Almost two-thirds of the IKEA climate footprint is directly connected to the supply chain, including production at suppliers. IKEA is striving towards 100% renewable energy throughout the entire value chain. The new program supports nearly 1,600 direct suppliers to switch to 100% renewable electricity.
“Together with our direct suppliers we will take the necessary steps and contribute to limit climate change to 1.5°C. We have a long-term perspective and the financial strength to invest in activities and support our suppliers to have a positive impact on people and the planet. By working together, we can make renewable electricity both more affordable and accessible.” says Henrik Elm, Global Supply Manager, Inter IKEA Group
The program announced today, enables direct suppliers to purchase 100% renewable electricity. IKEA will provide for local solutions, such as bundled framework agreements and Power Purchase Agreements to purchase renewable electricity from the grid, thus enabling its direct suppliers to consume 100% renewable electricity in their production. This can cover the electricity demands of the supplier, which cannot be generated on-site.
The program will be introduced in 2021 for direct suppliers in Poland, China and India, which are the three of our largest purchasing countries, followed by a stepwise global roll-out. Achieving 100% renewable electricity with the suppliers in mentioned countries will save 670,000 tonnes CO2 emissions per year, equivalent to approximately 3% of the total climate footprint of the IKEA value chain.
“The new program is critical since our suppliers can’t generate all their renewable electricity on-site – a majority still needs to be bought from the grid. Through this program, IKEA will have a complete offer to both support our suppliers to generate renewable energy on-site and enable them to purchase the remaining part from the grid”, says Andreas Ahrens, Head of Climate Inter IKEA Group.
This program for direct supplier can be combined with IKEAs previously announced offer to finance renewable energy generated on-site (electricity, heating & cooling) to achieve 100% renewable energy consumption in their operations. All heating and about 15% of electricity consumption of the suppliers can be addressed by on-site investments with installations of for example solar panels and boilers. This is achieved through the 100 million EUR financing of renewable energy announce in December 2019.
The two combined programs are a critical contribution to reach our science-based targets that are aligned with the 1.5°C ambition and supports the IKEA long-term commitment to become climate positive by 2030 by reducing more greenhouse gas emissions than the value chain emits, while growing the IKEA business. This includes a goal for IKEA to reduce absolute greenhouse gas emissions from its own production at direct home furnishing, food, component and catalogue suppliers 80% by 2030, from a 2016 base year.
In addition to the program, IKEA will continue to lead by example through its own operations. Already today, 51% renewable energy consumption in IKEA stores, offices, warehouses, factories, and other operations is implemented, by means of for instance purchasing renewable electricity from the grid and installing solar panels on site. The goal is to reach 100% renewable electricity in 2025 and by 2030 secure that all remaining energy, such as heating and cooling, is renewable as well.
In 2020, IKEA joined the ‘1.5°C Supply Chain Leaders’ initiative, where leading companies share their commitment and learnings from engaging their supply chains to limit climate change to 1.5°C. The initiative is hosted by Exponential Roadmap Initiative, an official partner of the UNFCCC Race to Zero campaign that is rallying non-state actors to take rigorous and immediate action to halve global emissions by 2030.