IKEA has announced a major strategic plan to make the furniture giant both circular and climate neutral by 2030.
The move supports IKEA’s new long-term strategy of adapting to a new future, marked by resource scarcity and urbanisation. As part of this initiative, IKEA has sketched out a strategy document called “Three Roads Forward”, which outlines the furniture group’s future direction towards 2025.
The three roads are centered on accessibility, the environment and affordability.
“It was worked out a little under a year ago and aims to make IKEA more priceworthy for people who can’t afford it today, more accessible for those who aren’t reached today and create a positive impact on people, society and the planet,” Göran Nilsson, a concept innovation manager at IKEA, told Veckans Affärer this spring.
In conjunction with the Democratic Design Days, IKEA’s annual media event taking place in its headquarters in Älmhult this week, the furniture chain is detailing the the third road — People & Planet Positive 2030.
IKEA wants to be circular and ‘climate positive’ by 2030
Besides the usual corporate commitments to inclusion, equality and improving biodiversity, IKEA is making a pledge to transform the very resource use of its business.
The goal is to become “circular” and entirely climate positive. This means the company aims to only use renewable or recycled inputs for its products by 2030.
“Our ambition is to become people and planet positive by 2030 while growing the IKEA business. 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” said Inter IKEA Group CEO, Torbjörn Lööf.
As part of the circularity pledge, the furniture company — already conditioned to living by near-religious principles since its founder Ingvar Kamprad nailed down IKEA’s core theses in 1976 — has now outlined nine new circular design principles, which will be challenging some of the company’s standard practices and will be fully in place by 2022.
A preamble to that strategy came last year, when the company unveiled its “click technology ” that makes screws redundant.
IKEA pinpoints the importance of infrastructure and partnerships to support a waste-free and circular economy.
“Change will only be possible if we collaborate with others and nurture entrepreneurship. We are committed to taking the lead working together with everyone — from raw material suppliers all the way to our customers and partners”, said Torbjörn Lööf, CEO of Inter IKEA Group.
From solar packs to veggie hot dogs
To achieve climate positivity, IKEA said it will reduce the carbon footprint from its stores and other operations by 80% in absolute terms by 2030, with 2016 as the baseline year. The furniture retailer also aims to reduce greenhouse emissions by “at least 15% from the IKEA value chain in absolute terms compared to 2016.”
This measure translates on average to a 70% reduced climate footprint per IKEA product, achieved in part by strict requirements on suppliers, product materials and design and transportation. Even the company’s upcoming “veggie hot dog” will play a part in reducing footprints.
In conjunction with this, the company will be doubling down on consuming and buying 100% renewable energy by 2020, IKEA said in the press release. Having recently invested some $1,7 billion in renewable energy, IKEA its also looking to offset its overall consumption with renewables within this same time period.
IKEA will also be enabling its customers to save and generate renewable energy in their homes, in part through the company’s wall-mounted solar packs released in 2017.
IKEA wants to set a corporate benchmark for sustainability
Intensifying pressure from e-commerce giants such as Amazon and Alibaba has made traditional retailers increasingly aware of the need for fast transformation. IKEA, a global firm with 355 stores and 149,000 employees in 29 countries, knows this.
Having taken big initiatives — from buying forest to announcing electric vehicle support — over the past few years, IKEA now seems to be taking sustainability into its core business practices. Its massive scale — IKEA consumes around 1% of the world’s wood supply — will undoubtedly make a dent, and perhaps set a sustainability precedent for other global corporates in the coming decade.
In order to become a fully circular business by 2030, more than investment has to be shifted: an entirely new mindset will be required.
“IKEA has to ask themselves — is a loyal customer one that comes back often or someone that loves us but makes purchases less often”, said Malin Sundström, associate professor at the University of Borås.
How does the People & Planet strategy connect with the company’s Three Roads Forward initiative from earlier this spring?
Jonas Carlehed, who is head of Sustainability at IKEA Retail Sweden, said: “It’s very much part of it. Now we are charting the course for the third road, that we’ll have a positive impact on people as well as environment. But this action plan is also part of the two other roads around low prices and affordability. It’s our new core business.”
But the company’s third road will be all but straight.
IKEA needs to go from selling just new items to providing a host of services in order to prolong the lifecycle of its furniture. An example of that is an initiative with Swedish secondhand marketplace Blocket, which lets IKEA’s premium members advertise their used products without paying.
“For example, we could help by selling different spare parts to furniture. We are going to communicate around that opportunity, but we’ll also be looking at utilising our bargain sections better by, for example, accepting used items,” said Carlehed.
What have been the hardest parts of outlining the People & Planet strategy?
“That has absolutely been the consumption bit. We have two things that we will be good at — to create products and to create a better everyday life for the masses. We need to do both in a sustainable way,” said Carlehed.
IKEA’s sustainability commitments for 2030 include:
- Designing all IKEA products with new circular principles, with the goal to only use renewable and recycled materials
- Offering services that make it easier for people to bring home, care for and pass on products
- Removing all single-use plastic products from the IKEA range globally and from customer and co-worker restaurants in stores by 2020
- Increasing the proportion of plant-based choices in the IKEA food offer, like the veggie hot dog launching globally in August 2018
- Becoming climate positive and reducing the total IKEA climate footprint by an average of 70% per product
- Achieving zero emissions home deliveries by 2025
- Expanding the offer of affordable home solar solutions to 29 IKEA markets by 2025