Ingka Group, the largest IKEA retailer, has announced an additional €1.5 billion ($1.58 billion) investment to eliminate the direct use of fossil fuels in its operations. This funding will focus on energy efficiency improvements and the implementation of renewable heating and cooling technologies, supporting the company’s goal to reduce its climate footprint from own operations by 85% by 2030, based on a 2016 baseline. The move complements an earlier commitment of €7.5 billion ($7.92 billion) toward offsite renewable energy production and related technologies.
“Ending our reliance on fossil fuels is essential to tackling the climate crisis and halving global emissions by 2030. At IKEA, we started our journey in 2009 and have invested heavily in both on- and offsite renewable energy production to enable the transition. We have already reduced emissions across our IKEA stores by 60.4% since 2016 and 96% of our retail sites now use renewable electricity. The future of energy must be renewable, and this additional investment will enable us to reduce our carbon emissions, increase efficiency and lower costs in the long term. It’s also good for business – a win-win,” said Jesper Brodin, CEO, Ingka Group.
The company has already achieved a 60.4% reduction in emissions across IKEA stores since 2016, with 96% of its retail sites now powered by renewable electricity.
Aligned with its Science-Based Targets initiative (SBTi) and the Paris Agreement, Ingka Group is committed to phasing out fossil fuels while reducing greenhouse gas (GHG) emissions. Heating and cooling remain the largest contributors to emissions in its operations. To address this, the company is retrofitting 150 existing IKEA properties with energy efficiency and renewable energy upgrades, while ensuring all new units adopt renewable heating and cooling systems.
Efforts towards the goal of using 100% renewable electricity across its retail operations has already contributed to Ingka Group reducing its overall emissions by 24.3%, against a 30.9% increase in revenue (FY16 baseline). Heating and cooling are currently the largest drivers of emissions with Ingka’s own operations category.
“Transitioning to renewable heating and cooling is a vital enabler on our decarbonisation journey; however, it’s a complex and costly process. This investment means we can progress further and faster with our plans – and we know it will pay off in the long term”, said Karen Pflug, Chief Sustainability Officer, Ingka Group.
The investment in operations is part of a broader €7.5 billion commitment to offsite renewable energy projects. Ingka Group’s investment arm, Ingka Investments, has already allocated over €4 billion to renewable energy ventures, positioning the company as a mid-sized renewable energy producer.
“As businesses, we have an important role to play in phasing out fossil fuels, but we cannot do it alone. We welcome the COP28 pledges on renewable energy and energy efficiency and consensus on transitioning away from fossil fuels. 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. We have five years left to deliver to the Paris Agreement – with the right commitment and leadership we have it in our hands,” Jesper Brodin added.