Renewable Energy, Sustainable Business Models, and Decarbonization in the European Union: Comparative Analysis of Corporate Sustainability Reports

Abstract

The purpose of this article is to investigate the development of sustainable business models (SBMs) of renewable energy companies. To assess the degree of alignment with the European Union Taxonomy for sustainable activities (Regulation 2020/852), the European Green Deal, and the Sustainable Development Goals of five renewable energy companies—Ørsted, Engie, Vattenfall, Iberdrola, and Enel—we have used their sustainability reports from 2023. We have analyzed how each company contributes to the EU climate targets and strategy to achieve a 55% reduction in greenhouse gas emissions by 2030 and net zero by 2050. The results showed the challenges faced by each company in switching from traditional fossil fuel models to renewable models. Due to regulatory constraints and different organizational structures, each company has adopted a specific SBM with respect to power generation and the green transition. The advantages and disadvantages of these SBMs were identified and described comparatively to help regulators, policymakers, and industry associations improve sustainability reporting for the energy sector.

1. Introduction

Climate change is an issue that is urgent enough to put the energy sector under severe pressure [1]. Since energy production and use are mostly carbon-related activities, the traditional and dominant business model seems to be no longer suitable to avert climate risks and catastrophic events [2,3]. The fossil fuel-based energy model should be replaced by a new energy model based on renewable and clean energy sources. The European Union has taken strict actions to address the issue of climate change in the long term [1]. It has taken important steps by aiming to reduce its greenhouse gas emissions by 55% by 2030 and achieve net zero by 2050 [4]. In doing so, the EU will be shifting its energy sector from fossil fuels to renewable energy sources such as wind, solar, water, and biomass. Moreover, European Union member states will reduce energy consumption by adopting more efficient and innovative solutions. To achieve these goals, the European Union has developed a clear strategy as part of the European Green Deal [5,6].

One of the economic phenomena that plays an important role in the design of the European Union’s energy transition strategy is the creation of sustainable business models (SBMs) [4]. These can help companies remain sustainable and follow environmental, social, and governance (ESG) guidelines in their core strategies [7] while also creating value for shareholders [8]. A key characteristic of sustainable business models (SBMs) is the embeddedness of environmental, social, and economic objectives within the core of corporate strategies and functions [9]. SBMs highlight the importance of businesses moving away from their traditional, resource-demanding models to solutions that are ultimately not resource-intensive and create value for society. Such models focus on increasing resource-efficient innovations, driving businesses to rely on renewable energy, adopting the principles of the circular economy aimed at reducing energy consumption, and promoting the use of pooled resources in delivering products as services.

In relation to corporate stakeholders, SBMs help boost transparency and accountability, while ensuring that businesses align their operations with frameworks (i.e., the Sustainable Development Goals or SDGs) and environmental regulations (like the EU Taxonomy) [10,11]. SBMs extract value from stakeholder engagement [12], as companies realize that partnerships with communities, suppliers, and customers are essential for reaching shared sustainability objectives. With growing pressure on the corporate sector from regulators and markets alike to contribute to climate action and resource conservation, SBMs provide a set of principles to align economic performance with ecological and social value [13]. SBMs are relevant to organizations that adopt practices consistent with global sustainability targets, seeking economic resilience in a fast-changing economy. These models are intended to make companies conform to the Sustainable Development Goals of the United Nations and, in this context, with SDG 7 ‘Affordable and Clean Energy’ and SDG 13 ‘Climate Action’ [2].

According to the Renewable Energy Directive (EU) 2018/2001, renewable energy is defined as any naturally occurring, theoretically unlimited source of energy that can be replenished over a short period of time, including solar, wind, hydroelectric, and geothermal energy. The Green Deal outlines a broad set of initiatives by the EU to make Europe climate-neutral by 2050 and implicitly stresses the necessity of renewable energy for this goal. Renewable energy projects contribute substantially to climate change mitigation and the transition to sustainable energy systems, as set out in the EU Taxonomy Climate Delegated Act (EU) 2021/2139.

This paper analyses the adoption of sustainable business models (SBMs) in some of Europe’s leading energy companies and evaluates how SBM attributes are aligned with the regulatory frameworks fostered by the EU, specifically the Taxonomy Regulation (EU) 2020/852 [10]. This analysis considers how the sampled companies have developed strategies to meet the targets set in 2021 by the European Union to reduce greenhouse gas emissions and create a low-carbon economy. This article seeks to explore the progress factors and bottlenecks faced during the implementation of corporate sustainability practices, in parallel with regulatory demands, by critically reviewing significant contributions towards SDGs 7 and 13. The present article highlights the operational adaptations and strategic approaches used by these firms when dealing with changes in sustainable energy markets in EU countries.

The results provide details on the companies’ renewable energy capacities [14] and operational performance as presented in their sustainability reports with respect to climate change [2]. The analyzed reports illustrate how large energy companies are taking practical steps to be compliant with EU legislation and ensure that their plans align with the objectives of the Green Deal. They emphasize that sustainability must be woven into corporate strategy, from the supply chain to customer engagement, and point out the importance of taking a comprehensive view of the energy transition. Our results help readers understand the challenges and opportunities for sustainable business models in the energy sector. Finally, all companies in our sample, namely, Ørsted, Iberdrola, Enel, Engie, and Vattenfall, are renewable energy producers, thus matching the requirements to be covered by the EU Taxonomy and being positive contributors to the implementation of EU climate and sustainability goals.

This article is structured as follows; we first introduce a review of the literature that situates SBMs in the energy sector through the lens of contemporary legislation like the EU Taxonomy. This section summarizes the main academic and industry work on how SBMs have evolved in response to regulatory pressures, as well as through technological advancements impacting renewable energy. After reviewing the literature, we describe our research methodology and explain the qualitative comparison framework that was used to analyze sustainability reports from the five major European energy companies (Ørsted, Enel, Engie, Vattenfall, and Iberdrola). This is followed by the Results Section: a case study for each company providing details of the strategic and operational alignment with SBMs and the EU Taxonomy. The analysis is articulated through several key considerations such as renewable energy capacity, carbon emission reductions, and sustainable infrastructure investment, focusing specifically on stakeholder engagement. In addition, the case studies offer insight into how the principles of SBMs are reflected in various regulatory and market circumstances through company-specific challenges. The Discussion Section provides a comparison of the results, identifying trends, differences, and implications for future developments of SBMs in the energy field.

2. Literature Review

2.1. The Strategy of the European Union on Green Energy

The European Union (EU) has made a commitment to be the first climate-neutral continent by 2050, and the energy sector (NACE D35) will be key to enabling this ambition. Green energy production and retail companies bring renewable energy to end-users and enable the transition to a low-carbon economy. These companies enable the decarbonization of value chains and global climate policy goals by aligning the way they operate with the requirements of the EU sustainability regulations [10]. This is the gap that the EU Green Deal [6] is trying to fill in by focusing on sustainability in all economic activities. This strategy regards green energy firms as facilitators of a wider energy transition so that renewables are not only produced but also used in households, local administration, and industrial processes toward climate neutrality. Aligning energy generation and retail with the EU Taxonomy can have a real impact towards mitigating climate change. However, the application of these strategies faces practical hurdles such as regulatory constraints, stakeholder resistance, and inadequate technological innovation, which need to be addressed in a targeted and systemic way [15].

As part of the EU’s goal to reach climate neutrality by 2050, a share of 23% of the EU’s gross final energy consumption in 2022 came from renewables, up from 21.9% in 2021 [6,16]. Wind energy is the main contributor to green electricity production, holding the largest market share, 421.3 TWh, 39% of the total renewable electricity produced, followed by hydropower at 276.2 TWh (25.6%) and solar energy at 210.2 TWh (19.5%) [17]. This emphasizes the increasing significance of such renewable options in terms of mitigating greenhouse gas emissions and diversifying EU’s energy supply. The need to harmonize these policies at the European level will also be crucial in strengthening renewable energy capacity and the single energy market, which has long been at the heart of EU climate and sustainability strategies [18]. A chronological presentation of European strategies and legislation regarding renewable energy is included in

Table 1. Evolution of European Union strategies and legislation on renewable energy.

Year	Directive	Key Changes	Impact
2003	Renewable Energy Directive (2003/30/EC)	Mandated member states to set a minimum biofuel share in the transport fuel market, with indicative targets of 2% in 2005 and 5.75% in 2010. Promoted the production and use of biodiesel, bioethanol, and other biofuels.	Higher attention paid to the funding of biofuels as a substitute for fossil fuels in transport. However, due to weak enforcement, the implementation of such provisions has varied among the member states, and subsequently, issues related to indirect land-use change and food-vs.-fuel conflicts have arisen.
2009	Renewable Energy Directive (2009/28/EC)	Established legally binding national targets for renewable energy such that 20% of the total EU energy mix by 2020 will come from renewable sources, and 10% renewable energy in transport.	Increased investment in wind and solar power, laying the foundations for the EU long-term sustainability policy.
2015	Paris Agreement (ratified by the EU)	EU member nations pledged to keep global warming under 2 °C, working to achieve 1.5 °C.	Improved climate targets, connecting renewable expansion to emission reduction targets.
2018	Revised Renewable Energy Directive (2018/2001/EU)	Raised the EU 2030 renewable energy target to 32%, with a review mechanism in place to increase it. Allows easier permitting of renewable projects.	Development of offshore wind and solar energy projects, laying the groundwork for widespread renewable deployment.
2019	European Green Deal	Designed to make Europe the first climate-neutral continent by 2050. Policies implemented to support renewables across all sectors.	Greater focus on systemic decarbonization through the lens of green finance and corporate responsibility instead of targets.
2020	EU Taxonomy for Sustainable Activities (Regulation 2020/852)	Developed a taxonomy to classify activities that can be considered sustainable economic activity, such as those involving renewable energy.	Enhanced clarity on investments and reduced greenwashing, supporting the alignment of financial markets with sustainability.
2021	Fit for 55 Package	Increased the 2030 renewable energy share target from 32% to 40%. Enhanced emission trading and investment in clean energy.	Established a legally binding commitment to a 55% GHG cut by 2030 and enhanced cap-and-trade policies.
2022	RE Power EU Plan	Boosted the 2030 renewable energy target to 45 percent, decreasing dependence on fossil fuels during geopolitical energy crises.	Aims to increase renewable energy investments and energy efficiency. Supports the EU in energy source diversification and energy security.
2022	Corporate Sustainability Reporting Directive 2022/2464 (CSRD)	Mandated large companies to reveal risks related to sustainability and renewable energy contributions.	Enhanced corporate accountability in the deployment of renewable energy and in climate-related disclosures, through the European Sustainability Reporting Standards (ESRS).

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2.2. The EU Taxonomy—A Framework for Sustainable Economic Activity

The EU Taxonomy is the EU’s landmark sustainability instrument establishing the alignment of economic activities with sustainable objectives in the environmental domain [10]. It provides a clear framework for identifying which activities are environmentally sustainable, enabling investors and businesses to channel their funds towards assets and processes that make a meaningful contribution to climate change mitigation and adaptation [19]. Within the EU Taxonomy, an activity must satisfy stringent technical screening criteria by making a substantive contribution to at least one of the six environmental objectives and by causing no significant harm to other sustainability objectives. Such objectives refer to climate change mitigation, climate change adaptation, sustainable use of water and marine resources, preventing pollution, protecting biodiversity, and enabling the transition to a circular economy [20].

Renewable energy projects are at the heart of the EU Taxonomy’s preoccupation with climate change mitigation. Electricity from renewable sources is the solution to reaching the EU climate objectives and is needed to meet the United Nations Sustainable Development Goals (SDGs), specifically SDG 7 ‘Affordable and Clean Energy’ and SDG 13 ‘Climate action’. The EU Taxonomy further strengthens investor confidence by creating a transparent and comparable system to assess the environmental performance of projects [21]. Renewable energy projects developed under the EU Taxonomy should pursue three main KPIs with respect to their roles in a project: avoidance of carbon emissions, expansion of renewable energy capacity, and compliance with the DNSH principle. These measures target quantifiable environmental effects with a focus on delivering project outcomes in alignment with the SDG 7 and SDG 13 targets and ensuring that performance reporting is transparent and documented to build stakeholder trust and improve regulatory compliance. This is expected to mitigate greenwashing and guarantee that sustainability claims are supported by actual, measurable results [22].

The literature [1,5] underlines the importance of transparency in sustainability reporting for aligning corporate practices with regulatory frameworks, such as the EU Taxonomy. The EU Taxonomy encourages accountability and trust among stakeholders by making companies disclose extensive data on their environmental performance. Companies disclose data on their environmental activities by reporting carbon emissions across Scopes 1, 2, and 3, renewable energy generation metrics, and resource efficiency measures [23]. Furthermore, compliance with EU Taxonomy criteria, biodiversity impact assessments, and investment allocations toward sustainable projects are highlighted. These disclosures enhance transparency, addressing stakeholder expectations and fostering informed investment decisions [24].

While the EU Taxonomy has numerous transparency benefits, it also poses considerable challenges. Meeting the standards can be resource-intensive because of the extensive technical criteria proposed for each economic activity. In addition, the dynamic character of the taxonomy itself stresses the necessity for iterative refinements to improve its usability and sector-specific complexities [19]. As an example, renewable energy projects must show a carbon reduction potential but also demonstrate that they ‘do no significant harm’ (the DNSH principle) to other environmental aspects or negatively impact biodiversity and local communities. The need to balance these requirements can create complexities in implementation, especially for projects that occur near sensitive biodiversity areas.

2.3. Policies/Progress: Transition to Renewable Energy in the EU

Fossil fuels have historically formed the basis of most of the energy produced and consumed by the EU member states [25]. Geostrategic challenges from 2022 onwards, as well as international climate agreements like the Paris Agreement [26], have forced a transition to renewable energy sources [27]. Policies like the Renewable Energy Directive 2018/2001, requiring that 45% of the EU’s energy production be renewable by 2030 and ultimately net zero by 2050, have institutionalized this green transition [4].

Wind, solar, and hydroelectric power technologies have led to this transition. Specifically, offshore wind energy has become an increasingly important piece of the renewable capacity puzzle in the EU [17]. With a high conversion efficiency and not competing with land for food production, it is an ideal candidate for power generation on the gigawatt scale. Top European players like Ørsted and Iberdrola have invested upfront in offshore wind projects, resulting in substantial capacity expansions over recent years. As an example, Ørsted expects to have an installed renewable capacity of 23 GW by 2026, up from of 15.7 GW in 2023 [1]. Iberdrola’s renewable portfolio, which features offshore wind grids, shows how scalable wind is as an emission-free solution [12].

In southern Europe, where solar irradiance allows for a different kind of energy generation, solar energy has also become an important source. Enel, a major renewable energy developer, claims that managed renewable capacity and BESS (Battery Energy Storage System) of 63 GW of installed capacity was reached in 2023 [19]. These developments can be seen as indicators of innovation, regionalization, and participation of the private sector in the advancement of renewable energy technologies.

Sustainable business models (SBMs) are considered business blueprints to incorporate environmental, social, and governance (ESG) principles into corporate strategies. Best practices for adapting SBMs should be cost-efficient, innovative, and sustainable through collaboration with stakeholders [13]. Recent literature underscores the importance of SBMs as a mechanism to modify traditional resource-driven practices towards sustainable value creation [28]. Digital technologies like blockchain and IoT allow real-time tracking of energy consumption and emissions, improving operational efficiency and transparency. The integration of these innovations requires substantial investments, especially for SMEs who have limited access to such resources (financial and/or operational) [29].

2.4. Challenges Regarding Renewable Energy

Although renewable technologies are being deployed on a growing basis, the sector faces significant challenges in integrating these sources into the existing energy network [30]. Wind and solar energy are the most sustainable sources of energy available today, but they are intermittent sources of energy, and it can be difficult to always guarantee the supply of energy. Such intermittency complicates grid stability, especially in areas where renewables constitute a high proportion of electricity production [31]. Smart grid technologies and energy storage systems play a pivotal role in addressing these challenges [30]. With real-time energy management, smart grids can optimize electricity distribution against supply-and-demand fluctuations. Still, this technology is in its infancy, and significant investment and innovation are needed in the field. Likewise, improving energy storage in batteries is crucial to storing energy at times of peak generation for use when demand is the highest [30]. Although these solutions show promise, they are still expensive and not sufficiently mature in terms of technology applications [32].

The integration of renewable energy is also made more complex by regulatory inconsistency across EU member states. As an example, national policies that differ significantly, e.g., Germany and the Netherlands, have created bottlenecks for companies like Vattenfall in expanding offshore wind projects [33]. Among the main challenges the company must face are the inconsistent energy policies of EU countries, slowing down projects such as offshore wind farms. Delays in permitting projects such as Hollandse Kust Zuid are reflective of how better-directed processes across the member states are necessary [15,33].

This paper aims to study sustainable business models (SBMs) related to renewable energy strategies and their convergence with the regulatory frameworks and sustainability objectives of the European Union. We evaluate renewable energy capacities, carbon abatement strategies, and how well these companies contribute to SDGs 7 and 13 based on a sample of leading European renewable energy firms. This contributes to the literature by providing a series of case studies that have not been explored before from the perspective of sustainable business models in conjunction with the EU Taxonomy.

This article will answer the following research questions:

• To what extent do the renewable energy capacities of the selected firms reflect their alignment with sustainable business models (SBMs) and the strategic approaches of the companies with respect to energy transition?
• How do company investments and corporate environmental performance measure against the EU Taxonomy climate change mitigation criteria?
• How does each company’s business model contribute to Sustainable Development Goals (SDGs) 7 and 13, specifically in terms of renewable power generation and carbon reduction?

3. Methodology

3.1. Research Design

The research design used in this study is a comparative qualitative analysis. The following analysis compares the 2023 sustainability reports of five European energy companies. The 2023 sustainability reports of Iberdrola, Ørsted, Enel, Engie and Vattenfall are chosen as the primary source of data for this study. This study analyzes the EU Taxonomy-related activities of the sampled companies, pertaining to transparency of sustainability reporting and compliance with principles such as ‘do no significant harm’ (DNSH). This article also aims to extract drivers and barriers for implementing SBMs to better understand sustainable practices in the renewable energy sector. The method is suitable for this type of research question, as it has a clear structure for the comparison [34].

We identify similarities and differences in the companies’ approaches to sustainability. This qualitative analysis will also refer to the academic literature, general industry reports, and regulators’ reports in analyzing the sampled corporate reports. The methodology also compares the 2023 and 2022 reports to learn about the trends in the development of SBMs and how companies responded to external shocks and events such as regulatory changes, technology development, and stakeholder demands [1].

3.2. Sample Selection and Description

The sampled companies were first chosen from Statista’s ranking of leading green energy firms operating in the European Union [35], focusing on companies active in renewable energy generation. This is a selection of companies where at least 50% of the total energy generation is from renewable sources. This threshold served the objective of focusing on companies that show a commitment to going green and that have significant contributions to the Sustainable Development Goals of the United Nations. All the selected companies have invested heavily in wind, solar, and hydroelectric power, and their installed capacities now represent a significant share of Europe’s renewable energy capacity. Each of them had publicly committed to net-zero emissions and had already included sustainability as an important part of their business model. As a result, the 2023 sustainability report of each of these companies provides an overview of their performance with respect to these goals, making them adequate case studies for the SBM analysis [31].

Engie was the only company not reaching the 50% renewable energy threshold. However, it was included as a subject for our analysis, given its large impact on the European energy transition. Through its strategic leadership in low-carbon technologies, such as green hydrogen and energy storage, over the years, Engie has had a growing impact on renewables. Hence, the inclusion of Engie offers a perspective on corporate transition in expanding renewable capacities while managing a business model relying on fossil fuels.

These five companies operate in various European markets and even outside the EU. Their impact on different industries provides an opportunity to understand how specific regulatory differences and market specifics contribute to the design and implementation of SBMs. Ørsted and Iberdrola are examples of best practices in sustainability reporting by following the guidelines of the Task Force on Climate-related Financial Disclosures (TCFD) and the Global Reporting Initiative (GRI) [1].

3.3. Data Collection

Data collection allowed a detailed analysis of sustainability reports released by these five companies in 2023. These were the latest versions at the time of writing. The primary data collected in this paper are as follows:

• Renewable energy facilities and capacity (in gigawatts, GW) owned by the five companies, broken down by power generation source;
• Carbon emission reduction targets and actual emissions, with carbon emissions represented in metric tons of CO₂;
• Investment in renewable energy projects, particularly offshore wind turbines, solar plants, and energy storage projects;
• EU Taxonomy-aligned activities as reported by each company on the topic of renewable energy generation and energy efficiency: revenue, capital expenditure (CapEx), and operational expenditure (OpEx) ratios;
• SDG alignment, primarily to SDGs 7 and 13;
• Stakeholder involvement in the development of strategies for the production and use of renewable energy;
• Secondary data collection and analysis based on academic articles and company reports that have already examined these five companies [36].

We have also collected financial data from the sustainability reports and financial reports to perform financial and operational analysis for the period 2019–2023:

• Gross margin = the gross profit (utility sector) for the fiscal year divided by primary revenue for the same period and multiplied by 100;
• Fixed asset turnover = the amount of revenue generated for each unit of fixed assets. This is calculated as the primary revenue for the fiscal year divided by the sum of total net property, plant and equipment, and total net utility plant for the same period;
• Renewable energy supply (%) = total energy distributed or produced from renewable energy sources divided by the total energy distributed or produced;
• Renewable capacity installed (GW).

3.4. Data Analysis

The data analysis procedure included three key steps:

• Comparative analysis of renewable energy capacities: The first step was to compare the renewable energy capacities of the five companies chosen. They were analyzed by each specific energy source and the average number of GW of power installed. Furthermore, the data were analyzed in terms of the proportion of renewable energy in the total capacities of the companies. This will allow for understanding the way each company has developed its renewable energy sources and capacities [37].
• Assessment of climate change mitigation within the EU Taxonomy in relation to each SBM: The second step of data analysis is focused on the analysis of the companies’ carbon reduction strategies and net-zero goals. The analysis of data was also implemented on the basis of the extent of and progress in reducing carbon emissions for each of the various scopes, especially Scope 1. For this step, we included an analysis of the milestones of EU climate regulations and participation in the Paris Agreement. We also include an analysis of integrated carbon offset projects, carbon capture technology, and energy efficiency implementation [38].
• Analysis of financial and operational performance in relation to energy transition and/or the delivery of renewable energy projects. We assessed the financial effectiveness of renewable energy expansion through key financial indicators in the financial period 2019–2023. Four financial/operational indicators measure each company’s transformation of its business model, financial resilience, and sustainability performance.

The presentation of the results is followed by a discussion of the contributions of the SDGs. The next section includes an assessment of how the SBM of each company is aligned with the implementation of the Sustainable Development Goals. We evaluate to what extent the SBMs—i.e., the companies’ sustainability frameworks and strategies—contribute to SDG 7 and SDG 13. Resource efficiency and benefits for stakeholders will be referred to in the discussion.

4. Results

4.1. Comparative Analysis of Renewable Energy Capacities

The diversity of this sample is reflected in the figures for renewable energy capacity. The largest renewable capacity belongs to Enel with 55.536 GW, and renewable sources constitute 68.21% of its mix, the company primarily investing in solar, wind, and hydroelectric energies. Ørsted is the leading company by renewable capacity in terms of percentage, with a total of 15.7 GW renewable installed capacity, of which offshore wind contributing 56%. With a total of 42.187 GW in renewable capacity, Iberdrola goes green for 67% of its energy mix, with wind energy contributing 36% and hydroelectric energy capacities contributing 20.8%, indicating a more balanced strategy. Vattenfall has 17.135 GW with a total renewable capacity of 62% and a heavier reliance on hydropower (42%). Engie has only 39.5% renewable energy in its production capacity, reflecting a broader reliance on fossil fuels. The details presented in

Table 2. Renewable energy breakdown by installed capacities for the financial year 2023.

Company (Page in Report)	Total Capacity (GW)	Total Renewable (GW)	Solar (%)	Wind (%)	Hydro (%)	Other Green Energy (%)	Total Renewable (%)	Countries
Iberdrola (p.30)	62.88 (electricity and heat)	42.19	9.8%	36% (onshore and offshore)	20.8%	Mini-hydro: 0.4%	67%	40+
Ørsted (p.95)	15.73 (electricity and heat)	15.73	6.5%	80% (offshore and onshore)	N/A	Biomass: 13.5%	100%	10+
Enel (p.373)	81.42 (electricity and heat)	55.54	12.8%	19.5%	34.8%	Geothermal: 1.14%, biomass: 0.01%	68.21%	38
Engie (p.3)	104.7 GW (electricity)	41.40	6.6%	15.09%	17.09%	Others: 0.8%	39.54%	70+
Vattenfall (p.197)	27.60 (electricity)	17.14	<0.01%	19.72%	41.7%	Biomass: 0.4%	61.82%	7+

indicate that companies with more focused renewable strategies like Ørsted are likely to attain higher proportional coverage, while companies with larger and diversified portfolios have more challenges in achieving greater renewable shares like Engie’s.

The data for the financial year 2023 on non-renewable energy capacity show differences in the dependence on fossil fuels and nuclear power between companies. Engie has more than 60 GW capacity of non-renewables, with substantial contributions coming from natural gas (49%) and coal (3%). A higher proportion of the non-renewable capacity of Iberdrola is 20.7 GW, mainly from its nuclear- and natural gas-based generation, representing 35.8% of the energy mix. In 2023, Enel had a total of 25.9 GW of non-renewables representing 31.8% of its portfolio, which were mainly contributed by nuclear power (12%) and natural gas (17.7%). Vattenfall has 10.2 GW of non-renewable capacity, representing 37.9% of its total installed energy capacity, and the main contributions to non-renewable energy generation are from nuclear power, covering 37%. In comparison, Ørsted owns a maximum of 1.3 GW of non-renewable capacity for heat generation using coal and 1.6 GW using natural gas, in Denmark. The figures suggest that companies with more specialized portfolios and a focused renewable strategy (like Ørsted) have succeeded in decreasing their reliance on non-renewables. On the contrary, bigger and more diversified energy production source companies, such as Engie and Iberdrola, seek solutions to reduce their dependence on polluting sources of energy.

4.2. Comparative Analysis of Business Models

The business models and energy capacities of Ørsted, Enel, Iberdrola, Engie, and Vattenfall show different pathways to integrating renewable energy, reflecting their strategic focus, operational conditions, and market environments. Such variations highlight the progress that companies are making towards sustainable objectives but also the difficulties they experience transitioning from traditional (fossil fuels) to sustainable energy systems. Our results contribute to understanding not just the operational level but also the business models of these large companies, by providing the relevant renewable capacity data and non-renewable capacity data.

Ørsted has a very targeted business model, focused mainly on offshore wind as the main technology of its business. This strategy is supported by minor investments in onshore renewables and green hydrogen (P2X), which enables it to expand and enhance biodiversity impact at scale through various projects [39]. With 15.7 GW of renewable capacity, 93% of Ørsted’s energy portfolio is in renewables, the highest share among its peers [39]. The strategy is focused on limiting their dependence on fossil fuels, as they aim to phase out fossil sources in 2024. Ørsted has continued to align its strategic goals to prioritize scale and the reduction in climate impact through its significant offshore wind investments. Although its absolute renewable capacity is smaller compared to larger companies such as Enel or Iberdrola, its proportional renewable coverage illustrates the benefit of specialization in streamlining the transition to sustainability.

On the other hand, Enel combines renewable energy generation with its entire energy infrastructure and electricity services. This model allows the company to target global development possibilities while responding to local market needs for electrification and digitalization. With 55.54 GW of renewable capacity, Enel holds the largest share (68.23%) of renewables in its power generation portfolio, when compared with the companies analyzed [40]. The diversified mixture consists of investments in solar (7%), wind (21.9%), and hydroelectric (29.4%) energy. But the wide operating footprint of Enel also contains 25.881 GW representing 31.77% of non-renewable capacity, mostly from coal and natural gas [40]. This reveals the difficulties of running a diversified energy portfolio while trying to meet decarbonization goals. However, having a wider geographical footprint and investments across different categories of assets and risks, Enel maintains the balance between renewable capacity, potential for growth, and managing transition risks in relation to fossil fuel-based energy.

Another important player, Iberdrola, also developed an integrated energy business model, combining renewable generation with smart grid development plus customer-centric energy services [41]. Iberdrola has a total renewable capacity of 42.187 GW, which is 67% of its total energy portfolio [41]. This includes considerable investments in wind (29%) and hydroelectric (14%) power, representing the mix of renewables. However, 20.7 GW of its portfolio is still linked to non-renewable (but less polluting) sources including nuclear power and natural gas. Fundamentally, this reliance highlights the difficulty of managing the trade-off between expanding renewables and the operational implications of traditional energy systems. Iberdrola has an integrated model that allows the right resources to be deployed [41], but it also has significant non-renewable capacities that indicate that more work is needed for decarbonization and further integration of renewable resources while growing its capacity.

Engie offers a mixed business model based on the production of renewable energy with a significant share of natural gas and other traditional sources. While the company has made important advances by investing in green hydrogen and energy efficiency services that assist in decarbonization, its continued use of fossil fuels reveals the broader structural challenges of its green transition. Unlike the other four companies, Engie only has 41% of its total energy portfolio in renewables, with 41.40 GW of renewable capacity, which is the lowest proportion of renewables in the present sample [42]. In contrast, its non-renewable capacity in 2023 is 61 GW, with natural gas and coal making up 49% and 3%, respectively [42]. A high dependence on traditional energy also reveals the difficulties of operating a diversified energy model; the company currently faces the challenge of shifting to cleaner alternatives due to its legacy systems, as the entity owns fossil fuel-dependent assets. This situation requires time and investment to replace current fossil fuel assets while managing transition risks. However, Engie has already taken significant steps, setting the goal of achieving at least 50% renewable capacity by 2025 and its commitment to phase out coal earlier with a complete exit planned by 2027 [42].

Engie invests in new technologies such as green hydrogen in the transition to a more sustainable energy infrastructure [42]. The size of its legacy infrastructure is an obstacle in changing the energy mix to support sustainable development. In response, the company has, as part of its larger strategy to increase its renewable footprint, ramped up investments in offshore wind and solar, particularly in the European and Latin American markets [42]. Engie has a multifaceted approach in which it weighs its investments in renewables against a larger base of natural gas and coal installations, meaning its growth of renewables (including biomethane) is slower. Nevertheless, the firm has explored carbon capture and storage (CCS) technologies to reduce dependence on traditional fossil fuels for grid balancing [42].

Vattenfall has a regional business model that utilizes hydropower and nuclear power as transitional resources with an increasing share of investments in wind and solar. This approach is in line with its focus on maintaining grid stability and operational efficiency in its respective regional markets. Vattenfall has 17.14 GW of total renewable capacity, and it accounts for 62.8% of Vattenfall’s energy portfolio [33], with 36% from hydropower. The reliance on hydropower creates a stable foundation for renewable generation but limits the speed of diversification to other renewable sources like wind and solar. Moreover, climate variations can affect this business model.

To address these challenges, Vattenfall has committed to achieving net zero by 2040 and advanced a coal phase-out by 2030 [33]. It has a non-renewable capacity of 10.4 GW (37.92% of its portfolio), mostly from nuclear power (which is considered a transitional solution by the European Commission), which does not emit greenhouse gases. Other than the coal phase-out, Vattenfall is also rapidly growing its wind asset base, e.g., its offshore wind projects such as Hollandse Kust Zuid, one of the largest offshore wind farms in the world [33]. Vattenfall’s solution is systemic in nature, combining renewables, electrification, and hydrogen production and consumption, in line with the climate targets of both the European Union and the Paris Agreement 1.5 °C targets. The company is also seeking solutions to enhance the stability of energy systems by offering grid flexibility solutions, expanding energy storage and nuclear-based grid stabilization [43].

In an additional push for decarbonization, Vattenfall is developing hydrogen infrastructure in Sweden and Germany to allow the heavy industry, including steel production, to decarbonize. One of its flagship projects, a joint effort with the steel industry, is the HYBRIT project in Sweden, which aims to replace coal-based steel production with hydrogen-based direct reduction processes [44]. The firm is also broadening the implementation of large-scale heat pumps and waste heat recovery integration into district heating networks and is carrying out major initiatives in Berlin, Amsterdam, and Uppsalla to decarbonize urban heating from fossil fuels [44].

4.3. Financial and Operational Analysis of Sampled Companies

For the sample companies, financial and operational analysis focuses on four indicators: fixed asset turnover, gross margin, renewable installed capacity, and renewable energy production. These indicators are used to demonstrate the implementation of SBMs in the energy generation industry.

In Figure 1, Ørsted has seen the most significant variation in fixed asset turnover. A decrease in 2023 in fixed asset turnover coincides with Ørsted’s 31% revenue reduction [39], DKK 26.8 billion in impairments, and the pause of offshore wind projects, especially in the U.S. [39]. Unlike Iberdrola, Enel, and Engie, which boast a more diversified energy portfolio, Ørsted has typically been highly reliant on offshore wind, making it vulnerable to over-budget and under-schedule pitfalls. Vattenfall, by contrast, has a more balanced mix, including more hydroelectric and nuclear power to stabilize its deliveries. The case of Ørsted is illustrative of the financial perils of capital-heavy, offshore-wind-based models in unpredictable markets.

Enel experienced a steep decrease in gross margin in 2022 (see Figure 2) largely because of unstable energy market conditions, higher procurement costs, and lower thermal generation profitability. Enel’s revenue from thermal generation fell by EUR 10.1 billion [40] while revenue from coal plants fell by EUR 3.6 billion [40], as the company cut margins while ramping up its exit from fossil fuels. The high costs of CO₂ certificates and supply chain disruptions also impacted margins, while the other European energy firms such as Iberdrola avoided these risks due to their diversified energy mix. A substantial rebound in 2023 shows better cost efficiency and stabilized renewable energy revenue for Enel.

In 2023, Vattenfall’s renewable installed capacity remained steady, while the other companies managed to grow (see Figure 3). This was impacted by regulatory restrictions and caused delays in offshore wind projects in Germany and the Netherlands [33]. Vattenfall also adjusted its investment plans in favor of nuclear power as the only solution in which the company is investing, by allocating funds to maintain and grow its nuclear power capacity (which is not considered renewable) [33]. In comparison, firms such as Enel, Iberdrola, and Ørsted maintained their focus on wind and solar energies, driving renewable capacity growth even higher. These evolutions illustrate the role that investment strategies and regulatory conditions play in capacity development trends.

The production of renewable energy has increased for most companies in our sample, as the continued investments in capacity expansion and decarbonization were driven by policy (see Figure 4). Offshore wind deployment and repowering projects ensured steady growth for Ørsted and Iberdrola. Vattenfall also has a relatively high share of renewables but showed a slower increase due to national policies that postponed the offshore wind farms as it may affect biodiversity [33]. Both Engie and Enel grew their renewable portfolios, adding storage to their integrated renewable capacity. The continued expansion of Engie towards solar and wind scaling added further to its growth. Moreover, Engie and Enel were also able to grow their renewable portfolios, with the advantage of adequate policies and storage integration. The evolution of Engie was also linked to its effort in investing in solar and wind energy development [40,42].

4.4. Assessment of Climate Change Mitigation Within the EU Taxonomy

The analysis of compliance with the EU Taxonomy across the five leading renewable energy companies (Ørsted, Iberdrola, Enel, Engie, and Vattenfall) examines how the main players in wind and solar power are implementing sustainability frameworks and whether they can achieve alignment with EU climate policy targets. This analysis regards the compatibility of their business models with EU Taxonomy-defined activities, presenting how these companies have reduced greenhouse gas emissions and helped the EU move towards net zero. The present study attempts to examine how transparency plays its role in clarifying the relationship between stakeholders’ expectations of accountability and sustainability reporting using multi-sectoral disclosures. The analysis focuses on the applicability of the EU Taxonomy and provides insights into environmental objectives within corporate strategies. In brief, this analysis provides the background for understanding some of the bottlenecks and opportunities for integrating EU Taxonomy-aligned practices in renewables.

4.4.1. EU Taxonomy Analysis—Iberdrola

Iberdrola’s 2023 activities are mostly eligible from the perspective of CapEx (90.2%) and OpEx (92.3%), aligning with the EU Taxonomy for Sustainable Activities, in large part due to its focus on climate change mitigation and the expansion of its already-notable renewable energy infrastructure. According to its sustainability report, Iberdrola demonstrates alignment with the EU Taxonomy: 40.4% of turnover, 88.8% of CapEx, and 64% of OpEx are associated with sustainable activities. This is driven by the focus on renewable energy capacity, with significant revenue from wind and solar projects throughout Europe. However, 15.9% of turnover comes from activities classified as eligible but not fully aligned with environmental sustainability (transitional) within the EU Taxonomy framework. Iberdrola, for example, continues to innovate in grid modernization and energy storage solutions to further expand its renewable portfolio with this more nuanced approach in mind.

Iberdrola complies with the EU Taxonomy (

Table 3. Iberdrola—EU Taxonomy table for the financial year 2023.

Economic Activities	Proportion of Turnover (%)	Proportion of CapEx (%)	Proportion of OpEx (%)
Eligible activities according to the taxonomy
A1. Environmentally sustainable activities (that comply with the taxonomy)	40.4	88.8	64
A2. Eligible but not environmentally sustainable activities according to the taxonomy	15.9	1.4	28.3
Total (A1 + A2)	56.3	90.2	92.3
Non-eligible activities according to the taxonomy
B. Non-eligible activities according to the taxonomy	43.7	9.8	7.7
Total (A + B)	100	100	100

) by channeling a large proportion of its investment into activities that align with the EU’s climate and environmental goals. For example, in 2023, Iberdrola invested over EUR 11,382 million in renewables, out of which EUR 10,106 million is EU Taxonomy-compliant [41]. The firm’s investment approach favors several activities that help reduce the company’s Scope 3 greenhouse gas emissions, for example, through the development of green hydrogen technologies and the expansion of its existing large offshore wind farms. The firm’s 2023 EU Taxonomy report cites Iberdrola’s use of the Task Force on Climate-related Financial Disclosures framework to ensure that environmental information is provided in a clear, detailed, and high-quality way for the understanding of the users of this information. Transparency is vital for the company to meet the expectations of EU regulations [7].

Iberdrola’s business model is focused on the ongoing switch to renewable energy sources and leadership in wind power onshore and offshore. The company is a long-term global leader in wind energy, and its business model is consistent with sustainability principles by investing in green energy technologies, eliminating fossil sources, and promoting energy efficiency solutions. According to Iberdrola, its 2023 sustainability report shows wind energy’s high share in the company’s focus, with Scotland, Germany, and the United States leading in the domain of wind energy due to facilitating regulations. Iberdrola also pays considerable attention to its value chain decarbonization. As reflected in its 2023 sustainability report, Iberdrola has an established target of net-zero emissions in the chain by 2040. Iberdrola has also increased its total renewable capacity, which as of 2023 is 42.19 GW, mainly coming from its onshore wind and solar projects. The company’s sustainable business model (SBM) applies the principles of the circular economy by increasing process and resource efficiency and using reusable wind turbines and solar panels. In addition, Iberdrola has made great efforts to digitalize its processes, with an emphasis on smart grid technology that improves operations and reduces emissions [4].

4.4.2. EU Taxonomy Analysis—Ørsted

Ørsted is one of the forerunners in the renewable sector and has completely transformed its business model from that of an oil and gas company to that of a world-leading renewable company, mainly in offshore wind. In its 2023 sustainability report, Ørsted’s published data indicate a higher wind capacity with each successive year. The key factor in SBM innovation is the company’s leadership in floating wind turbine technology, which allows wind farms to be farther from the coast, where the wind is stronger and more constant. An important element of the company’s business model is social and environmental responsibility. In the 2023 report, Ørsted emphasized its efforts to minimize the impact of its projects on marine and coastal ecosystems. The company has shown that it actively engages with local stakeholders, establishing a firm foundation to ensure that the projects are beneficial to the local economy and minimize their impact on the local environment. This systematic approach to managing different stakeholders and the significant investment of the company in protecting biodiversity are salient attributes of its SBM [2].

Ørsted has numerous activities that comply with the EU Taxonomy (

Table 4. Ørsted—EU Taxonomy table for the financial year 2023.

Economic Activities	Proportion of Turnover (%)	Proportion of CapEx (%)	Proportion of OpEx (%)
Eligible activities according to the taxonomy
A1. Environmentally sustainable activities (that comply with the taxonomy)	86	99	79
A2. Eligible but not environmentally sustainable activities according to the taxonomy	0	0	0
Total (A1 + A2)	86	99	79
Non-eligible activities according to the taxonomy
B. Non-eligible activities according to the taxonomy	14	1	21
Total (A + B)	100	100	100

), including the production of renewable energy infrastructure. The company’s investments in offshore wind farms adhere to the EU Taxonomy, as this type of renewable energy significantly contributes to climate change mitigation. In 2023, Ørsted invested more than EUR 5 billion in renewable energy projects, including the construction of offshore wind farms in Germany and Denmark. These investments are entirely consistent with the EU’s goals of decreasing greenhouse gas emissions and increasing the portion of renewables in the energy mix [27].

Ørsted is well aligned with the EU Taxonomy, with 86% of turnover and 99% of CapEx as well as 79% of OpEx classified as environmentally sustainable. According to Ørsted’s sustainability report for the financial year 2023, CapEx and OpEx are aligned primarily because Ørsted focuses heavily on offshore wind projects that make up a large proportion of its operations. The low share of non-eligible activities (14% of turnover) includes non-sustainable sources and appears to indicate that Ørsted has managed to have its business activity mostly aligned with the EU Taxonomy. Ørsted implements its climate strategy by using renewable energy projects, meeting Taxonomy criteria and mitigating the exposure to transitional or partially aligned economic activities.

4.4.3. EU Taxonomy Analysis—Enel

In the case of Enel, the SBM refers to the contribution of the renewable energy subsidiary Enel Green Power in the context of Enel’s development of solar, wind, and hydroelectric power projects in Europe and Latin America. The underlying business model is based on decarbonization and digitalization, emphasizing smart grids and the installation of energy storage systems to mitigate the intermittent supply of renewable energy [45]. In addition to the firm’s commitment to decarbonization in the EU region, Enel intends to ensure the expansion of renewable capacities with a view to achieving the development of decarbonized and decentralized energy generation. For instance, by the end of 2023, the available renewable capacity amounted to 55.54 GW, marking an improvement over the previous year. Moreover, the company promotes the expansion of access to renewable energy in most African countries, as well as Chile, Mexico, and South Africa. The approach is consistent with SDG 7, which aims to provide access “to affordable, reliable, and sustainable energy” [25].

All the activities undertaken by Enel in the domain of renewable energy generation and minimization of climate change are eligible within the EU Taxonomy (see

Table 5. Enel—EU Taxonomy table for the financial year 2023.

Economic Activities	Proportion of Turnover (%)	Proportion of CapEx (%)	Proportion of OpEx (%)
Eligible activities according to the taxonomy
A1. Environmentally sustainable activities (that comply with the taxonomy)	33.8	84.8	68.4
A2. Eligible but not environmentally sustainable activities according to the taxonomy	4.1	2.9	7.7
Total (A1 + A2)	37.9	87.7	76.1
Non-eligible activities according to the taxonomy
B. Non-eligible activities according to the taxonomy	62.1	12.3	23.9
Total (A + B)	100	100	100

). Activities relating to renewable energy investment, specifically in Spain, Italy, and Brazil, are compliant with the EU Taxonomy. During the financial year 2023, Enel invested EUR 8.2 billion in renewable energy projects, and most of these investments contributed to the realization of the EU’s renewable energy and carbon reduction objectives [19]. However, Enel reports on its alignment with the EU Taxonomy at a less detailed level than its competitors. The company’s 2023 sustainability report appears to lack information on Enel’s compliance and safeguarding mechanisms according to the EU Taxonomy. In other words, it would be relevant to learn how Enel ensures that its projects are aligned with the EU Taxonomy’s requirements for biodiversity protection, as well as social impacts. Thus, this is the type of disclosure that the company should expand on to demonstrate its compliance with the EU’s sustainability requirements [46].

According to its report, 33.8% of Enel’s turnover and 84.8% of its CapEx pertain to sustainable activities. The company has made significant efforts to implement renewable energy generation, especially through investments in solar and wind energy. But 62.1% of its turnover is derived from non-eligible activities, indicative of a dependance on legacy energy sources in certain geographies. To address this, Enel’s sustainability roadmap sets out to gradually reduce this dependence and improve grid resilience by leveraging distributed generation in much higher-demand markets.

4.4.4. EU Taxonomy Analysis—Engie

The basis of Engie’s business model today is a transformation from a conventional fossil fuel energy producer to a leader in the renewable energy sector and energy services. Engie already has an impressive portfolio in wind and solar energy, with a total capacity of 33 GW of renewable energy installed at the beginning of 2023. The company has also managed to maintain a good pace in reducing carbon emissions. Compared to 2022, Engie reported a 55% decrease in 2023. The company is also struggling to develop an entirely different path toward decarbonization for heavy industries and relies on green hydrogen. Engie perceives bioenergy as an intermediate solution, which could, to a certain extent, replace traditional fossil fuel power plants and would emit less carbon into the atmosphere. However, the technology behind bioenergy production may cause serious environmental and social challenges like deforestation, soil depletion, and food crises [32].

Engie’s efforts in 2023, including its investments in wind and solar energy as well as in the production of green hydrogen, imply alignment with the EU Taxonomy (see

Table 6. Engie—EU Taxonomy table for the financial year 2023.

Economic Activities	Proportion of Turnover (%)	Proportion of CapEx (%)	Proportion of OpEx (%)
Eligible activities according to the taxonomy
A1. Environmentally sustainable activities (that comply with the taxonomy)	18	66	35
A2. Eligible but not environmentally sustainable activities according to the taxonomy	6	6	16
Total (A1 + A2)	24	72	51
Non-eligible activities according to the taxonomy
B. Non-eligible activities according to the taxonomy	76	28	49
Total (A + B)	100	100	100

). The company has exceeded a sum of EUR 6 billion invested in dedicated projects. A significant part of these funds was spent on EU Taxonomy-compliant renewable energy projects. However, bioenergy is one of the most controversial long-term and short-term solutions to this day. The EU Taxonomy includes several conditions under which bioenergy-produced energy can fall under aligned activities, so Engie needs to make sure that each of its bioenergy-related projects would not cause long-term and unintended environmental and social challenges [34].

According to Engie’s figures, 18% of its turnover is from environmentally sustainable activities in accordance with the EU Taxonomy, with CapEx and OpEx representing 66% and 35%, respectively [42]. After having allocated a total of 72% of CapEx to eligible projects, the relatively high portion of non-eligible revenues (76%) indicates that Engie continues to derive considerable revenue from non-sustainable sources. This is again highlighted as an area that will need to undergo a substantial transition for targets to be met.

4.4.5. EU Taxonomy Analysis—Vattenfall

Vattenfall has a clear goal of becoming fossil fuel-free by 2040. Its 2023 sustainability report clearly demonstrates the progress that has been made in this direction. Specifically, the company’s renewable energy capacity reached 17.14 GW, with hydropower projects being the most focused on in 2023. The business model is heavily based on its focus on sustainability and innovation that includes investments in energy storage systems. Vattenfall’s Power Climate Smarter Living initiative is the core of its SBM, which is designed to encourage and educate consumers to reduce their environmental carbon footprint and switch to clean energy sources. The company also pays special attention to the implementation of digitalization and smart grids, which are important for efficient renewable energy in the grid [31].

Vattenfall’s 2023 activities clearly correspond to the EU Taxonomy (see

Table 7. Vattenfall—EU Taxonomy table for the financial year 2023.

Economic Activities	Proportion of Turnover (%)	Proportion of CapEx (%)	Proportion of OpEx (%)
Eligible activities according to the taxonomy
A1. Environmentally sustainable activities (that comply with the taxonomy)	30	89	75
A2. Eligible but not environmentally sustainable activities according to the taxonomy	10	2	9
Total (A1 + A2)	40	91	84
Non-eligible activities according to the taxonomy
B. Non-eligible activities according to the taxonomy	60	9	16
Total (A + B)	100	100	100

), with the distinction of such aspects as renewable energy investments and energy storage. Its wind and hydropower projects meet all the requirements to be considered EU Taxonomy-compliant, with the company’s investments in this area over EUR 4 billion in 2023. At the same time, its green hydrogen project is also in line with the EU’s climate and environmental goals [36]. Similarly to Engie, Vattenfall faces difficulties in the growth of offshore wind capacity because of regulatory barriers in Germany and the Netherlands. It is noteworthy that the progress of key projects has decelerated, and Vattenfall needs to collaborate with regulators to overcome the problem and reach the goal for 2040 of being net zero [37].

The table shows a more systematic investment in sustainability-focused projects, which is evident with a 30% turnover and 89% CapEx, aligning with the EU Taxonomy. The report notes that 60% of Vattenfall’s turnover is still not eligible, implying a partial reliance on non-compliant activities. According to Vattenfall’s sustainability report, its strategy includes investments in hydropower and wind energy that have led to reductions in greenhouse gas emissions by 52% in 2023 compared to its baseline year, 2017 [33]. The company identifies certain difficulties in making its whole portfolio of renewable energy compliant, especially given the legacy operations that contribute to most of this non-eligible turnover.

5. Discussion: Analysis of SDG Contributions

This analysis illustrates how renewable energy faces the global challenges embodied by the SDGs and how renewable energy companies align their business models with the SDGs [2]. The sampled companies provide information to policymakers, researchers, and industry leaders seeking progress in sustainable practices and long-term value for stakeholders. These renewable energy companies are part of the bigger movement across the globe for sustainable and resilient energy systems [47]. Ørsted, Iberdrola, Enel, Engie, and Vattenfall have significant segments of their business strategies aligned with global sustainability frameworks. A summary of the results is presented in Figure 5. This highlights the role of corporate practices in promoting progress for the SDGs 7 and 13 which are at the core of their business strategies [48].

Ørsted’s sustainability strategy focuses on offshore wind, which means that the company is closely linked with SDGs 7 and 13. In its 2023 sustainability report, the company stated that 86% of its turnover, 99% of its CapEx, and 79% of its OpEx are compliant with the EU Taxonomy. This alignment embodies Ørsted’s vision for a world that runs entirely on green energy. In addition to addressing climate change, Ørsted takes into account the preservation of biodiversity, addressed by SDG 15 (Life on Land). Ørsted succeeded in reducing GHG emissions, due to lower natural gas sales and efficiency gains, reflecting a commitment to sustainability integrated into its business model [15]. Similarly, to overcome the intermittency of wind energy as well as the obstacles of integrating renewables into existing energy grids, Ørsted is investing in energy storage technologies and digital grid solutions to enhance the reliability and efficiency of energy delivery [2]. From a financial perspective, its gross margin has been stable over the years, suggesting that the company is profitable despite capital-intensive offshore wind projects. The fixed asset turnover ratio also suggests Ørsted is making efficient use of its capital investments in infrastructure, which supports Ørsted’s long-term strategy of scaling offshore wind capacity and managing operational efficiency.

The production of clean energy by Iberdrola helps decarbonization in accordance with SDG 7 and SDG 13. The company was able to make progress in reducing GHG emissions through the development of renewable power, integrating the EU Taxonomy requirements within its 2023 operations. Likewise, SDG 9 (Industry, Innovation and Infrastructure) is also relevant because energy delivery and storage systems should address energy access and energy efficiency for achieving the SDGs. Partnerships for facilitating access to clean energy (SDG 16) are also essential to the company’s business model, which is reflected in the deployment of its services [47]. The company has also implemented circular economy principles in its business model by recycling key parts from decommissioned wind turbines, applying zero-waste strategies and ensuring material efficiency [7]. On the other hand, at the financial level, the gradual increase in renewable energy production and capacity achieved by Iberdrola reflects the long-standing sustainability of the company and its commitment towards the development of clean energy. Furthermore, its gross margin trend indicates solid operational efficiency, while the fixed asset turnover ratio is a sign of good infrastructure utilization in deploying clean power.

Enel achieved a 55.5 GW consolidated renewable capacity in 2023, which positively contributes to SDG 7 and SDG 13. This is the largest installed capacity by one company, in our sample. The sustainability strategy focuses on a just energy transition, reflecting a simultaneous focus on environmental and social dimensions and thereby aligning with SDG 10 (Reduced Inequalities). For example, Enel has implemented weather alerting, structural reinforcement, and vegetation management to increase the climate resilience of its assets [19]. NextHy is a green hydrogen initiative of the company that demonstrates its determination to decarbonize hard-to-abate sectors through innovative funding mechanisms such as IPCEI Hy2Tech [48]. Schulte [19] adds, “Enel’s recent disclosure points out both the social and environmental impacts of its large-scale renewable energy projects, but there is room for improvement in the insight-sharing process, including stakeholder engagement and sustainability reporting”. The growth in Enel’s renewable energy production and capacity, strengthening its transition strategy, was reflected on the financial side. Nevertheless, its gross margin fell steeply in 2022 due to increased procurement costs and lower thermal generation revenues but has recovered in 2023 with better cost efficiencies and more steady renewable earnings. The fixed asset turnover ratio does suggest that its infrastructure is being utilized efficiently, but the recent modest drop implies further expansion in its investment that has not yet delivered revenue at similar rates to cost.

Through its renewable energy and energy efficiency initiatives, Engie indirectly contributes to SDG 7 and SDG 13, with 41% of electricity classified as renewable in 2023. The company relies on energy-saving technologies and low-carbon technologies (SDG 12: Responsible Consumption and Production). In a bid to avoid the energy crisis, Engie diversified its portfolio, focusing not only on electricity and gas but also on bioenergy and green hydrogen projects using the principles of the circular economy to convert organic waste into energy and test hydrogen infrastructure projects throughout Europe [32]. In fact, these problems related to bioenergy scalability and ecological sustainability are factors that need to be mitigated to avoid the failure of dedicated projects [46]. On the financial side, Engie has gradually increased its production of energy from renewable sources and the corresponding installed capacity, supporting the goals of the energy transition process. Nonetheless, its gross margin has experienced volatility based on fluctuating market conditions and sourcing costs. Although its fixed asset turnover ratio is constant, the company struggles to increase its scale of renewable assets without sacrificing operational efficiency.

Vattenfall contributes to SDG 7 and SDG 13 because it specializes in power generation and distribution, as well as heating, in Northern Europe. The company’s mission is to provide fossil fuel-free living within one generation, so the organization’s operations are focused on wind and solar energy. Furthermore, it has focused its energy solutions on urban environments that contribute to SDG 11 (Sustainable Cities and Communities) by finding ways to increase the sustainability of cities. Vattenfall also stresses the importance of biodiversity, contributing to SDG 15 by striving to preserve ecosystems and reduce the loss of biodiversity [15]. However, further growth is hindered by the regulatory framework in different European countries, although more projects in renewable electricity production from offshore wind and hydropower have been added in the last years. The company withdrew from the Norfolk Boreas wind farm, citing wide-ranging uncertainties about funding and policy, and called for better EU standards to make the renewable development criteria more competitive on a larger scale [33]. Although Vattenfall has grown its renewable energy output, the overall increase in capacity has been limited compared to the other four companies due to project cancellations and regulatory bottlenecks. Over the years, its gross margin has decreased because of ongoing market volatility and rising development costs. While the company has a higher-than-average fixed asset turnover ratio, the limited expansion of investment in renewables illustrates the difficulties of scaling its business efficiently.

Overall, these companies demonstrate how sustainable business models (SBMs) facilitate the growth of renewable energy and the importance of a systems-based approach in overcoming technological, regulatory, and business expansion barriers. This research compares the top renewable energy companies to benchmark the EU sustainability targets and integration with SBMs [45]. The sampled companies are demonstrating different routes to renewable energy within the EU’s policies like the Green Deal and EU Taxonomy while addressing industry-specific obstacles such as energy storage and grid integration [37]. From a financial point of view, Enel and Iberdrola have a more developed business model, as they combine utility-scale renewable energy growth with stable financials. Enel’s renewable output and capacity have steadily increased, and while its gross margin fell temporarily in 2022 as it disposed of fossil assets, its profitability proved resilient as efficiency gains offset this trend and it received stable earnings from renewables.

Iberdrola’s strategy of diversifying investments in various renewable technologies favors its stable financial performance and effective cost management. While Ørsted has a strong offshore wind strategy, its capital intensity and lack of revenue diversification prevented it from achieving a stronger fixed asset turnover ratio. Engie has a shows financial volatility, with a fluctuating gross margin, while the growth in renewable capacity is decreasing and shows transitional difficulties. Although Vattenfall is still focused on renewables, it has been forced to withdraw from certain projects, while CapEx remains constrained by limited growth opportunities, resulting in limited capacity expansion and a diminishing gross margin. Although all the companies are making progress towards renewable energy goals, companies with differing investment strategies and risk management systems will see the difference reflected in financial metrics and business model effectiveness.

6. Conclusions

In this article, our objective was to present an analysis of the 2023 sustainability reports of the five leading energy companies mentioned above. Based on the principles of SBMs and a structured approach, the data analysis is consistent among the five energy companies. The results of this article build an understanding of how the sample firms integrate their renewable energy approaches with the overall sustainability goals. In the SBM context, we analyzed the operational and strategic choices each company makes to achieve ecological benefits, i.e., environmental sustainability, renewable energy, and economic performance. This includes examining the development of their renewable capacities, CO₂ reduction approaches, resource efficiency, and stakeholder engagement processes. We analyzed how SBMs have been embedded in the mainstream activities of these companies, specifically within energy production and grid operations, using a comparative perspective.

The European Union (EU) has established the decarbonization objective to achieve a 55% decrease in greenhouse gas emissions by 2030 and net-zero emissions by 2050, setting the trend towards renewable energy. This article investigated the adoption of sustainable business models (SBMs) in the renewable energy industry by examining five large European energy companies: Iberdrola, Ørsted, Enel, Engie, and Vattenfall. It assessed the consistency of their sustainability strategies with the key goals of the EU Taxonomy and the European Green Deal that focus on carbon reduction, growth of renewable power capacity, and stakeholder engagement. Specifically, the research reveals the role that SBMs play at the intersection of regulatory compliance, competitiveness, and environmental responsibility. This article has discussed the differences in the strategies and operational outcomes of these firms transitioning to a new low-carbon energy model.

Energy companies must convert traditional business models to sustainability-oriented strategies associated with the transition to renewable energy sources [49]. Companies that actively incorporate renewable energy capacity expansion, emission reduction, and circular economy practices into their business models will have the greatest gain in terms of long-term sustainability. The literature implies that alignment with EU Taxonomy criteria provides increased investor confidence through transparency, minimizing greenwashing, and ensuring compliance with the expectations of regulators [50]. Similarly, firms that manage to find a balance between regulatory compliance, financial strength, and innovation in green technologies stand a better chance of being competitive in the European Union and around the world.

Regulators are interested in harmonizing sustainability reporting [1], improving taxonomy criteria, and unifying policy coherence among EU countries. The EU Taxonomy has established general guidelines for companies in the domain of environmental sustainability assessment; however, the differing national legislation still creates difficulties for companies operating in different countries. One of the most important challenges consists of the mismatch between national- and EU-level permitting processes and pan-European renewable energy targets, which undermines project implementation and investor certainty [51]. This fragmentation of regulatory approaches leads to longer times for integrating projects into the grid, notably for offshore wind, which is why a targeted reform is needed to ensure policy consistency [52]. To mitigate the regulatory hurdle, policymakers must seek to reduce bureaucracy and support renewable energy development and investment in green infrastructure. This includes market-based mechanisms such as incentives for green investment and simplified permits, which may speed up deployment [53]. Moreover, it also requires investing in grid flexibility technologies such as battery storage and digitalized energy networks to overcome technological barriers in terms of integrating a variety of renewable energy sources [54].

Finally, EU governments need broader mechanisms for monitoring that can help determine whether the sustainability claims of corporations are matched by the appropriate environmental effect. This would help decrease the greenwashing risk, which is an objective of the EU Taxonomy. Another focus area is the creation of a circular battery solutions in which increasing the demand for energy storage does not end up creating new dependencies on resources by supporting reuse and recycling [55]. Filling those gaps with a combination of policy- and technology-based solutions will allow energy companies to not only enhance resilience but also contribute to EU-wide sustainability initiatives.

The present research reinforces the connections of SBMs with the SDGs, especially with respect to SDG 7 (Affordable and Clean Energy) and SDG 13 (Climate Action). Creating new SBMs plays a vital role in enhancing renewable energy capacity, efficiency improvement, and implementing carbon neutrality initiatives that help achieve these goals. However, the impact on SDGs 9 and 12 must also be enhanced because the development of sustainable energy depends on advanced energy storage technologies, grid digitalization, and responsible production and consumption. Contributions to dedicated SDGs will also increase the impact on sustainability in general, thus improving the resilience of companies in the future.

This study uses sustainability data from corporate disclosures that are self-reported (but based on audited financial data), and this reliance naturally may have bias and selective reporting of environmental performance. Furthermore, due to differences in reporting methodologies and regulatory environments in the different EU countries, it is difficult to make direct comparisons between firms. The reporting of installed capacities is not standardized across the EU, which was a significant challenge in collecting the research data. This sample only contains very large energy companies and excludes smaller renewable energy companies. Future research is suggested to include larger data sets of companies of different sizes and business structures for a more comprehensive assessment of SBMs in this sector.

Future research could extend this work by measuring the financial, carbon, and regulatory effects of SBMs in the energy sector over a longer time horizon. Qualitative research could investigate stakeholder engagement and alignment with the minimal safeguards of the EU Taxonomy, as well as with the DNSH (do not significant harm) criteria for each of the relevant activities. This investigation is necessary to assess whether corporate contributions to a low-carbon economy have other unintended consequences at the social or environmental level. Lastly, a potential research direction is the examination of digitalization and artificial intelligence in the development of sustainable energy business models, specifically predictive energy demand modeling and supply chain transparency. Further comparing policy-driven SBM adoption in regions outside of the EU, such as North America, the Middle East, and Asia, would facilitate a better understanding of SBM best practices relevant to the green transition.