“The only way we can exist as a business model tomorrow is to be sustainable, so it's not about how we pay the premium to do it. It's the only way we can be the low-cost company of tomorrow.”
—Jesper Brodin, CEO, Ingka Group (IKEA)
HOW TO MOVE FROM A LINEAR TO A CIRCULAR MODEL?
The Swedish language has a unique ability to capture complex ideas in a few syllables. “Flygskam” is a new Swedish word describing the contemporary shame that comes with flying. “Klimatskuld” refers to the debt owed by developed countries to the planet due to overconsumption of natural resources. Meet the latest Swedish term for encouraging sustainability: “Kungsbacka.”Named after a small municipality in Sweden, Kungsbacka is a new sustainable series of kitchen fronts from retailer IKEA—a product it hopes will become synonymous with a circular economy.
“Our aim is to increase the share of recycled materials in our products,” says IKEA product developer Anna Granath, explaining Kungsbacka’s backstory. “We are looking into new ways to reuse materials such as wood fiber, foam, paper and plastics, so we can give the materials new life in a new product.”
Each year, IKEA welcomes more than 700 million store visits and 3.6 billion online customer interactions. For much of its 78-year existence, the company vision (”to create a better everyday life for the many people”) has guided a business strategy that prioritizes affordability, accessibility. This vision helps IKEA to nurture a community of loyal customers seeking its functional, affordable furniture and products.
The downside: IKEA is responsible for 0.1 percent of global carbon emissions. Ingka Group CEO Jesper Brodin and his leadership team—IKEA Retail is Ingka Group’s core business—acknowledge the company’s big responsibility and opportunity for large-scale impact.
Consumption has a negative impact in a linear economy. We are part of the problem, like many others. At the same time we can and must be a part of the solution.
—Pia Heidenmark Cook, Senior Advisor & former Chief Sustainability Officer, Ingka Group (IKEA)
Ingka Group began assessing its environmental impact as early as 1989. But for a company whose historical strength is its linear model, how can it become circular and regenerative in the truest sense?
Jesper Brodin, CEO, Ingka Group (IKEA)
Good intentions are important. Words make them powerful. In the end, it is only actions that create real change.
Tackling climate change is not about opinions, it’s about facts. With the data we have today, we simply can’t pass this on to the next generation. What will be your commitment? Not by 2030, not tomorrow. Today.
LEADING HOLISTIC TRANSFORMATION
Ingka Group launched its People and Planet Positive strategy in 2012, beginning a seismic internal transformation to build resilience in its operations and mitigate environmental and social risk. The strategy is focused on three objectives: promoting healthy and sustainable living; contributing to a circular economy; and embedding fairness and inclusion in its workplace and across its ecosystem. Central to the approach is a recognition that climate change increasingly threatens everyday life, which prompted leadership to embed sustainability alongside affordability and accessibility in the company vision.
This is a holistic business strategy—not a sustainability strategy for sustainability professionals.
—Pia Heidenmark Cook
To become climate positive by 2030, Ingka Group will reduce more greenhouse gas emissions than its value chain emits. This means adopting 100% renewable energy use by 2025; committing to halve greenhouse gas emissions from the total IKEA value chain, in absolute terms, by 2030; and achieving net-zero emissions by 2050. In addition, leadership is advocating for ambitious and harmonized regulations that will drive the change needed to achieve the Paris Climate Agreement and limit global temperature rise to 1.5°C above pre-industrial levels.
A science-based approach guides company commitments and actions, including striving for zero waste across Ingka Group’s operations, ensuring zero-emission home delivery and accelerating carbon removal through forestry and agricultural initiatives. The company’s climate methodologies and targets are verified through the Science Based Targets initiative (SBTi). Climate data is externally audited on an annual basis, then publicly reported. IKEA’s internal dashboard captures climate data alongside sales data, enabling leadership to leverage sustainability metrics to steer business decisions.
In 2019, IKEA’s country managers also became in-market sustainability officers, ensuring integration of the People and Planet Positive strategy across the business.
Leadership sees stakeholder engagement as a prerequisite to success for the People and Planet Positive strategy. And Inter IKEA Group, which connects IKEA franchisees with range development and suppliers and coordinates overall strategic direction, has invested heavily to bring its suppliers along for the journey. The resulting shift impacts how it designs and supplies its 9,500+ products, and a set of circular design principles guides new product design and helps assess opportunities for reuse of products already on the market. “We’re heavy in wood, textiles, metals, store operations, transport, home delivery,” says Heidenmark Cook, senior advisor and former chief sustainability officer at Ingka Group (IKEA). “We’re in everything, and our commitment to sustainability needs to be as well.”
Inspire and enable 1 billion people to live a better life within the boundaries of the planet by 2030
Reduce energy-related greenhouse gas emissions from its own operations by 80% by 2030
Goal to achieve 50-50% gender balance in every unit, level, board and committee in 2022
BUSINESS FIT FOR THE FUTURE
Becoming climate positive is a shared responsibility across Ingka Group and its global value chain. While the appetite for change is significant, challenges remain. To overcome a lack of renewable energy availability in key markets such as India and Russia, IKEA has committed to invest €6.5bn in renewable energy by 2030. IKEA is joining forces with partners and initiatives such as EV100 to accelerate investments in zero-emission mobility infrastructure. The company collaborates deeply across its supply chain, but a core challenge—and core commitment—is to reduce the climate footprint of materials such as metal, glue and ceramics. And there is a need for better market conditions to support a shift to a net-zero society, which is why Ingka Group leadership is advocating for change at COP26 and beyond.
Incidentally, the Swedish government sees a circular economy as key to a low-carbon future. “It’s madness that valuable material is used just once and then thrown away,” says Isabella Lövin, who served as Sweden’s minister for environment and climate until February 2021. “A circular economy is smarter, much better for the environment and also allows us to create opportunities for many new jobs and sustainable business.”
#BuildBackBetter - Ingka Group CEO, Jesper Brodin