The Ikea store in Queens, New York, which opened on January 14, marked a decided departure for the iconic home furnishings brand. Located in the Rego Park Shopping Center, the 11,500-square-foot open layout — a new, smaller format for Ikea — is divided into core areas of the home, offering small-space solutions tailored to city living. Rooms are thoughtfully merchandised with easily portable accessories like lamps and throw pillows that customers can take with them on the bus or subway, both of which are a block away — a key factor in choosing the store’s location, given that more than half of city residents use public transportation.
Digital stations allow shoppers to self-pay and arrange furniture delivery for bigger pieces for a flat fee of $49. The company is working to make all last-mile deliveries in New York City by electric vehicle, according to Jennifer Keesson, country sustainability manager for Ikea U.S. — a test run on the way to making the last mile of its more than 2 million annual home deliveries nationwide zero emissions by 2025.
The Swedish powerhouse set out 80 years ago “to create a better everyday life for the many people” — as its motto goes — by putting sleek, stylish home furnishings within the budgets of the masses, and became a $35.4 billion (2020 revenues) market force in the process. And just as the brand is widely credited with democratizing design, it’s now moving to make sustainable living the norm rather than the exception, with a sprawling strategy that’s wildly ambitious in scope.
Ikea’s overarching goal is to become “climate positive” by 2030 — reducing more greenhouse gas emissions, or GHGs, than its entire value chain emits. It plans to do this while still growing its business by designing new products, moving into new markets, and building dozens, perhaps hundreds, of new stores in that time. The company is charging ahead with plans to open 50 more stores (of various sizes and formats) in 2021 alone.
Expanding its retail footprint on a warming planet may seem to fly directly in the face of Ikea’s plan to reduce its colossal climate footprint. In the last year, moves to decrease energy use across the business, from manufacturing to what it serves in its restaurants, have reduced its climate footprint per product sold by 7 percent, the company estimates. Meeting its 2030 target while selling ever more will mean cutting the average climate footprint per product by 70 percent.
Given that Ikea emitted the equivalent of 24.9 million tons of carbon dioxide in 2019 — accounting for 0.1 percent of the world’s GHG emissions that year — it’s a Herculean undertaking that encompasses virtually every element of its business, from the materials it sources through product manufacturing and transport. Emissions reductions will also come from efforts to pull carbon out of the atmosphere (without the use of carbon offsets) and influence supplier and customer behavior.
Making products last longer, and giving old products second lives, is a central pillar of its climate ambitions: Ikea aims to become a “100 percent circular business” by 2030. That means creating home goods that not only meet Ikea’s definition of “democratic design” — affordable, high-quality, sustainable, stylish, and functional — but also can be reused, refurbished, recycled, or remanufactured into new items.
Materials contribute the most to Ikea’s overall climate footprint, followed by the use of products in customer homes. Squeezing carbon savings out of those budgets poses the greatest hurdles toward meeting its ambitious targets, which were set to align with the Paris climate accord goal of keeping global warming below 1.5 degrees Celsius above pre-industrial levels.
“An increasing number of companies have said they’ll be climate positive by 2040 or 2050, but relatively few have said 2030,” said Andrew Winston, a corporate sustainability strategist and author of “The Big Pivot.” “Ikea’s challenge is also much more complicated because they manufacture tons of different products — unlike a company like Google, which has also set incredibly aggressive goals.”
The sprawling infrastructure and commercial leverage that enables the company to manufacture and sell millions of products is exactly what Ikea is banking on to realize its climate goals.
“Obviously the consumption model of the 1900s that we were part of will not work in the future, because we’re consuming more than the planet can provide,” said Ingka Group CEO Jesper Brodin on a Harvard Business Review podcast last December. Ingka Group is the largest of 12 strategic partners in Ikea’s franchise system, operating 380 Ikea stores around the world.
“I love mass production,” said Brodin, “because if you put it in the right aspect, you can scale up change so much better and faster. If you can scale something that’s climate-positive, that’s probably the best and fastest way of doing it — and bring the cost down so sustainability doesn’t become something that’s only for those who can afford it.”
Seeing the forest for the trees
Arguably few companies, particularly in the retail industry, have Ikea’s vision and knack for innovation. Founded in 1943 by the late Ingvar Kamprad — the name is an acronym of his initials, his family farm (Elmtaryd), and his birthplace (Agunnaryd) — it quickly became known for low prices. Chagrined competitors tried to pressure suppliers to boycott the brand, driving Kamprad to start designing products in-house and thinking early about moving beyond his home market.
Ikea shifted to flat-pack, self-assembly products in 1953 to minimize shipping costs and damage to mail-order deliveries. In 1970, the first self-service area was opened at Ikea’s flagship store near Stockholm, which allowed customers to walk out with flat-pack furniture in hand to assemble at home. The debut of Ikea’s first store outside of Scandinavia, in Switzerland, in 1973 set the stage for international expansion: Ikea is now the world’s largest home furnishings business, with nearly 530 stores (including test formats and planning studios) in more than 50 countries.
The seeds of Ikea’s shift to sustainability were planted (literally) in 1998, with the launch of the “Sow a Seed” Foundation, which sought to rehabilitate large swaths of rainforest lost to logging and forest fires in Malaysian Borneo. Over the next two decades, Ikea funded the replanting of 3 million trees across 31,000 now-protected acres of rainforest.
Sustainable forestry has long been a key focus of the brand, for good reason. Ikea uses wood in 60 percent of its products. Last year, it used just under 671 million cubic feet of wood (enough to fill 18 Empire State Buildings) in home furnishings and packaging, most of it from Poland, Russia, Belarus, Sweden, and Germany. About 12 percent of it was recycled and nearly all the rest was certified by the Forest Stewardship Council, a nonprofit group that promotes responsible forestry (Ikea is a founding member), meaning its harvesting did not contribute to deforestation.
Ikea still runs into criticism from time to time. Last year, the company was accused of illegally sourcing wood from Ukraine; a third-party independent investigation found no evidence of such timber in its supply chain, attributing the allegations to ambiguity surrounding the law concerning certain forest management practices. FSC is now working to resolve the issue.
Wood as a resource is under threat from deforestation, wildfires, pests, and other climate change impacts. The brand’s commitment to sustainable forest management is intended to ensure that its most critical raw material remains in sufficient supply. It also aims to enhance biodiversity, support those whose livelihoods are forest-dependent and protect vital carbon-sequestering trees. A big chunk of the company’s emissions reductions rely on keeping carbon locked up in the plants and soils of healthy forests.
To that end, Ikea invests heavily in forestland, where the company can reap carefully managed timber. Earlier this month, Ingka Group announced its acquisition of nearly 11,000 forested acres in southeast Georgia from The Conservation Fund, assuming its legally binding obligations to protect the land from fragmentation, restore trees, and protect wildlife. The company now owns 136,000 acres of forest across five states, and some 613,000 acres combined in the U.S. and Europe.
“Seventy percent of our footprint comes from materials,” said Pia Heidenmark Cook, Ingka Group’s chief sustainability officer. “So the products we put on the market, the materials we choose and where we source them from are critical.”
Ikea is taking a close look at its entire supply chain, said Cook, with the goal of using only recycled or renewable materials (like sustainably sourced wood and cotton) in its over 9,500 products by 2030. Today 10 percent of products contain recycled material, such as plastic and polyester, and 60 percent contain renewable materials.
The company has so far mapped out how to achieve half its materials footprint reduction goals for 2030 and has to figure out how to get the rest of the way there.
In the December podcast, Brodin called raw materials the most challenging part of the sustainability equation, noting that materials R&D has been one of the brand’s top investment priorities for nearly a decade.
“In terms of material innovation, the majority of investment is connected to our sustainability agenda — to find new materials that have a smaller climate or water footprint than what we use today,” said Cook.
Laminated veneer lumber, or LVL, is one material showing promise. A relatively new engineered product, it comprises multiple thin layers of wood glued together and cuts down on wood consumption by up to 40 percent. Its strength is comparable to metal in some applications, making it a potentially viable substitute for steel and aluminum, which have a high climate footprint due to their energy-intensive production process.
Another project explores using rice straw — a harvesting residue that’s typically burned and contributes to air pollution in places like northern India — as a new renewable material source.
Ikea has also partnered with clothing retailer H&M and forest products manufacturer Stora Enso to invest in Tree To Textile, a company that transforms wood cellulose into a sustainable textile fiber that could potentially serve as an alternative to cotton, Ikea’s second-most-used raw material behind wood. Last year, the brand used nearly 142,000 tons of the water-intensive crop — 0.5 percent of cotton production worldwide.
So far, alternative materials are still in testing phases or limited use. Ikea’s rice-straw product prototypes debuted as the FÖRÄNDRING (“change” in Swedish) collection of rugs, bowls, and baskets at stores in India last year, with limited volumes in a few European markets.
Should the company determine these new materials are viable, it will take years to update designs, adapt supply chains, and bring production to scale. But the advantage of Ikea’s size and clout means that if the company does identify any breakthrough renewable materials, it could push suppliers to get on board.
“Ikea is fairly unique in its ability to tell a potential supplier, ‘If you can’t meet our terms, we’ll find someone else who will,’” said Tom Eggert, a senior lecturer on business sustainability at the University of Wisconsin-Madison. “Whether it’s a wood alternative or plant-based plastics or something else entirely, they have the buying power to create a market where one may not yet exist.”
While cheap sofas and tables are the company’s bread and butter, the brand is one of the world’s largest food sellers: 680 million customers visited its food outlets in 2019. It sells a billion of its signature Swedish meatballs a year.
But meat is an ecological nightmare — livestock production accounts for more than 14 percent of total global greenhouse emissions and is a leading cause of deforestation. So Ikea is retooling its menu. The company has sold over 5 million veggie hot dogs since unveiling them in 2018. Last August, it introduced the HUVUDROLL plant ball, an alternative to its iconic meatball. With ingredients like pea protein and potatoes, it mimics meat’s taste and texture (unlike the brand’s veggie balls, which debuted in 2015), with a climate footprint that’s only 4 percent of the beef-and-pork original.
The company aims to make 50 percent of its restaurant entrees plant-based by 2025, and 80 percent of them non-red meat (of animals raised for food, cows and pigs are the biggest GHG contributors). The brand’s packaged food will also be 80 percent plant-based within five years.
Ikea’s other not-so-small side hustle is helping eliminate fossil fuels from its retail operations and production: The company is striving for 100 percent renewable energy across its entire value chain by 2030 — including helping secure 100 percent renewable electricity for its nearly 1,600 suppliers. Ikea has been investing in solutions like solar and wind farms around the world since 2009. Its clean energy portfolio now includes 547 wind turbines and two solar farms in 14 countries, and more than 920,000 solar panels on the roofs of Ikea stores and warehouses.
Last year, for the first time, Ingka Group generated more renewable energy — by a third — than it consumed globally in retail and distribution operations.
“Ikea is very much ahead of the curve in retail,” said Winston. “They were one of the biggest renewable energy purchasers before the big tech companies started their buying sprees.”
Widening the circle
In order to realize its vision of becoming 100 percent circular by 2030 — eliminating waste by keeping materials and finished products in use — Ikea must not only make products out of recycled and recyclable materials, but also convince its hundreds of millions of customers to recycle or reuse them.
“A truly circular economy approach is going to have to deal with end of life of products in a totally revolutionary way compared with their current business model,” said ecological economist Tim Jackson, author of the upcoming book “Post Growth: Life After Capitalism.”
The company is exploring how to entice customers to do their part.
During its #BuyBackFriday campaign late last year — conceived as an alternative to traditional Black Friday marketing blitzes — Ikea stores in 27 countries offered to buy back and resell thousands of used home furnishings. Customers received vouchers worth between 30 percent and 50 percent of their item’s original price, depending on its condition. (Anything that couldn’t be resold was recycled or donated to COVID-19 community outreach projects.) Down the road, as the company develops its methods, a bought-back chair could be stripped to its frame, polished, painted, and reshaped into a new chair.
Ikea is turning their “as-is” sections — where last year, 30.5 million discontinued and seasonal items, floor samples and customer returns were sold at discounted prices — into “circular hubs.” Customers can bargain hunt for second hand furnishings while picking up tips on fixing, cleaning or hacking their Ikea products. There are plans to launch hubs in half of Ikea’s stores by the end of the year.
Ikea’s first entirely secondhand store, a six-month test project, debuted in Eskilstuna, Sweden, last November.
“The perception of Ikea as a mass producer of stuff that doesn’t last very long has probably been its biggest Achilles’ heel,” Winston said. “This relatively new effort to change the lifecycle of their products by refurbishing, reselling, or entirely recycling them is probably one of the most important things that they’re doing.”
Jackson put a fine point on it: “#BuyBackFriday was a symbolic gesture. It needs to be an everyday reality.”
Cook says Ikea’s challenge “is to make sustainable living mainstream.” The company has had some past success. Back in 2015, when the most popular alternatives to inefficient incandescent light bulbs were halogens and compact fluorescent lamps, Ikea switched all its lighting products to light-emitting diodes (LEDs), believing that it could build an economy of scale and make LEDs a commercial success. The bulbs sold for about $7 at the time; they now cost less than $1 each and Ikea sold 56 million of them in 2019.
“In general, we are always trying to support the education of our customers [on] how to live a more sustainable and a healthier life at home,” Keesson said.
It’s reasonable to question how any company with a business model based on selling more and more stuff can expand in a truly sustainable way. Some argue that with a burgeoning global middle class on the rise and eager to spend their disposable income, we need companies that will make the effort to stay within the limits of what the planet can provide.