IKEA’s Ingka Group has committed US$1.5bn to new sustainability measures including retrofitting, renewable energy production and energy management tech.
Ingka Group, the largest IKEA retailer, has announced a US$1.6bn investment to phase out direct fossil fuel use in its operations.
This new commitment aims to reduce the company’s climate footprint from its own operations by 85% by 2030, using 2016 as the baseline.
A dual focus on energy efficiency and renewables
This investment of US$1.5bn will focus on energy efficiency improvements and renewable heating and cooling technology, coming in addition to a previously announced US$8bn commitment to offsite renewable energy production and technologies.
This combined US$9.6bn investment positions Ingka Group as a major player in the corporate transition to renewable energy.
Simon Henzell-Thomas, Global Director of Climate & Nature at Ingka Group, explains the significance of this investment.
“Heating and cooling are currently our largest driver of emissions within our own operations. This part of the bigger plan to reduce our total climate footprint across all scopes by 50% by 2030 and be net zero by 2050,” he says.
Another step in a long journey to sustainability
“Ending our reliance on fossil fuels is essential to tackling the climate crisis and halving global emissions by 2030. At IKEA, we started our journey in 2009 and have invested heavily in both on- and offsite renewable energy production to enable the transition,” says Jesper Brodin, CEO of Ingka Group.
The company has already made significant strides in its sustainability efforts. Emissions across IKEA stores have been reduced by 60.4% since 2016, with 96% of retail sites now using renewable electricity.
These efforts have contributed to a 24.3% reduction in overall emissions. All the while, IKEA has experienced a 30.9% increase in revenue since 2016, showing that their shrewd investments have not affected the bottom line.
How to retrofit a global company
Retrofitting will be a key part of the energy transition for all companies. By increasing the energy efficiency of buildings – either through improved insulation or smart energy management solutions – you can reduce the amount of energy needed to heat buildings.
“This investment will be used for accelerating ongoing efforts to retrofit IKEA units with energy efficiency upgrades and renewable heating and cooling systems,” says Simon.
“All new units will be built with renewable heating and cooling systems, and work is already under way to retrofit 150 existing properties.”
Ingka CSO Karen Pflug also highlights some key areas that the investment will cover. “Transitioning to renewable heating and cooling is a vital enabler on our decarbonisation journey; however, it’s a complex and costly process,” she explains.
“This investment means we can progress further and faster with our plans – and we know it will pay off in the long term.”
An unwavering commitment to global climate goals
Ingka Group’s commitment aligns with the Paris Agreement and Science Based Targets initiative (SBTi), demonstrating a comprehensive approach to reducing greenhouse gas emissions and phasing out fossil fuels.
The company’s investment arm, Ingka Investments, has already committed over US$4.3bn to offsite renewable energy, establishing itself as a mid-sized renewable energy production company.
“This investment means we can progress further and faster with our plans – and we know it will pay off in the long term.” – Karen Pflug, CSO of Ingka Group.
The imperative for collaboration
While the investment is significant, Brodin emphasised that corporate action alone is not sufficient to address the climate crisis.
“As businesses, we have an important role to play in phasing out fossil fuels, but we cannot do it alone. We welcome the COP28 pledges on renewable energy and energy efficiency and consensus on transitioning away from fossil fuels,” he says.
He called for collaborative efforts between businesses and governments to overcome obstacles such as complex policy frameworks and inefficient permitting processes.
Overall, though, he remains positive about the company’s ability to deliver on its longstanding climate commitments.
“Now, to move from pledges to impact, governments and businesses need to combine efforts and address obstacles, such as complex and inefficient policy, permitting and reporting frameworks. We have five years left to deliver to the Paris Agreement – with the right commitment and leadership we have it in our hands,” he says.
