Ingka Group, the largest IKEA franchisee, published its Annual Summary and Sustainability Report FY23, highlighting significant progress in separating business growth from environmental impact.
The report marks the first year in which the group has achieved this feat, reducing its climate footprint by 24.3% compared to its 2016 baseline while achieving a 30.9% increase in revenue.
IKEA operates through a unique franchise model, where multiple companies manage stores under the single IKEA brand. Whilst Inter IKEA Group B.V. serves as the master franchisor, overseeing the continuous evolution of the brand, Ingka Group is the largest IKEA franchisee, responsible for over 88% of total IKEA Retail sales in fiscal year 2023.
The Dutch-based firm attributes the emission reductions to implementing carbon-saving measures, such as renewable electricity and energy efficiency; however, changes in its business operations and sales have also contributed.
Renewable energy push
One major milestone for the company in 2023 was sourcing over 79% of its electricity from renewable sources, a substantial increase from the previous year’s 74.6%. Inkga is ultimately planning to reach 100% by 2025.
To reach this clean energy target, Ingka invested €700 million in off-site renewable energy projects in 2023. This brings the total invested since 2009 to €3.8 billion, with a further target of €7.5 billion set for 2030.
Net zero by 2050
In November 2023, Ingka strengthened its climate targets, aligning with the Science Based Target Initiative (SBTi)’s Corporate Net-Zero Standard. Their plan aims for net zero emissions by 2050, achieved through at least a 90% reduction in absolute greenhouse gas emissions across the entire value chain, without relying on carbon offsets.
Importantly, the company has set an intermediate target of a 50% reduction in absolute emissions by 2030 compared to 2016 levels. This goal is currently pending SBTi approval.
Progress in waste reduction and circularity
Ingka also made strides in waste reduction and circularity practices in 2023, despite a slight year-over-year increase in operational waste recycling (75.9% in 2023 compared to 75.7% in 2022). The company emphasises circular economy principles like product reuse and repair services to combat this, reporting significant growth in both areas.
Twice as many customers globally utilised Ikea’s buyback and resell service in 2023, exceeding 211,000 participants. Similarly, customer purchases of repair solutions jumped to 45.1 million products in 2023 from 42.6 million in 2022. These developments align with Ikea’s ambitious goal of becoming a fully circular business by 2030, a vision supported by its partnership with the Ellen MacArthur Foundation.
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