Tuesday, June 19, 2018

IKEA Goes All the Way with Sustainability

The IKEA Group is the world's largest furniture retailer and a leading sustainability-focused corporate brand. IKEA recently promised to make all of its 12,000 products from renewable and recyclable materials by 2030. This is in addition to adopting science-based emission reduction targets and deriving all of their energy from renewable sources by 2020.

The Dutch-based company of Swedish origin has an enormous customer base estimated to be approximately one billion people. To put that number into context that is almost two times Apple's client base and more than a tenth of the global population. IKEA has built an empire that now totals 418 stores in 49 markets around the world. In 2017 IKEA had $45.3 billion in retail sales, an increase of $8 billion over 2016 totals.

IKEA is leveraging their tremendous economic clout to address climate change, arguably the most serious threat ever faced by humanity.

"Through our size and reach we have the opportunity to inspire and enable more than one billion people to live better lives, within the limits of the planet," Inter IKEA CEO Torbjorn Loof said in a statement to accompany the group’s 2030 sustainability strategy document. "We are committed to taking the lead, working together with everyone – from raw material suppliers all the way to our customers and partners."

Renewable & recyclable materials

By committing to using only renewable and recycled materials the "Life Improvement Store" is completing their company-wide sustainability strategy. Currently, IKEA diverts around 90 percent of its overall operational waste from landfills and 60 percent of IKEA's products are made from renewable materials (10 percent use recycled materials). IKEA has several recycling programs including mattress and incandescent bulbs. Now the company has pledged that by the end of the next decade everything the company sells will be renewable and recyclable.

As explained by Lisa Davis, IKEA’s U.S. Sustainability Manager: "In keeping with our People and Planet Positive Sustainability strategy, IKEA has decided to take a lead in turning waste into resources. The goal is zero waste to landfill, with as much recycling as possible. We are committed to securing recycled materials while ensuring key parts of our range are easily recycled, - all contributing to a closed-loop society."

IKEA is hardly new to sustainability they have been at it for more than a decade. They phased out plastic bags in 2007 and incandescent bulbs in 2010. They got into the electric transportation market when they started selling electric bikes several years ago. In 2011 they were among the first to host recharging stations for electric cars in the US. Ahead of the launch Mike Ward, IKEA's US president, explained the company's commitment to charging stations, "furthers our commitment to a smaller carbon footprint and technological opportunities that help protect the environment. This project is part of a global effort to promote the sustainable transport of people."

Comprehensive solution

As a member of the Science-Based Targets initiative, IKEA is seeking far more than just reputational benefits. The initiative is a collaboration between the Carbon Disclosure Project, the World Resources Institute, the World Wide Fund for Nature, and the United Nations Global Compact. IKEA is also involved in tiny scale agriculture. In 2016 they started selling an indoor garden that can grow food all year round. They have even created a more eco-friendly vegetarian substitute for their famous swedish meatballs.

By focusing on both its stores and its supply chain, IKEA is sending a powerful message. These moves show the world what it means to be a responsible corporate actor. As explained in their 2030 sustainability strategy document their ambitious goal is to reduce the climate impact of each of their products by more than two thirds by 2030. They are planning on slashing the climate impact of their retail outlets and other operations by 80 percent compared with 2016 emission levels.

However, reigning in their huge carbon footprint is not an easy feat. In 2013 IKEA emitted a staggering 28 million tonnes of greenhouse gases. To put this number into context this represents half the emissions for the entire nation of Sweden.

IKEA acknowledges the scope of the problem but they are committed to meeting the challenge. To prove just how serious IKEA is about sustainability they recruited Steve Howard, founder and CEO of The Climate Group, to be their chief sustainability officer (CSO). When he met with Ikea's CEO Mikael Ohlsson, Howard said: "If you're interested in being incrementally less bad, I'm the wrong guy. If you're interested in transformational, I'm in."

The Business Case

The retail giant is mitigating business risks and making their brand more cost efficient. As IKEA warned in its 2020 Sustainability Report, rising energy, and raw material costs are a concern as is the fact that by 2030, almost half of the world’s population will be living in water-scarce areas.

Using recycled materials reduces costs particularly in the context of a circular economy. Simply put the less raw materials you use the lower your costs. It also reduces waste that goes to landfill and it conserves natural resources by minimizing the demand for raw materials.

As explained by Kerri Molinaro, president of IKEA Canada, "We are able to support the transition to a low-carbon future, reduce our energy and operating costs, and pass those benefits on to our customers by continuing to offer high quality home furnishings at low prices."

This is not just about corporate responsibility this is a smart business strategy.

IKEA is a corporate Leader in Renewables and Efficiency 
IKEA's Sustainable Supply Chain Leadership

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