Market power as a lever for change

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© Ikea

Furniture concern IKEA is renowned for cheap goods but also for the democratisation of design. A less well known fact about IKEA is that it is also investing billions in its efforts to democratise sustainability – an approach that pays off for the Swedish concern too.  

Yvonne von Hunnius, 10.11.2015

For Lorenz Isler a tour of the IKEA store in Spreitenbach is a tour of green design and the industry of tomorrow. “As IKEA sees it, sustainable management is the only solution if you want to be successful in 50 years time,” says Isler, Sustainability Manager of IKEA Switzerland. IKEA, the second biggest furniture company in the world, adopted its “People & Planet Positive” sustainability strategy in 2012. Stricter regulations for IWAY, IKEA’s code of conduct for suppliers, were also introduced at the time and the company subsequently parted ways with some of its partners.

Powerful levers at work
At 13 million, the number of people who visit IKEA’s nine furniture outlets in Switzerland exceeds the country’s population. A total of 716 million people throughout the world pop into a branch of IKEA every year. This volume enables impressive economies of scale. According to its own data, in 2013 IKEA sold 12.3 billion LED light bulbs, which enabled customers save around EUR 80 million (CHF 87 million) in energy costs compared to the use of normal light bulbs. And IKEA is the first retailer to switch to selling LED bulbs exclusively. “Based on the volume, we have given our suppliers investment security and have now managed to halve the price of the most popular LED light bulb,” says Lorenz Isler.

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Lorenz Isler, Sustainability Manager of IKEA Switzerland during a tour of the IKEA shop in Spreitenbach, Switzerland.
© Yvonne von Hunnius

Investments must pay
A study on IKEA’s CO2 footprint revealed that it is mainly accounted for by raw material extraction and the use of IKEA products by its customers. IKEA aims to redouble its efforts here through initiatives for the sustainable use of raw materials in production processes and awareness-raising among its customers. The latter strategy is clearly demonstrated by the numerous signs about energy efficiency displayed in IKEA stores, particularly in the lighting departments. However, IKEA is also pointing the finger at itself. Between 2009 and 2015, the concern invested EUR 1.5 billion in renewable energies. Solar power systems are installed on the roofs of all of its branches in Switzerland. At 9,500 square metres in area, the biggest of these systems in Rothenburg generates 1.2 million kilowatts annually, which corresponds to 50 percent of the furnishing retailer’s own energy consumption or that of 400 households.

The possibility of incorporating a price for CO2 into investment decisions is also being considered within the company. The aim is to make all operations belonging to the IKEA industry CO2 neutral by 2020 – in the last three years alone, the CO2 emissions per cubic metre generated by the transport of goods have been reduced by 13 percent. “And IKEA does nothing without carrying out detailed calculations on the rates of return,” says Isler. So these measures pay off.  

Ikea Rothenburg
At 9,500 square metres, IKEA’s biggest solar power system can be found in Rothenburg, Switzerland – it produces 1.2 million kilowatts annually, which corresponds to 50 percent of the furnishing giant’s consumption.
© Ikea

Focus on labels
IKEA is a major consumer. The company uses one percent of the wood produced in the world and 0.6 percent of the cotton. As a co-founder of the FSC label for sustainable forest management, IKEA has set itself the aim of ensuring that half of all its wood products have the FSC label or are produced using recycled wood by 2017 – the plan is to reach 100 percent by 2020. With regard to cotton, IKEA launched the “Better Cotton” initiative with the environmental organisation WWF in 2004. Today, 190,000 farmers are part of the initiative and, according to IKEA’s estimates, they are producing in a way that ensures that 50 percent less water and pesticides and 30 percent less chemicals are used.

Product design with clear specifications
On the tour of the IKEA store in Spreitenbach, Lorenz points to Sinnerlig – a dining table with a cork top. 

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The sustainable raw material cork is used as an alternative to wood in the furniture belonging to IKEA designer Ilse Crawford’s Sinnerlig collection.
© Ikea

Designers at the company’s Swedish headquarters are constantly on the lookout for good alternatives to wood, cotton and plastic, and for ways of improving the products, he reports. So they use of cork and Lyocell, the latter is a cotton substitute produced from cellulose fibre. Moreover, Billy, the smash-hit shelving system has become 30 percent lighter over the years. In a concern like IKEA, standardised processes are effective. The designers collect points for sustainable criteria using a so-called “Product Sustainability Score Card”. If a product exceeds a certain threshold, it qualifies as particularly sustainable. Up to now, fewer than 50 percent of IKEA’s products have been in this category and the aim is to increase this proportion to 90 percent by 2020. By doing this, IKEA aims to offer a clear rebuttal to those who argue that environmental awareness is the exclusive preserve of more affluent consumers.

About IKEA:
The concern, which was established in Sweden by Ingvar Kamprad, offers around 9,500 products in 315 furniture outlets located in 27 countries throughout the world. The country organisations are closely connected to the mother company through a franchise system. The concern is led today by its CEO Peter Agnefjäll. In 2014, IKEA recorded a turnover of EUR 28 billion, of which 1.46 million was accounted for by food sales. The concern has 147,000 employees. IKEA operates the entire value-added chain from the product range strategy and product development to production, distribution, and retail. Approximately 59 percent of IKEA’s production is based in Europe.

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Last modification 12.11.2015

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