Sustainable Business Strategy
Ikea, renowned for its flat-pack furniture and home accessories, has recently achieved a significant milestone in its sustainability journey. The ‘Annual Summary and Sustainability Report FY23’ published by the Ingka Group, Ikea’s largest retailer, reveals a notable feat: a 24.3% reduction in climate footprint since 2016, juxtaposed with a 30.9% increase in revenue. This achievement marks a pivotal moment for the company, showcasing its ability to dissociate environmental impact from financial success.
Innovative Carbon-Saving Initiatives
The key to Ikea’s success lies in its strategic adoption of carbon-saving measures. The company has embraced electric vehicle use, shifted to renewable electricity, and enhanced energy efficiency across its operations. A significant investment of €700m in offsite renewable energy since 2016, part of a larger €3.8bn investment since 2009, underpins these initiatives. In 2023, the Ingka Group sourced 79.2% of its electricity from renewable sources, reaching 100% renewable electricity consumption in Ikea stores and Ingka Centres in 28 countries.
Scope 3 Emissions Reduction
The Ingka Group’s efforts extend beyond its direct operations. It recorded a 23.6% drop in Scope 3 emissions, which include supply chain and downstream activities, since 2016. This includes a 12.5% year-on-year decrease in 2023. Karen Pflug, Ingka Group’s chief sustainability officer, emphasises the company’s role in addressing global challenges such as climate change and nature loss, and its commitment to sustainable solutions.
Decoupling Growth from Emissions
2023 marks a landmark year for Ikea, as it successfully decouples growth from emissions for the first time. This is a significant turnaround from two years ago, when the company reported a 15% increase in absolute emissions post-lockdown.
Future Climate Goals
Looking ahead, Ikea aims for net-zero emissions by 2050, planning to cut absolute emissions by at least 90% without relying on carbon offsets. In line with this, the Ingka Group realigned its climate targets with the Science Based Target Initiative (SBTi)’s Corporate Net-Zero Standard in November 2023. The company now aims to slash absolute greenhouse gas emissions in its value chain by at least 50% by 2030, based on the 2016 baseline.
Circular Business Models and Customer Engagement
The report also highlights growth in Ikea’s circular business models, including product reuse and repair services. The buyback and resell service doubled its customer base in 2023, attracting over 211,000 customers. Additionally, repair solutions for products saw a significant uptick. Ikea’s partnership with the Ellen MacArthur Foundation reinforces its ambition to become a fully circular business by 2030.
In conclusion, Ikea’s journey towards sustainability serves as a beacon for corporations worldwide. By successfully decoupling its emissions from financial growth, the company not only demonstrates its commitment to the environment but also sets a new standard in sustainable business practices.
