Ikea Sustainability Report: GHG Intensity Up From 2012

Ikea has published its FY13 Sustainability Report. Highlights include:

GHGs

• The company cut carbon emissions from its FY10 baseline by 19.3 percent in 2013, relative to sales.
• This is a slight worsening versus FY12, when carbon intensity was 21.3 percent below the baseline. The company has a target of 50 percent by FY15.
• While carbon efficiency improved 3 percent in stores, versus FY12, it fell in Ikea’s industry group. The company says this was due to increased production of high-density fiberboard, increased in-house component production, purchases of lower-renewable electricity at some facilities, and the acquisition of a Russian facility with a gas boiler.
• Ikea is looking at financing options to convert this boiler to biomass.
• Last year Ikea developed a new model for calculating total carbon footprint, from raw material to product end-of-life, which showed its total footprint was 28 million metric tons of CO2.
• Ikea says home furnishing suppliers were 0.1 percent more carbon efficient last year than in FY12. It is targeting a 20 percent cut by FY15.
• In FY13, CO2 emissions from transport were down 10.5 percent per cubic meter of products shipped, compared to FY11. The company is targeting a 20 percent cut by FY16, against the FY11 baseline.

Renewables

• In FY13 Ikea produced renewable energy equal to 37 percent of its total energy consumption, up from 34 percent in FY12. It is aiming for 70 percent by FY15, and 100 percent by FY20.
• It is investing €1.5 billion in renewable energy projects by 2015.
• Last year it installed thin-film solar panels on the roofs of five Chinese stores; doubled the number of PV panels on its Denver store; opened a 26 MW wind farm in Poland; and invested in wind farms in Sweden and Ireland.

Energy efficiency

• Ikea aims to become 20 percent more energy efficient by FY15, compared to FY10.
• In FY13 Ikea increased energy efficiency by 8 percent in its stores, 9 percent in distribution centers, 14 percent in the IKEA Industry Group Solid Wood & Flatline Division and 10 percent in the IKEA Industry Group Board Division, compared with FY10.
• In FY13 energy efficiency of direct suppliers also improved by 10 percent compared with an FY12 baseline. Ikea is targeting a 20 percent improvement by the end of FY17.

Water

• The company missed a goal to cut water use by 15 percent by FY13, from FY10, instead finding a 12 percent reduction.
• The largest share of water in Ikea’s extended supply chain is used for the production of raw materials, particularly cotton.
• Home furnishing suppliers were 1.5 percent less water efficient in FY13 than in FY12.
• “This is because water is still relatively cheap in many places,” the company says, adding, “our water efficiency projects are just beginning.” It is planning to launch a water efficiency strategy this year.
• By the end of FY20, Ikea aims for suppliers to be 30 percent more water efficient than in the baseline year.

Waste and recycling

• In FY13, 87 percent of waste from stores and other operations was sorted for recycling, up from 86 percent in FY12. Ikea is targeting 90 percent by FY15.
• Last year 11 percent of waste was sent to landfill.

Products

• In FY13 98 percent of home furnishing materials, including packaging, were recyclable (in at least one IKEA market), recycled or renewable, up from 91 percent in FY12.
• The company is targeting 100 percent by FY15.
• In FY13 39 percent of sales value came from products identified as more sustainable on Ikea’s Sustainability Product Scorecard. It is targeting 90 percent by FY20 (revised from FY15).
• In FY13 Ikea’s energy-consuming products were on average 41 percent more efficient than its range in 2008. The target is 50 percent by FY15.
• Last year 51 percent of all lighting products were LEDs or LED-compatible. Ikea is targeting 100 percent by FY16.

Sustainable sourcing

• The company is aiming to improve its Supplier Sustainability Index score by 20 percent each year.
• In FY13 the score increased by 30.8 percent compared with the year before.
• The company is aiming for 50 percent of wood to come from more sustainable sources – Forest Stewardship Council-certified or recycled – by 2017.
• In FY13 the figure was 32.4 percent, up from 22.6 percent in FY12.
• The share of more sustainable sourced cotton (grown in accordance with standards, or from farmers working towards certification) rose from 34 percent in FY12 to 72 percent in FY13. The goal is 100 percent by FY15.

Takeaway: The report provides a solid overview of major environmental areas. Ikea has made good gains in energy efficiency, both for its own operations and for suppliers, and in CO2 from transport. But it missed a goal on water use, slid backwards slightly on overall carbon efficiency and supplier water efficiency, and still has a long way to go to meet its goal on supplier carbon.