Like a lot of its rivals in retail, Sweden’s Ingka Group — the IKEA model’s main retailer — faces a frightening Scope 3 problem: Worth-chain emissions made up 98 p.c of the 30 million tons of carbon dioxide equal (tCO2e) the corporate emitted in 2016, the baseline yr for its net-zero goal.
But Ingka is in contrast to its friends in that it has made exceptional progress towards its targets, which name for a 50 p.c discount by 2030 and reaching web zero by mid-century. In 2024, the corporate emitted 21 million tCO2e, placing it roughly on monitor for its end-of-decade purpose.
In contrast, no less than half of the world’s greatest retailers don’t have a proper net-zero goal in any respect. For instance, Walmart, the world’s largest retailer — referred to as a pioneer in provide chain decarbonization — is struggling to ship by itself short-term commitments.
Ingka’s secret weapon? The corporate’s dedication to investing in local weather initiatives is important: the greater than $5 billion it’s spent on photo voltaic and wind initiatives since 2009 have accrued sufficient belongings for Ingka to be labeled as a midsize vitality firm.
However this second profile within the Chasing Internet Zero sequence — our company-by-company take a look at progress towards 2030 local weather objectives — reveals that simply as vital is perhaps Ingka’s shut ties with Inter IKEA, which provides it with every part from bookshelves to Swedish meatballs. Few different retailers are as depending on one provider. Whereas Ingka buys from 1,500 suppliers, 81 p.c of its local weather footprint comes from IKEA meals and merchandise, based on information revealed by each firms. By comparability, Walmart has no less than 100,000 buying relationships.
Ingka and IKEA are separate, privately held entities with particular person net-zero targets, however their objectives had been developed in shut collaboration and validated final yr by the Science Primarily based Targets initiative (SBTi). Senior employees from each organizations take part within the Inter IKEA Strategic Sustainability Council, which meets twice a yr.
“This isn’t only a sustainability transition to the sustainability group, it’s about the entire of IKEA and the entire of the enterprise,” mentioned Simon Henzell-Thomas, local weather and nature supervisor at Ingka.
This relationship gives granular insights into provider emissions that create a bonus few others within the sector get pleasure from. “As a retailer, it’s a enormous elevate to get at this information as a result of you’re the final level on a really lengthy provide chain,” mentioned Honor Cowen, international head of retail and attire at consulting agency Anthesis Group.
Largest legal responsibility: Supplies
Ingka manages 574 places in 31 nations and generated $47 billion in fiscal 2024 — 90 p.c of IKEA’s whole gross sales. The retailer’s high emissions supply by a large margin is bought items, which made up 36 p.c of its Scope 3 whole in its 2016 baseline yr.
The Scope 3 emissions come from operations as numerous as cattle ranches and information facilities, however the highest impression inside the class, at virtually 10 million tCO2e, is from uncooked supplies. Ingka is aiming to squeeze that down to five.5 million metric tons by 2030, based on its first net-zero transition plan, revealed in February.
To cut back these numbers, Ingka will want Inter IKEA to vary how its items are designed, produced and transported. “Shifting towards extra renewable supplies, extra sustainable supplies, that’s going to be an enormous a part of decreasing our footprint,” mentioned Henzell-Thomas.
Clues concerning the potential for Ingka’s progress are present in Inter IKEA’s 2024 local weather report. Listed below are plans for 3 of the 5 supplies that contribute most to Ingka’s and IKEA’s emissions:
- Metals. Lowering the steps required to fabricate merchandise can minimize emissions. IKEA is utilizing stronger grades of metal for some merchandise, reminiscent of its Mittzon desks, to cut back the quantity of the fabric required. It’s additionally boosting use of recycled metals: The corporate makes use of a minimal of 70 p.c recycled aluminum in broadly obtainable merchandise together with cupboard doorways and mirrors.
- Wooden. IKEA plans to modify to recycled wooden for one-third of its wooden merchandise by 2030, up from 16 p.c now. One sticking level is the shortage of recycling infrastructure for fiberboard and particle board. The corporate has arrange its personal recycling line in Poland to supply pegboards and higher perceive what’s wanted to scale this work. It’s additionally investigating bio-based glues, which assist minimize emissions from board manufacturing. The draw back is that bio-based glues might make it more durable to disassemble sure merchandise, hindering IKEA’s and Ingka’s recycling objectives.
- Textiles. IKEA is switching to lower-carbon sources for the materials, foam and stuffing utilized in mattress linens, curtains, rugs, towels, sofas and mattresses. Promising developments in 2024 included curtains manufactured from waste polyester and a settee full of felt made of material waste quite than polyurethane foam.
These modifications would require applied sciences which might be nonetheless rising, together with coverage modifications and infrastructure investments. “We’ve a plan, however we even have gaps there that we’re going to shut,” Henzell-Thomas mentioned.
Vivid spot: Product use at residence
Ingka’s second greatest Scope 3 legal responsibility, at 24 p.c of its 2016 whole, comes from emissions generated by its clients’ use of the ovens, stoves, fridges, lighting and different merchandise it sells. This can be a brilliant spot for the corporate: It has met its high-level purpose of reducing the impression in half by decreasing emissions to three million tCO2e tons in 2024. The push now could be to slice a further 2 million tCO2e off the class by 2030.
Product-level modifications are an enormous a part of this success. IKEA improved the effectivity of its whole lighting line by 90 p.c just by phasing out gross sales of incandescent bulbs, for instance, lowering associated emissions by 57 p.c from its 2016 baseline. Now the main target is on decreasing the electrical energy utilized by home equipment reminiscent of fridges and ovens.
Ingka’s clear vitality companies, which assist clients set up photo voltaic panels or warmth pumps at residence, are one other key driver of reductions on this class. And Ingka’s funding arm plans to spend $3 billion extra earlier than 2030 on extra renewable vitality installations and different key applied sciences for the clear vitality transition, reminiscent of various fuels and grid-scale batteries.
Coverage-dependent lever: Mobility
Ingka’s third-largest Scope 3 part incorporates the transport-related emissions from supply companies, in addition to buyer, co-worker and enterprise journey. The retailer has diminished this footprint by simply 13 p.c, to 2.3 million tCO2e, for the reason that 2016 baseline yr. What’s extra, emissions rose barely between 2023 and 2024. Ingka’s transition plan requires a further 40 p.c discount by 2030 to 1.6 million tCO2e.
To attain that, Ingka is investing in electrical and alternative-fuel automobiles to extend the proportion of residence deliveries it fulfills with zero-emissions automobiles from 40 p.c to 90 p.c by 2028. The retailer can also be offering extra pick-up places close to clients’ properties.
Ingka is prioritizing work in areas the place regulatory assist for a transition to zero-emissions automobiles is extra favorable. In Paris, for instance, Ingka makes use of boats on the Seine to move items to distribution factors the place they’re picked up by EVs and delivered.
Round answer: Product finish of life
Ingka’s round economic system initiatives intersect with the work IKEA is doing to chop supplies emissions. These efforts scale back Ingka’s emissions associated to product end-of-life — which contributed 6 p.c of Ingka’s general footprint in 2016 — whereas offering IKEA with a supply of recycled supplies.
Ingka reported 1.6 million metric tons in emissions for product end-of-life in 2024, down 15 p.c from 2016. It achieved this by increasing gross sales of secondhand gadgets to a majority of shops, distributing thousands and thousands of free elements to encourage repairs, refurbishing the IT tools it makes use of in shops and reducing meals waste. The purpose is now to chop 0.3 million extra tons by 2030.
Sriram Rajagopal, head of local weather at Inter IKEA Group, mentioned he was assured of hitting the 2030 purpose for these emissions. However he famous that Ingka and IKEA can’t remedy systemic points, reminiscent of restricted recycling infrastructure, on their very own. “We want collective effort the place many actors contribute to a round economic system and society,” he mentioned.
Ingka’s funding arm can also be placing $1 billion into round economic system startups. The retailer estimates that these ventures have up to now recycled round 1.9 million metric tons of supplies, avoiding 5 million tCO2e.
One instance is RetourMatras, which recycled greater than 1 million mattresses in 2024, avoiding an estimated 90,000 tCO2e. It sells that materials again to clients reminiscent of IKEA to be used in new manufacturing.
Ingka’s edge: Internet-zero integration
Leaders throughout all ranges of Ingka are accountable for delivering on emissions reductions. Ingka’s chief sustainability officer, Karen Pflug, is a part of the group’s administration group, which meets no less than eight occasions yearly. The group is straight accountable to Ingka’s govt board, which incorporates the CEO, deputy CEO/CFO and group authorized counsel.
This kind of deep integration is indicative of leaders in retail sector decarbonization, mentioned Evan Sheehan, head of the retail, wholesale and distribution apply at Deloitte. Probably the most profitable firms, he famous, share a couple of greatest practices:
- High executives purchase into the corporate’s sustainability technique and supply sources to assist it.
- Groups agree on clear metrics for demonstrating the return on these investments.
- Effectively-defined fashions are developed to seize and use information to drive net-zero objectives.
Ingka does all three. CEO Jesper Brodin is fond of claiming that “being local weather good can also be useful resource good, value good and enterprise good.”
As much as 85 p.c of the privately held firm’s earnings are additionally put towards enterprise enhancements, together with these designed to cut back emissions. Historic evaluation suggests different retailers, together with Walmart, reinvest round 40 p.c of earnings.
That board degree assist is another excuse Ingka says it’s poised to ship on its 2030 purpose. “We’re happy with the place we’re,” mentioned Henzell-Thomas.
