Getting sustainability right can be challenging in the even the most clear cut supply chains.
Along with COP26 came climate change promises from many companies, but even the best-intentioned companies can struggle to deliver on sustainability promises. Ikea, for example, has a goal to become "climate positive" by 2030 and reduce more greenhouse gas emissions than its entire value chain emits. Ikea plans to accomplish its sustainability goals while still growing its business which reached $35.4 billion in revenue in 2020.
In 2019, Ikea emitted the equivalent of 24.9 million tons of carbon dioxide, which accounts for 0.1% of the world's GHG emissions. But last year, the company decreased its energy use across the business, from manufacturing to its restaurants. Ikea has reduced its climate footprint per product sold by 7%, but to meet its 2030 target, it will need to reduce its average climate footprint per product by 70%.
One of Ikea's other climate ambitions is to become a "100% circular business" by 2030. This means Ikea products will be affordable, high-quality, and sustainable so that they can be reused, refurbished, and recycled.
The materials Ikea uses are the primary contributor to the company's overall climate footprint. Ikea is one of the world’s biggest wood buyers and wood has caused supply chain problems for the company.
Ikea was founded in the forests of southern Sweden in 1943 by Ingvar Kamprad. Its first store debuted in Switzerland in 1973 and has since become the world's largest home furnishings business.
Ikea has long been known for its low prices but has recently been fighting against a reputation that its cheap furniture fuels disposable consumption. The furniture company argues that wood is a sustainable and renewable material superior to plastics or metals.
In 1998, Ikea's sustainability mission was launched with the Sow a Seed Foundation, which sought to rehabilitate large swaths of rainforest lost to logging and forest fires in Malaysian Borneo. Sixty percent of Ikea's products are made with wood, which might explain why sustainable forestry has long been a focus for the brand.
Last year, Ikea used 671 million cubic feet of wood from Poland, Russia, Belarus, Sweden, and Germany. About 12% of the wood was recycled, and most of the rest was certified by the Forest Stewardship Council, a nonprofit group that promotes responsible forestry.
In the past year, Ikea has been the subject of investigations regarding its use of wood from Russia and Ukraine. According to Earthsight, a UK-based campaign group, the timber sourced from Russia and Ukraine was cut down against permits and allowed practices. Ikea denies knowingly accepting illegal wood into its supply chain, but its executives admit that forestry management is a complex issue.
Ikea uses three layers of protection in its wood supply chain: a wood procurement plan, internal wood supply specialists, and 200 annual audits. Ikea points to these efforts when insisting that it actively works to ensure that no illegal wood enters its supply chain. But the company still sources large parts of its wood from countries like Russia, Belarus, and China. Ikea pushes back against criticism of its timber suppliers by saying it can do more good with its current suppliers by uncovering wrongdoing and driving its forestry agenda.
In addition to wood supply goals, Ikea also aims to eliminate fossil fuels from its retail operations and production. The ultimate goal is 100% renewable energy use across its entire value chain by 2030. This includes 100% renewable energy for its nearly 1,600 suppliers.
Why It Matters
Industry leaders in global workforce mobility were already in the process of discerning and quantifying the environmental impact of current processes and technologies employed in the relocation of key human resources. The pandemic’s impact on the workforce has profoundly changed the scope and magnitude of what we believe is possible. From that experience we have learned how adaptable we can be in the face of crises while simultaneously remaining productive and profitable.
Worldwide ERC will be releasing groundbreaking research in January 2019 that outlines the priorities and progress being made by the mobility industry in improving sustainability. In that research we found that more than 90% of mobility professionals have a sustainability strategy that originated with leadership. Fully 89% of these have been allocated resources and funding for implementation in the mobility function. Worldwide ERC members can look for a full report out in January 2022.