Ikea chief: Business and governments must go all in for a carbon-free 21st century

Speaking at the Business and Climate Summit at London’s Guildhall on Tuesday (28 June), Ikea’s Steve Howard urged policymakers to craft “well-designed policies” that would allow the retailer and fellow businesses to build on the largely independent platform that has been established in transitioning to a “carbon free 21^st century”.

“We need the government to go all in to build the 21st century and put everything behind the carbon-free movement,” Howard said. “If we can do that then business can unlock opportunities like we’ve never seen before.

“We want clear policy signals that account for the long-term and allow us to invest. There are an outstanding number of businesses that are behind stronger carbon pricing, and this could unlock a tremendous amount of expertise in decarbonisation.

“But we need other forms of incentives for technologies such as renewables and electric vehicles. Incentives need to be well designed and well thought through with no more short-term luxury incentives. We need long-term framework for renewables combined with carbon pricing to get us along the way.”

100% or nothing

Speaking to delegates shortly after UN climate chief Christiana Figueres called on businesses to use climate action to create a “thread of certainty” during the aftermath of Brexit, Howard noted that, while governments need to embed the correct green policies, business can get a head-start on the low-carbon revolution by shaking up supply chains and revamping in-house energy management practices.

Howard highlighted how Ikea’s numerous ‘100%’ sustainability pledges – which include renewables and sustainable cotton – have motivated 100,000-plus ‘co-workers’ within the business to create products and services that enhance customer satisfaction while simultaneously strengthening the business case for sustainability.

Highlighting that Ikea is already energy independent in the Nordic countries, Howard explained that a new business mantra that “reframes” sustainability issues from a cost burden to an ambitious push to create cleaner and more affordable products – while also adopting a more science-based approach – has motivated Ikea workers to aspire towards these 100% targets.

“Using the science-based targets approach is great because it shows you that it’s not just about counting carbon but understanding how fast you’ll have to reduce it,” Howard said. “Within our working lives, we’ll have net-zero carbon emissions and there will be a radical difference between the carbon economies of the 20^th century to the carbon-free economy on the second half of the 21^st century.

“But you need to really understand where every tonne of carbon in your business and value chain comes from, and then starting the process of how to rid yourselves of it. It used to be about costs and burdens and being incrementally less bad, which isn’t very aspirational. You need to frame the push in a way that businesses can get behind. It’s about motivation, investment and growth.

“Going all in is a mindset about transformational change. To eliminate carbon emissions, you’ve got to set 100% targets. I’m a big fan of 100% targets. If you set a 90% target, more than 10% of your colleagues will want to be in the 10% and you’ve not declared what success looks like.

“If you set a 50% target then everyone is confused, whereas if you say its 100% you stop all investment and development activities in the historical products and services and put all of your efforts into building for the future.”

Renewable retailer

This ‘all-in’ mindset has seen Ikea establish itself as one of the leaders of the low-carbon movement, currently utilising around 700,000 solar panels and operating 29 windfarms across 10 countries as a means to generate its own energy. In the fiscal year 2014, Ikea produced 1,810GWh of renewable energy – a 27% increase on the amount produced the year prior.

The Swedish retailer has also highlighted its commitment to enhancing the sustainable living of its customers by becoming the first major retailer to offer only LED bulbs in stores. Howard revealed that, by August this year, he expects annual sales of LEDs to pass the 100 million mark for the first time.

On top of Ikea’s “natural progression” to a servitisation-based business model, the company is also aiming to become the number one residential solar retailer, with Howard claiming that the business will to adapt and push the low-carbon movement will usually “trump the political case”.

Ikea at edie’s Responsible Retail Conference

Ikea’s sustainability leader for the UK and Ireland Sharon McKracken is among the expert speakers at the edie Responsible Retail Conference, taking place on 21 September in London. 

This brand new edie conference equips retailers, government representatives, sustainability professionals and key stakeholders with the tools they need to achieve more efficient resource use and improve brand reputation in the process.

View the full agenda for the Responsible Retail Conference here and register to attend here.

Matt Mace