Instructions are embedded in Ikea’s culture – from its flatpack furniture to its ambitions to give back to the planet. Emily Wright met with global climate manager Simon Henzell-Thomas to find out how the iconic retailer is delivering on its ESG strategy.
When it comes to setting sustainability targets, fearless ambition is everything. Just ask Ikea franchisee Ingka Group, which has set itself a goal of being carbon-positive by 2030. In just over six years’ time it expects the group – which doesn’t just operate stores but owns them too – not just to have cancelled out the carbon it is emitting, but to be making a positive contribution to the environment.
It is a lofty goal for a static portfolio. It is even loftier when you’ve just spent £145m buying a rundown, 1960s-built shopping centre in Brighton, East Sussex, and are also preparing to open a whopping 82,000 sq ft superstore on Oxford Street, W1.
Despite only inking the deal on Brighton’s Churchill Square earlier this month, the group already has big plans to bring the 60,000 sq ft mall up to BREEAM Excellent standard, to invest in its infrastructure to “play a part in supporting” Brighton & Hove City Council’s drive to establish a “thriving local circular economy” and deliver a range of electric vehicle charging options at the three car parks that come with the mall.
On Oxford Street, Ikea pushed back its opening from the end of this year to autumn 2024, saying it was taking longer than expected to turn the 100-year-old former Topshop block into an energy-efficient asset. The building will be powered by renewable energy, with its gas-fired boilers removed and replaced with air-source heat pumps.
The work is getting done, it seems, but is it working? Simon Henzell-Thomas, global director for climate and nature at Ingka Group, certainly thinks so.
“There is a lot more to do, but we are making progress,” he says. “We have managed to reduce CO2 and decouple that from our growth by focusing on things like an increase in biomass heating, increasing renewable electricity consumption, having a higher share of renewables across the supply chain and reducing emissions from Ikea products at home – selling things like energy-efficient lighting and increasing the efficiency of energy-intensive products.”
Ikea in numbers
80 – Ikea turned 80 this year
€47.6bn – Global revenue grew by 6.6% to €47.6bn in its 2023 financial year
70 – Number of new stores the group opened during the year
860m – Number of shoppers who visited Ikea stores this year, up from 822m in 2022
Making a commitment
The group launched its People & Planet Positive sustainability strategy in 2012. The plan, while lacking in detailed targets, sets out three key principles:
- Inspiring and enabling more than 1bn people to live a better everyday life within the limits of the planet;
- Becoming climate-positive and regenerating resources while growing the Ikea business; and
- Creating a positive social impact for everyone across the Ikea value chain.
As part of its plan to be carbon-positive by 2030, in 2019 it pledged to invest €200m (£174m) in green energy and forest planting, and it has committed to reduce energy consumption in its stores by 80% by 2030.
The group’s latest sustainability report shows a carbon footprint of 25.8m tonnes of CO2 for 2022, down by 5% on the previous year and by 12% compared with a baseline set in 2016. The continued reduction is mainly due to an increased share of renewable energy in both retail and production, says Ikea, and a more energy-efficient range, particularly through the Solhetta LED bulbs.
Last year the group reached 100% renewable electricity across all Ikea-operated factories, packaging and distribution units, and was able to ensure that some 55.8% of materials sourced by the business were renewable and 17.3% recycled. Almost 100% of the wood used in Ikea products also comes from Forest Stewardship Council-certified woodland. A global wood supply map, launched during the year, helps increase transparency, publicly showing the origins of wood used in Ikea products.
Ikea has also this year introduced bio-based glue alternatives after 10 years of internal research, which will enable it to reduce its fossil-based glue usage by 40% and its climate footprint from glue by 30% by 2030. And, it has developed a new Silversida product series which represents the first successful example of Ikea using ceramic production waste on a large scale to make new tableware. Some 65-70% of Silversida products are composed of internal waste at the factory.
“The company has always done sustainability to some degree,” says Henzell-Thomas, who joined the firm in 2012 from The Body Shop. “Take the flatpack concept; that was about reducing emissions from shipping as well as saving money. Sustainability is part of the company’s history. It runs through the business like a stick of rock.”
For Henzell-Thomas, being able to commit to and deliver on sustainability targets requires a focused strategy.
“You have to build a strategy with very tangible goals,” he says. “But that strategy and those goals have to make sense for the business. Our focus areas are very clear. We want to be climate-positive and circular, and we want to enable our customers to live a more sustainable life at home. That vision resonates both internally and externally, which is so important for success. And it needs to be material. A company needs to look at its biggest material impacts.”
He adds: “What we have done recently is introduce value creation goals where we lift up, for example, our operational climate footprint to the same level as revenue and profit.”
Those goals are formally performance-managed, says Henzell-Thomas, because they mean nothing if they are not delivered. To help with ownership and accountability, the company’s global managing directors have all been given the job title of chief sustainability officer.
“It’s to get across the idea that, yes, you’re leading the country’s financial performance and the penetration in the market, but you are also leading on sustainability impact and delivery of our goals,” says Henzell-Thomas.
“Those goals need to be delivered just like any other, and they need to be taken just as seriously.”
Since 2009, Ingka Investments has invested €4bn into renewable energy, so we own more wind turbines than we do stores – around 594 wind turbines and 22 solar parks
Simon Henzell-Thomas
Investment strategy
Another driving force behind Ikea’s focus on sustainability is strong investment. The group’s largest franchisee, Ingka Group, runs 90% of all Ikea stores, including all of those in the UK, and within that group sits Ingka Investments. This arm of the business makes investments and acquisitions to “secure Ingka Group’s long-term financial strength” but also to make investments with societal value.
“Since 2009, Ingka Investments has invested €4bn into renewable energy, so we actually own more wind turbines than we do stores – around 594 wind turbines and 22 solar parks,” he says. “That’s a big portfolio within the business now focused on renewable energy. It is phenomenal really because you can see how that investment benefits Ikea, but it also helps transform the whole energy sector and drive investment in wind energy in particular.”
The investments, commitment and accountability the group has put in place all help focus Ikea on its target, but 2030 is just around the corner, and with the group building its portfolio and taking advantage of distress in the sector to pick up “bargain” assets like Brighton’s Churchill Place, is Henzell-Thomas feeling the pressure?
“The thing I feel the most is urgency,” he says. “We haven’t got a huge amount of time. But it’s a great privilege to work for a big brand. The ability to influence change across multiple geographies and being able to think ‘if Ikea does this right and if other brands do this right, it will fundamentally change the economy’ is amazing.
“I find it inspiring to be part of a purposeful, resilient, sustainable brand like Ikea. But the urgency part is what keeps me awake at night, because we really do need to act quickly.”
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