IKEA's Approach To Sustainability

2/07/2014

IKEA's Aggressive Approach To Sustainability Creates Enormous Business Opportunities

IKEA released its 2013 Sustainability Report this week, and the results in the energy arena are pretty impressive.  The company continues to follow through on its commitment to develop and own renewable electricity supplies, with a 2020 goal of producing more energy than it uses.  IKEA has numerous other sustainability-related goals, and is expanding its offerings to customers as well.

I spoke on the phone with Chief Sustainability Officer Steve Howard to discuss IKEA’s aims, its overall approach to the issue of sustainability, and what the future may hold.  One thing that was clear from the outset: IKEA is committed to ‘future proofing’ its company, and is proactively anticipating many of the challenges to be faced in the coming years.

Howard commented that values are critical to the entire endeavor.

If you start with a values-driven point of view, you can make a business case.  Climate change and energy security mean you have to have a radical approach.  We need a six, seven, or eight-fold decrease in carbon intensity. That’s not business as usual. Energy efficiency only gets you so far. You have to decouple your business from carbon.  Then you have to look at what’s commercially scalable.

He notes that there is a solid financial argument to be made for their renewable energy investments.

There has to be a rational business decision with a decent payback.  Any business with access to capital has a choice of where to invest.  Of course, you can invest in growth of business, and we do that, but we also look at what delivers long-term energy security, a macro hedge on energy price rises and addresses carbon. IKEA also has a long-term business philosophy, where we own most of our stores, our factories, and the land they are built on. We have the capital, so why would we rent? It’s the same with energy – if we can own our own energy production why would we not want to do it?

As a consequence, IKEA owns as many renewable energy resources as some energy companies, with 157 wind turbines (96 of which are already operational), with a capacity rating of 345 megawatts. The company has also installed 550,000 solar panels, totaling 90 MW.

In the U.S., IKEA’s numbers are also pretty formidable, with an investment of $150 million in PV systems, making IKEA the second largest private commercial solar owner. Currently, 39 of their 44 locations are served by solar arrays, with four more installations planned in 2014 (including one on a new store). When completed, the combined capacity of IKEA’s solar portfolio will total 38 megawatts.  The company is also working on a geothermal system to heat and cool a soon-to-be-constructed store near Kansas City.

via IKEA's Aggressive Approach To Sustainability Creates Enormous Business Opportunities – Forbes.