by trucks in the US alone each year5 and clearly, there is a long way to go yet.
1 Source: Vestas Wind Sytems A/S as at 09.01.2019
2 The stock mentioned above is shown for illustrative purposes only, and should not be considered as a recommendation or a solicitation to buy or sell.
3 Source: GM Heritage Center
4 Source: Hyundai.com as at 02.07.2021
5 Source: US Bureau of Transport Statistics, truck ton-miles for 2018 (converted to kilometers)
The information provided reflects Mirova’s opinion as of the date of this document and is subject to change without notice.
Mirova is an affiliate of Natixis Investment Managers dedicated to sustainable investing
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