Credit: IKEA
Swedish retail conglomerate's latest green progress reports show how it is taking big strides towards its science based climate targets
The journey to a cleaner, green economy has never been a smooth ride, as any seasoned corporate sustainability executive will tell you. But it is fair to say that 2025 has brought more than its fair share of bumps in the road, and it's only February.
President Trump's return to the White House has ushered in an unsurprising backsliding from the world's biggest economy on all things climate and nature-related, with reams of green regulations and funding programmes all being rapidly torched. His arrival in the Oval Office has amped up the backlash against environmental, social, and governance (ESG) policies in the US, encouraging several large corporates to ditch or water down public sustainability and diversity commitments. Fears are growing some governments could follow Trump's lead and quit the Paris Agreement altogether.
Meanwhile, the White House's mission to use the threat of import tariffs to protect US economic interests is causing turmoil on international markets, further heightening geopolitical tensions and triggering fresh trade barriers, potentially pushing up the costs of clean technologies in the process.
All the while, the climate crisis itself is becoming more and more real, with extreme weather events having devastating impacts on supply chains, homes, and businesses.
How do multinational companies navigate this tumultuous era, while accelerating their efforts to decarbonise and build a more nature-friendly and resilient business? It is a question at the forefront of many corporate sustainability experts' minds, as they try to develop plans for a five year period through to 2030 that looks set to be characterised by uncertainty, volatility, and a major political battle over climate policies.
However, some leading corporates have already signalled they are in no mood to see their sustainability strategies blown off course.
"Our business direction is clear," said Jon Abrahamsson Ring, CEO of Inter IKEA Group - which oversees the Swedish conglomerate's global brand and franchises - just last month. "We want to make IKEA more affordable, accessible and sustainable, including for people with thin wallets."
His comments came in the introduction to the company's latest global sustainability and climate progress reports, which was published in late January and covers all of the brand's retail outlets, production facilities, and value chains across its various global franchises. Writing in the report, Abrahamsson describes 2024 as "another year of big global challenges", from climate change and nature impacts, to geopolitical conflicts and cost of living concerns. But he stresses that commitments to and investments in sustainability "are not only crucial for safeguarding the future of both people and the environment, but also for the future of the IKEA business".
"We understand the challenges but continue to be optimistic," he writes. "We are committed to doing our part to support a just transition towards a net zero world by staying true to our vision, making sustainable living affordable for as many people as possible."
Over the past year or more, there has been palpable uncertainty surrounding some corporate sustainability communication strategies, with experts talking of a period of 'greenhushing' where businesses are reluctant to talk publicly of their sustainability efforts for fear of attracting criticism. Firms are terrified of being accused of 'greenwashing', while some major brands have also faced legal threats in the US over sustainability efforts that have been branded 'woke capitalism' by detractors.
But far from turning the volume down on its sustainability efforts, Inter IKEA now produces two annual progress reports - one focusing on climate and the other on sustainability more generally - detailing its progress over the previous year.
They reveal that, during the year running to the end of August 2024, IKEA slashed its total greenhouse gas emissions by five per cent. The reductions were achieved across its retail stores, offices, warehouses, distribution centres, energy use, logistics, production, and product use.
Moreover, for the first time the company included a 2030 roadmap for the Group, providing an overview of the key actions needed to halve its entire global operational and value chain emissions by the end of the decade, in line with its validated science-based target.
So far, IKEA has achieved a 28 per cent reduction in its total emissions against its 2016 baseline, which puts it within reach of its 2030 goal. To close the remaining gap over the next five years, the roadmap sets out the firm's ambitions to continue ramping up its use of renewable energy, renewable or recyclable materials in its products, and plant-based options in its food range, while also promoting more sustainable choices from its customers.
By 2050, the aim is for IKEA and its franchises to become a net zero emission organisation across its entire operations and value chain without the use of carbon offsets. The goal is accompanied by and additional aim to become a 'circular business', which designs products from the very beginning to be reused, refurbished, remanufacturers, and recycled.
Having long been a leading advocate for environmentally sustainable business practices worldwide, IKEA and its various franchises around the world appear determined to stick with their strategy, unbowed by the new political and economic headwinds blowing from the US and elsewhere.
"We're a global business, and we've been working a long time on our sustainability agenda, and we aim to continue on our road forward," Lena Julle, acting corporate sustainability officer and head of sustainability for range at the company tells BusinessGreen. "We are committed. We are pushing through globally to do what we have said we will do. Tariffs we know historically are not something that help global trade, and it can of course hinder the sustainability agenda, but we are a global business, so we will continue with the plans that we have."
That isn't to say IKEA and other multinational firms haven't tweaked their approaches to sustainability as sands have shifted. One part of IKEA's climate progress report reveals, for example, that the firm is looking to recalibrate its zero emissions delivery vehicle targets this year, due to "various challenges", such as the availability of suitable EVs, a limited range of freight EVs, and the absence of suitable charging infrastructure in some markets. Having previously set its sights on 100 per cent electric transport fleet for customer deliveries, it now expects to weaken that to a goal for 90 per cent of its deliveries to be made in EVs by 2028.
But rather than a sign of crisis or retreat, Julle views these shifts as merely part and parcel of the sustainability journey, as corporates chart entirely new territory for the global economy.
"Many companies have been working for a long time on this agenda, and you realise more - you learn more," she explains. "IKEA is too, every day, on what we can achieve and what we can't, and then of course being transparent about where you are, how far you've come, and what your challenges are. That is something I see more and more, with many companies - trying to increase transparency of challenges and progress."
And what of the worsening climate impacts - such as the devastating wildfires in Los Angeles last month - that are becoming an all too frequent occurrence worldwide? How can corporates respond to these risks?
These threats only make Julle "more determined than ever to actually move this agenda forward and be part of the solution", she says. "I think, as a person who is passionate about sustainability, you can choose to either feel downtrodden and hopeless, or you go with hope, and the strong actions that we have taken," says Julle. "I'm really proud of IKEA for having so many commitments and such strong, tangible actions that we are moving [forward with] all the time. Being part of the solution is what's driving me."
Renewable-powered supply chain
Alongside improved energy efficiency, an increasing shift towards electrified transport and heating, and lower production volumes, IKEA's purchase and use of renewable energy has been a primary driver behind its sharp fall in emissions in recent years.
For IKEA retail and other operations worldwide, the report shows the share of renewable energy used increased from 67 per cent in 2023 to 71 per cent in 2024, including an increase in renewable electricity from 77 per cent to 81 per cent, as it continued to phase out the use of fossil fuels. IKEA's direct operations are now powered by 100 per cent renewables in just over half the 63 markets it operates in worldwide.
Meanwhile, the share of renewable electricity used in the production of IKEA products also rose from 71 per cent in 2023 to 75 per cent last year. Looking ahead, IKEA has set its sights on only using renewable electricity in the production of its goods by 2030. To that end, last month it announced plans to expand its renewable electricity programme - which assists its suppliers in securing pre-negotiated energy prices or power purchase agreements (PPAs) - to a further 14 markets worldwide. The initiative now covers 27 markets and more than 91 per cent of the firm's CO2 emissions from electricity used in production, it said.
But with IKEA's operations spanning so many countries and regions, the availability of clean power sources varies significantly, as do the regulatory environments suppliers operate in, presenting major barriers to the company's efforts to meet its climate goals.
Some major global retailers facing similar challenges - such as Walmart in the US - have warned they now expect to miss their near-term climate goals. But Julle remains confident in IKEA achieving its 2030 targets, even if necessary policy support does not materialise in some of those markets with limited access to renewables capacity.
"To a large extent, I think we will get there," she says. "There might be a couple of countries where it might be impossible [to achieve 100 per cent renewable electricity use], but we will for sure do are utmost in the five years that we have."
Such challenges are precisely why government policy advocacy and partnerships with other companies are also key to IKEA's climate ambitions. That includes encouraging countries to develop clear, detailed, and sectoral decarbonisation plans across their economies as part of their national Paris Agreement plans, updated versions of which are supposed to be submitted to the UN before the COP30 Climate Summit later this year.
Sriram Rajagopal, head of climate and air quality at Inter IKEA Group, tells BusinessGreen the firm has been "very much engaged in a lot of external efforts, also joining hands with a number of like-minded companies out there, because it's not one company alone which can influence this".
"So we are tightly engaged in all those discussions, and will continue to be leading all the way to COP30 and beyond," he says.
Consumer behaviour change
The use of IKEA products in customer homes after they have been purchased accounted for the second largest portion of the conglomerate's global climate footprint last year, representing 17 per cent of its total emissions.
However, the firm has made impressive strides over the past decade in slashing emissions associated with the use of its products. Last year, these emissions fell by four per cent, meaning they have more than halved - a 54 per cent reduction - compared to IKEA's 2016 baseline year.
The vast majority of these Scope 3 emissions are generated by the electricity consumption of products such as lighting and home appliances, including gas hobs and refrigerants, for which improving energy efficiency remains a key focus.
But continuing to deliver such improvements also requires changes in consumer behaviour. IKEA has been seeking to encourage these shifts through tweaks to its products, such as selling washable sofa covers and mattress pads to extend the life of these products, and thereby cut costs and emissions over the long run, for example. Other efforts include providing more plant-based food items on its in-store menus, as well as more 'plant-rich' meals, in order to cut down on meat consumption and emissions associated with livestock farming. It even introduced a "hybrid patty" in Sweden last year, a burger made from half minced beef and half plant-based protein.
Meanwhile, it has been expanding its repair services, with the company claiming to have sent out 24.6 million spare parts for free last year to help customers extend the life of products. For the first time last year, IKEA also began the process of providing not just the standard product assembly instructions, but also instructions for disassembly further down the line. Starting with two product ranges last year - its Platsa shelving units and Gunnon gazebos - the plan is to now roll out disassembly instructions across a wider range of IKEA products in the coming years.
"People can assemble and disassemble our products, which is very good for circularity," Julle explains. "Then of course, when you go to assemble it again, you always miss one of those little screws, or whatever, so we send out spare parts to make sure [customers can do so]."
Circular business models
Meanwhile, efforts are continuing at the design stage to try and ensure IKEA's products are as reusable and recyclable as possible. That comes in addition to ramping up the use of secondary raw materials and working with suppliers to improve traceability for the materials it uses in its products. To that end, the firm has been expanding sustainability and responsible sourcing requirements through its IWAY supplier code of conduct, in order to boost environmental and social standards across its raw materials and agricultural supply chains.
Such efforts are critical, as materials account for more than half of IKEA's total global climate footprint, according to Julle. "We have a lot of different materials, and very complex supply chains," she explains. "For us, of course, it's about really making sure that we now have traceability all the way to the source, or the farm, or wherever we source, to get better data so we can really home in on what will make the bigger impact and make sure we are moving in the right direction.
"To go even more granular, one of the biggest parts of the focus is materials, and there the access or the costs of some of the newer materials are where we need innovations to scale faster. Sometimes we have issues moving towards using recycled materials, for example, where the solutions might not exist yet, or it might be prohibitively costly. Those are the challenges that we see and try to work with."
Beyond that, IKEA is continuing to explore new business models that aim to do away with the conventional manufacture and sale of new products altogether. After all, the planet's resources are being eaten up at a rapid rate, severely undermining its capacity to regenerate. This year ‘Earth Overshoot Day' - established to mark the date in the year on which humanity is estimated to have used up the amount of resources that the Earth produces annually - is set to fall towards the end of July, having last year fallen on 1 August.
However, shifting away from conventional production and retail approaches that have served the world's most famous furniture retailer so well is no easy task, even if it could deliver environmental and consumer savings. IKEA is continuing to explore and trial various renting and circular business models, but Julle acknowledges there is a long way to go on this journey.
"I would say at this point, we are testing and trying different things," she says. "We are looking into bigger furniture spare parts as the next step. And if you look at Ingka Group [the largest IKEA franchise which controls 367 of the firm's 442 store worldwide] they are working with buyback and re-sell options, where customers can sell their IKEA items back to the store, enabling them to be refurbished for someone else to purchase. So I would say we are at the beginning stages of looking into some of these concepts to see what works, and what the customer thinks about it."
It may be a tumultuous time for corporate sustainability efforts, but as IKEA well knows: it was ever thus. And ultimately the only way to meet climate goals is to keep doing the work. Whatever else may be going on in the world of geopolitics, the Swedish retailer appears intent on keeping its sustainability ambitions nailed to its mast.
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