As a company that relies on production, IKEA can never reach its climate goals without working with suppliers. That is why they deployed a program to transition their supply chain to 100% renewable energy. Since launching this program in June 2021, IKEA has doubled its share of renewable energy used for production in a year in one of the company’s biggest markets. They are now expanding the program to enable even more of their suppliers to switch away from fossil fuels.
At IKEA, the goal is to be a climate-positive company by 2030. This means helping reduce emissions by more than the whole IKEA value chain emits, every year. IKEA products affect everyone’s lives, so this is very possible, but only if they work with their suppliers to reduce emissions enough.
To do this, IKEA has launched two programs. In December 2019, the company announced that it is dedicating €100 million to be used by their suppliers to produce renewable energy on-site. All of the heating demand and up to 15% of the energy demand can be covered this way, but IKEA realized that the remaining energy needs to be bought from the grid.
That is why IKEA, in June 2021, announced a program where they can help negotiate Power Purchase Agreements (PPAs) for suppliers to receive renewable energy at competitive prices from the grid. These agreements are better for the climate, and often also financially beneficial, and all the supplier needs to do is sign the new electricity contract to get started. Making it easy and good to switch to renewable energy is the best way to enable suppliers to be a part of the renewable energy transition.
In 2021 IKEA launched this program in China, India, and Poland — the three markets that contributed the most to the company’s carbon footprint. The program has shown great success in these markets so far — in China alone, the share of renewable energy used for production has doubled from 32% to 64%! Following this success, IKEA is expanding this program to 10 new markets: The Czech Republic, Germany, Italy, Lithuania, Portugal, Romania, Slovakia, Sweden, Türkiye, and Vietnam. The combined electricity consumption for these markets emits 0.27 million tonnes of CO2 equivalents or 13% of the climate footprint from IKEA’s production.
Moving forward, IKEA sees this as a way to make sure that their suppliers are aligned with the company’s ambitions. 100% renewable energy may be a mandate for all suppliers in the future, and this program aims to make sure that IKEA gives all current suppliers the opportunity to meet these standards. If there is a will, there is a way, and this program paves it.
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33 w
Great initiative
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44 w
Both programs are beneficial! Great to note you give your suppliers a choice of switching and transit to renewable energy.
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44 w
That's a great innovation
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44 w
This is a great plan.
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44 w
Good move IKEA
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44 w
@winnie_nguru Indeed it is.
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44 w
this is inspiring
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44 w
Quite impressive. This is a great plan.
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18 w
@george_kariuki Should be an example to other companies
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44 w
A great plan! Thank you Ikea!
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44 w
Impressive, what would you say are the biggest challenges to making this 100% shift happen?
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43 w
@sarah_chabane Thank you for the question! A challenge is that our suppliers have different possibilities to purchase renewable electricity and thereby reach 100% renewable energy in their operations. Therefore this program enables our direct suppliers to purchase 100% renewable electricity from the grid, through e.g. bundled frame agreements that IKEA assists with.
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18 w
@ikea kudos to you
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44 w
Renewable energy is considered clean energy since it doesn't cause grave environmental pollution, and it has low or zero carbon and greenhouse emission.
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44 w
Interesting that such a relatively simple measure (helping a supplier make a good deal for power) can have such a big impact! Really shows that education and communication is a big lever in climate action. How can we use this knowledge for other industries?