How Ingka's Huge Investment in Smart Energy Will Be Spent
Ingka Group, the largest IKEA retailer, is taking bold steps by investing US$1.6bn to end the use of direct fossil fuels across its operations.
With this investment, Ingka is targeting a whopping 85% reduction in climate footprint from its own activities by 2030, starting from a 2016 baseline.
A twofold approach: Increasing efficiency and utilising renewables
The new commitment involves US$1.6bn earmarked for advancements in energy efficiency and innovative renewable heating and cooling technologies.
This most recent boost in funding follows on from a huge US$8bn already pledged towards offsite renewable energy production.
Therefore, with a combined total of US$9.6bn, Ingka Group solidifies its position as a formidable force in the corporate shift towards renewable energy.
Simon Henzell-Thomas, Ingka Group's Global Director of Climate and Nature, says: "Heating and cooling are currently our largest driver of emissions within our own operations.
"These efforts align with our broader agenda to cut our total climate footprint in all scopes by 50% by 2030 and reach net zero by 2050."
Another step on Ingka and IKEA's road to sustainability
Jesper Brodin, CEO of Ingka Group, believes transitioning away from fossil fuels is crucial for addressing the climate crisis.
"Ending our reliance on fossil fuels is essential to tackling the climate crisis and halving global emissions by 2030," he explains. "At IKEA, we started our journey in 2009 and have invested heavily in both on- and off-site renewable energy production to enable the transition."
The robust sustainability initiatives at IKEA have already yielded impressive results. Since 2016, emissions from IKEA stores have dropped by 60.4%, with 96% of retail areas now powered by renewable electricity.
What's more, these green strategies have gone hand-in-hand with economic growth. IKEA saw a 30.9% increase in revenue over the same period without compromising profitability.
A laser focus retrofitting
Enhancing the energy efficiency of buildings through better insulation or smart energy management systems is crucial in reducing the overall energy demand for heating.
"This investment will be used for accelerating ongoing efforts to retrofit IKEA units with energy efficiency upgrades and renewable heating and cooling systems," Simon explains.
"All new units will be constructed with renewable heating and cooling systems and we have already started retrofitting 150 existing properties."
Karen Pflug, Ingka's CSO, highlights that while transitioning to renewable heating and cooling is a crucial step in their decarbonisation path, it remains a costly and complex endeavour.
"This investment means we can progress further and faster with our plans – and we know it will pay off in the long term," she says.
Aligning with global climate goals
Ingka Group's initiatives resonate well with the goals set in the Paris Agreement and the Science Based Targets initiative (SBTi).
This shows Ingka's comprehensive approach to reducing emissions and transitioning away from fossil fuels.
The company's investment division, Ingka Investments, has already committed more than US$4.3bn in offsite renewable energy, establishing it as a considerable entity in renewable energy production.
This investment means we can progress further and faster with our plans – and we know it will pay off in the long term.
The necessity of teamwork in the lead up to net zero
Jesper stresses that while Ingka's commitment is substantial, effective climate action requires wide-ranging cooperative efforts.
"As businesses, we have an important role to play in phasing out fossil fuels, but we cannot do it alone," he states. "We welcome the COP28 pledges on renewable energy and energy efficiency and consensus on transitioning away from fossil fuels."
He advocates for a partnership between corporations and governments to address systemic challenges like complex policy frameworks and inefficient permitting processes, as these can significantly hinder progress.
Jesper remains optimistic, though.
"Now, to move from pledges to impact, governments and businesses need to combine efforts and address obstacles such as complex and inefficient policy, permitting and reporting frameworks," he explains.
"We have five years left to deliver to the Paris Agreement – with the right commitment and leadership we have it in our hands."
Make sure you check out the latest edition of Sustainability Magazine and also sign up to our global conference series - Sustainability LIVE
Sustainability Magazine is a BizClik brand
