Ikea Sustainability Report: Normalized Emissions Fall 21.5%

Ikea Group cut its normalized carbon emissions by 21.5 percent year-on-year in FY2012, according to the company's latest sustainability report.

In financial year 2011, the company emitted 34.4 kg of scopes 1 and 2 CO2 per cubic meter of product sold. In FY2012 this figured dropped to 27 kg of CO2 per cubic meter.

The group cut its carbon dioxide emissions from its buildings by almost 17 percent from financial year 2011 to financial year 2012. In FY2011, Ikea's stores, distribution centers, offices and other facilities emitted 859,616 metric tons of CO2, the report says. In FY2012, these emissions were cut to 714,126 metric tons. The company's sales increased 9.5 percent and its net profits jumped 8 percent over the same time period.

Much of this reduction was due to stores and distribution centers in Germany switching to a renewable energy tariff. Ikea reduced CO2 across all parts of its business, including the Ikea Industry Group, by improving energy efficiency and buying more renewable energy.

Ikea US is in the midst of investing $150 million in photovoltaic systems which will eventually cover 39 of 44 store and non-store locations. Ikea says it is the second-largest private commercial solar owner-user in the US with 20 solar PV installations, reaching a 70 percent solar presence on all Ikea US locations.

Additionally, in FY2012, Ikea installed 31 electric vehicle charging station at nine of its stores in the western US.

In October 2012 the company announced plans to become energy independent by 2020, which includes constructing €1.5 billion ($2.4 billion) of wind and solar projects. In August 2011, Ikea’s UK arm purchased a 12.3 MW wind farm in Scotland and announced plans to power all of its stores from renewable sources.

Energy efficiency programs enacted by Ikea include use of LEDs and natural daylight; upgrading ventilation systems so they only operate when needed; installing and upgrading building insulation and window glazing; and increasing the technical skills and awareness of workers who operate buildings and machines, the report says.

However, Ikea's emissions from buildings and employee commuting contribute just 2.5 percent of its total carbon footprint. Most of the company's emissions come from raw material extraction, manufacturing and distribution. Ikea's absolute scope 3 emissions increased 5 percent year-on-year from 30.9 million metric tons of CO2 in FY2011 to just under 32.5 million metric tons of CO2 in FY2012.

In an effort to reduce impacts in its supply chain, Ikea says it works with its suppliers to improve energy efficiency, encourage alternative fuel use, increase renewable energy generation, reduce water use and increase water recycling. In FY2012 Ikea developed plans with suppliers for energy saving activities at 11 energy-intensive supplier factories in China. Ikea estimates that these factories could reduce their energy intensity by five to 20 percent.

The company also last year began publishing data collected from direct suppliers on water consumption. The company tracks its suppliers' environmental impacts in a sustainability index. From FY2011 to FY2012 Ikea improved its Supplier Sustainability Index score from 33 to 39.

It also set new goals for its suppliers in FY 2012. These were:

• By the end of FY2015 – 20 percent reduction in supplier carbon emissions from 2011 levels.
• By the end of FY2017 – 20 percent improvement in supplier energy efficiency from 2011 levels.
• By the end of FY2020 – home furnishing suppliers 30 percent more water efficient than in 2011.

The company also increased the percentage of its suppliers who are FSC Chain of Custody-certified, to 42.2 percent in FY2012 from 34.9 percent in FY2011. In FY2010 20.3 percent of Ikea's suppliers were Chain of Custody-certified.