Climate Change Data

Environmental Metrics

ESG Focus Areas

• A more sustainable life at home
• Resource and energy independence
• Better life for people and communities
• Governance and ethics

Environmental Achievements

• Improved energy efficiency by 3% in stores compared to FY11
• Increased volume of wood from FSC certified forests to 22.6% (up from 16.2%)
• Dishwashers 22–51% more efficient compared with 2008
• Energy consuming products 32% more efficient compared with 2008
• 86% of waste recycled across operations
• Sourced 34% of cotton from preferred sources
• Produced renewable energy equivalent to 34% of total energy consumption
• Reduced CO2 emissions from IKEA buildings by 17% compared to FY11
• Reduced CO2 emissions by 7.3% per cubic metre of products shipped
• 91% of materials used in products were renewable, recyclable or recycled

Social Achievements

• 100% of home furnishing suppliers IWAY approved or being phased out
• 47% of managers are women (up from 40% in FY11)
• 83% of co-workers are proud of IKEA's work with sustainability
• €82 million donated in calendar year 2012 by the IKEA Foundation

Governance Achievements

• Launched People & Planet Positive sustainability strategy for 2020
• Launched “Good Business with Common Sense”, a code of conduct

Climate Goals & Targets

Environmental Challenges

• Shortage of FSC-certified wood
• Social challenges in the cotton industry (low incomes, child and forced labor, health risks)
• Deforestation and loss of biodiversity associated with palm oil plantations
• Complexity of the leather supply chain
• High carbon footprint of some food ingredients
• Water stress and scarcity
• Ensuring compliance with IWAY among suppliers and sub-suppliers
• Allegations about the use of political prisoners in IKEA suppliers' production in the former GDR in the 70s and 80s

Mitigation Strategies

• Working with partners to increase FSC certified forest areas
• Working with WWF and the Better Cotton Initiative to improve cotton sustainability
• Reducing palm oil use, buying GreenPalm certificates, working with NGOs to improve production
• Working towards a chain of custody for leather
• Exploring lower-carbon alternatives for food menu items
• Supporting suppliers to reduce water use and recycle water
• Implementing IWAY supplier code of conduct, conducting audits, providing training and support
• Commissioning an independent investigation into allegations regarding the use of political prisoners and making findings public

Supply Chain Management

Supplier Audits: More than 1000 IWAY audits

Responsible Procurement

• IWAY supplier code of conduct
• Supplier Sustainability Index

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI, UN Global Compact

Sustainable Products & Innovation

• Energy-efficient appliances
• LED lighting
• Products made from recycled materials
• Products that save energy, water, and reduce waste

Environmental Metrics

ESG Focus Areas

• A more sustainable life at home
• Resource and energy independence
• A better life for people and communities

Environmental Achievements

• Increased the proportion of wood from more sustainable sources to 32.4% compared with 22.6% in FY12.
• Sourced 72% of cotton from more sustainable sources, up from 34% in FY12.
• Produced renewable energy equivalent to 37% of total energy consumption (34% in FY12).
• Reduced carbon emissions (relative to sales) by 19.3% compared with FY10 baseline.
• Recycled 87% of waste from operations.

Social Achievements

• Launched a new people strategy.
• Trained 120,000 out of 135,000 co-workers on the code of conduct.
• Improved the occupational accident rate in the IKEA Industry group.
• Maintained 100% IWAY approval for home furnishing suppliers.

Governance Achievements

• Launched a new global IKEA diversity and Inclusion Approach.
• Updated and strengthened the IWAY standard (IWAY 5.1).

Climate Goals & Targets

Environmental Challenges

• Meeting goals in People & Planet Positive strategy.
• Supply chain disruptions due to water scarcity and unsustainable forestry practices.
• Ensuring all suppliers comply with IWAY.
• Reducing carbon emissions from operations and supply chain.
• Improving data collection and quality.

Mitigation Strategies

• Investing in renewable energy projects (€1.5 billion by 2015).
• Working with WWF and other organizations to improve forest management and cotton production.
• Implementing IWAY supplier code of conduct and conducting audits.
• Improving energy efficiency in stores and distribution centers.
• Developing a new model for calculating the total carbon footprint.
• Implementing a new IKEA-wide water efficiency strategy.

Supply Chain Management

Supplier Audits: 917 IWAY audits in FY13

Responsible Procurement

• IWAY supplier code of conduct

Climate-Related Risks & Opportunities

Opportunities

• Development of energy-efficient products and renewable energy generation.

Reporting Standards

Frameworks Used: GRI G4

Sustainable Products & Innovation

• LED lighting
• Energy-efficient appliances
• Water-saving taps
• Waste sorting systems
• Products made from recycled materials

Environmental Metrics

ESG Focus Areas

• Climate Change
• Resource and Energy Independence
• People and Communities

Environmental Achievements

• Reduced carbon emissions from own operations by 24% compared to FY10 baseline (relative to sales)
• Generated renewable energy equivalent to 42% of total energy used
• 41% of wood used from more sustainable sources (FSC certified or recycled)
• 76% of cotton used from more sustainable sources
• 89% of total waste recycled or energy recovered
• Halved the price of a popular LEDARE bulb

Social Achievements

• Launched global More Sustainable Life at Home Co-worker Engagement Project
• Increased sales of products contributing to a more sustainable life at home by 58% compared to FY13
• Donated €104 million by the IKEA Foundation
• 79% of co-workers agreed that sustainability is a natural part of their daily work
• 47% of managers were women

Governance Achievements

• All home furnishing suppliers IWAY approved, being phased out or pending a scheduled audit
• Implemented IWAY 5.1, updated supplier Code of Conduct
• Launched Tack! co-worker loyalty program

Climate Goals & Targets

Environmental Challenges

• Supply chain disruptions due to extreme weather events (e.g., Hurricane Sandy)
• Limited availability of certified seafood and free-range eggs in certain markets
• Challenges in accessing renewable energy at some IKEA Industry sites
• Difficulties in achieving 100% IWAY approval for all local food suppliers
• Maintaining continual compliance with IWAY requirements, particularly regarding working hours in Asia

Mitigation Strategies

• Investing in renewable energy (wind farms, solar panels)
• Improving energy efficiency in own operations and supply chain
• Working with suppliers to improve water and energy efficiency
• Developing new working methods for home-based workers
• Providing training and support to suppliers to meet IWAY requirements
• Implementing stricter requirements for suppliers in high-risk areas

Supply Chain Management

Supplier Audits: 1,155 IWAY audits in FY14

Responsible Procurement

• IWAY Code of Conduct
• IWAY Musts
• Supplier Sustainability Index
• Suppliers Go Renewable project
• Water Guidelines for Textile Suppliers

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events

Transition Risks

• Regulatory changes, market shifts

Opportunities

• Development of energy-efficient products, renewable energy investments

Reporting Standards

Frameworks Used: GRI G4

Certifications: ISO 14001

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Goal 7 (Affordable and Clean Energy)
• Goal 12 (Responsible Consumption and Production)
• Goal 13 (Climate Action)
• Goal 8 (Decent Work and Economic Growth)
• Goal 5 (Gender Equality)
• Goal 1 (No Poverty)

IKEA's initiatives contribute to these goals through renewable energy investments, sustainable product development, responsible sourcing, fair labor practices, gender equality initiatives, and community development projects.

Sustainable Products & Innovation

• LEDARE LED light bulbs
• Energy-efficient appliances
• Products made from recycled materials
• Home solar panel installation service

Awards & Recognition

• Sustainability Leadership Prize at the TOP/COM Consumer Awards 2014 (IKEA France)

Environmental Metrics

ESG Focus Areas

• Climate Change
• Renewable Energy
• Sustainable Sourcing (Cotton, Wood)
• Human Rights
• Diversity & Inclusion
• Refugee Support
• Community Investment

Environmental Achievements

• Committed to own and operate 327 wind turbines and invested in 730,000 solar panels.
• Sold 79 million LED bulbs (potential energy savings equivalent to powering 650,000 households for a year).
• Sourced 100% of cotton from more sustainable sources.
• Sourced 61% of wood from more sustainable sources.
• Phased out expanded polystyrene (EPS) foam packaging, reducing use by 8,000 tonnes/year.
• Produced renewable energy equivalent to 71% of energy consumed in operations (excluding shopping centre business).

Social Achievements

• Launched 'It Starts with the Food' theme, focusing on healthy and sustainable food solutions.
• Mobilized co-workers in many countries to assist refugees.
• Partnered with social entrepreneurs (e.g., Rangsutra) to support artisans and create livelihood opportunities.
• Launched global design challenge to help refugee integration.
• Donated nearly EUR 130,000 worth of products to help Syrian refugees in Canada.
• Donated 37,000 backpacks to children on the move in Sweden.
• Offered trainee positions to refugees in Denmark.
• Launched 'Refugee Inclusion Project' in Switzerland.
• Supported over 500 projects helping over 16,000 refugees in Germany.
• Donated around 30,000 IKEA products to help furnish accommodations for refugee families in Austria.

Governance Achievements

• Sold product development, supply chain, and production companies to Inter IKEA Group, simplifying the franchise system.
• Implemented new Employment Standards.
• Updated Diversity & Inclusion Approach, including workshops on unconscious bias.
• Developed a gender equality plan.
• Developed an LGBT+ inclusion plan.
• Participated in the Fundamental Rights Forum.

Climate Goals & Targets

Environmental Challenges

• Meeting changing customer needs in a rapidly changing retail market.
• Supply chain inefficiencies (e.g., customs processes in Italy).
• Need to become a leading multichannel retailer.
• Growing social and environmental awareness demanding more responsibility and transparency.

Mitigation Strategies

• Investing in multichannel retailing (stores, e-commerce, logistics, service).
• Developing new store formats (Smart Store, Pick-up Points).
• Improving logistics and distribution (e.g., paperless customs processes in Italy).
• Focusing on innovation and development to meet customer needs.
• Building strong relationships with customers through various touchpoints.
• Implementing new organizational structure focused on customer experience.

Supply Chain Management

Responsible Procurement

• IWAY (IKEA Supplier Code of Conduct)

Climate-Related Risks & Opportunities

Opportunities

• Development of energy-efficient products and renewable energy solutions.

UN Sustainable Development Goals

• Goal 7 (Affordable and Clean Energy)
• Goal 12 (Responsible Consumption and Production)
• Goal 13 (Climate Action)
• Goal 8 (Decent Work and Economic Growth)
• Goal 10 (Reduced Inequalities)
• Goal 11 (Sustainable Cities and Communities)

IKEA's initiatives contribute to these goals through renewable energy investments, sustainable sourcing, refugee support, and community engagement.

Sustainable Products & Innovation

• LED lighting range
• Home solar solutions
• Recyclable packaging alternatives
• Products made with sustainable cotton and wood.

Awards & Recognition

• Red Dot Design Awards (TILLREDA, SLADDA, LISABO)

Environmental Metrics

ESG Focus Areas

• Healthy & sustainable living
• Circular & climate positive
• Fair & equal

Environmental Achievements

• 91% of wood used for IKEA products is from more sustainable sources (MSS)
• Share of recycled polyester in textile products reached 59%
• Climate footprint of the IKEA value chain decreased by 4.3%
• First ocean container using biofuel

Social Achievements

• Launched collaboration programs with social entrepreneurs supporting marginalized people
• Updated IKEA supplier code of conduct (IWAY)
• Fewer co-worker injuries at IKEA Industry than in any previous year
• Initiatives in nine IKEA retail markets to support refugees’ skills development

Governance Achievements

• Established a global definition of climate positive with WWF and other partners
• Initiated a project to set a global accounting standard for removing and storing carbon

Climate Goals & Targets

Environmental Challenges

• Addressing unsustainable consumption and remaining affordable
• Limiting climate change to 1.5°C
• Sourcing recycled materials due to shortage
• Improving working conditions throughout supply chains
• Including vulnerable groups in society

Mitigation Strategies

• Investing EUR 200 million to accelerate transformation to climate positive business
• Developing alternative sourcing strategies
• Updating IWAY to ensure relevance and meet requirements
• Working with partners employing marginalized groups
• Testing new models of product ownership (furniture as a service)

Supply Chain Management

Responsible Procurement

• IWAY (IKEA supplier code of conduct)

Climate-Related Risks & Opportunities

Physical Risks

• Water shortages
• Extreme weather events

Transition Risks

• Regulatory changes
• Market shifts

Opportunities

• Development of energy-efficient products
• Renewable energy solutions

UN Sustainable Development Goals

• Goal 1
• Goal 2
• Goal 3
• Goal 4
• Goal 5
• Goal 6
• Goal 7
• Goal 8
• Goal 9
• Goal 11
• Goal 12
• Goal 13
• Goal 14
• Goal 15
• Goal 17

Report details how initiatives contribute to these goals

Sustainable Products & Innovation

• MUSSELBLOMMA (recycled ocean plastic), FÖRÄNDRING (rice straw), plant-based hot dog, vegan soft ice, plant ball

Environmental Metrics

ESG Focus Areas

• Climate change
• Biodiversity loss
• Inequality
• Circular economy
• Human rights
• Decent work

Environmental Achievements

• Decreased the IKEA climate footprint by 1.6 million tonnes of CO2 eq (5.8% reduction compared to FY16 baseline)
• Achieved 100% renewable electricity for all IKEA-owned factories globally
• Secured 100% renewable electricity in 10 additional IKEA markets
• Increased the share of recycled polyester in the supply chain to 88%
• Reduced the share of plastic packaging to 9%
• Launched a new interactive circular product design tool
• Continued to use only wood and cotton from more sustainable sources (99.5% wood from FSC® or recycled sources)
• Increased recycled wood in particleboard from 24% to 27%

Social Achievements

• Launched next generation of IWAY (IKEA's supplier code of conduct)
• Developed a global framework for responsible wage practices
• Submitted an action pledge in support of the UN's International Year for the Elimination of Child Labour
• Supported EU legislation on mandatory human rights due diligence
• Protected migrant workers' rights with the International Organization for Migration (IOM)
• Established six new social business partnerships
• Improved IKEA Industry's recycling rate by 4.3% to 85.8%

Governance Achievements

• Updated Inter IKEA Group human rights policy
• Launched a guideline for responsible portrayal of children in IKEA communication
• Completed a human rights baseline assessment of each core business and group function

Climate Goals & Targets

Environmental Challenges

• Supply chain disruptions due to the COVID-19 pandemic
• High costs and turbulence in the transport industry impacting sustainable biofuels use
• Global biodiversity loss
• Rising inequality exacerbated by the pandemic
• Healthy and sustainable living perceived as too expensive
• Complexity of sourcing recycled materials due to lack of infrastructure and technology

Mitigation Strategies

• Developed alternative sourcing strategies
• Launched a new programme to accelerate suppliers’ transition to 100% renewable electricity
• Joined the Science Based Targets Network Corporate Engagement Program
• Developed affordable and sustainable solutions for healthy living
• Collaborated with the waste sector, local communities, and recyclers to improve recycled material sourcing
• Developed a new global framework and assessment methodology for responsible wage practices

Supply Chain Management

Responsible Procurement

• IWAY (IKEA's supplier code of conduct)

Climate-Related Risks & Opportunities

Physical Risks

• Severe weather and natural disasters

Transition Risks

• Regulatory changes, market shifts

Opportunities

• Development of energy-efficient products

Reporting Standards

Frameworks Used: UN Sustainable Development Goals (SDGs)

Certifications: FSC®, UTZ, Rainforest Alliance, Fairtrade, RTRS, RSPO, ASC, MSC

UN Sustainable Development Goals

• Goal 1
• Goal 2
• Goal 3
• Goal 4
• Goal 5
• Goal 6
• Goal 7
• Goal 8
• Goal 9
• Goal 10
• Goal 11
• Goal 12
• Goal 13
• Goal 14
• Goal 15

IKEA's People & Planet Positive strategy and 2030 ambitions are aligned with the SDGs.

Sustainable Products & Innovation

• SOLHETTA LED bulbs
• FÖRNUFTIG and STARKVIND air purifiers
• VÄRLDSKLOK plant-based mince
• KLIPPAN sofa cover from recycled denim
• GURLI throw made of 100% Ocean Bound Plastic

Environmental Metrics

ESG Focus Areas

• Sustainability

Climate Goals & Targets

Environmental Challenges

• High cost of raw materials (25% more expensive than China)
• High transport and logistics costs (double that of China)
• High miscellaneous overheads (triple that of China)
• Inadequate scale of commercial forestation practices
• Inadequate domestic availability of certified wood
• High import duty rates on raw materials
• Challenges with duty drawback
• Lack of regulations to enforce emission standards in furniture manufacturing
• Small scale supply of intermediate products
• Inadequate skill development ecosystem
• High transport and logistics costs
• Overdependence on costly roadways
• Location of furniture clusters away from ports and urban areas
• Ease of Doing Business challenges (manual processes, annual renewals, delays in import clearance)
• High taxation (GST)
• Archaic Plant Quarantine laws
• Delays in CAROTAR Procedures

Mitigation Strategies

• Reducing import duties on raw materials and finished goods
• Amending Plant Quarantine laws
• Simplifying duty drawback procedures
• Reducing GST rates
• Improving Ease of Doing Business
• Supporting commercial forestation and sustainable forest management
• Promoting Farm/Agroforestry
• Developing policies for Trees Outside Forests
• Developing Public-Private Partnerships
• Developing and enforcing regulations to reduce formaldehyde levels
• Promoting certification of local wood varieties
• Promoting use of alternative raw materials
• Recycling wood waste
• Technological upgradation for manufacturing intermediate products
• Expanding manufacturing product profile
• Developing a National Furniture policy
• Developing furniture clusters closer to ports and urban areas
• Designing incentive packages for migration of brownfield units
• Reskilling and future-proofing jobs

Supply Chain Management

Responsible Procurement

• Promoting use of certified wood and alternative materials

Climate-Related Risks & Opportunities

Opportunities

• Promoting sustainable practices

Environmental Metrics

ESG Focus Areas

• Healthy & sustainable living
• Climate, nature & circularity
• Fair & equal

Climate Goals & Targets

Environmental Challenges

• Climate change and nature loss
• Unsustainable consumption
• Rising inequality

Mitigation Strategies

• Transitioning to a circular business model
• Halving greenhouse gas emissions by 2030
• Reaching net-zero emissions by 2050
• Promoting responsible sourcing and sustainable practices across the value chain
• Addressing human rights and ethical business practices
• Promoting a living wage and ensuring a just transition

Supply Chain Management

Responsible Procurement

• IWAY supplier code of conduct

Climate-Related Risks & Opportunities