Ikea More Than Doubles Renewable-Energy Spending as Costs Climb

Ikea More Than Doubles Renewable-Energy Spending as Costs Climb
Workers instal solar panels to the roof of an Ikea Group store in this undated handout photograph released to the media on Thursday, July 28, 2011. Source: Ikea Group via Bloomberg EDITOR'S NOTE: NO SALES. EDITORIAL USE ONLY

Ikea Group, the biggest home-furnishings retailer, more than doubled planned spending on wind farms and solar parks to as much as $2 billion as increased use of renewable power protects it from volatile fossil-fuel prices.

The investment will help the Swedish company get 70 percent of its energy consumption from renewable sources by 2015, Chief Sustainability Officer Steve Howard said in a phone interview. It aims to get all of its energy from renewables by 2020.

“Efficiency makes sense and it makes more sense now than ever before,” Howard said. “We’ve got rising costs of raw materials and rising costs of energy and a really strong need to decarbonize.”

Companies from sportswear maker Puma SE to drinks producer PepsiCo Inc. are expanding efforts to cut their use of scarce resources as they jostle for customers. Prices for wind turbines sank 23 percent in the three years to June, while solar panels have tumbled by more than half in two years, making projects cost-effective, according to Bloomberg New Energy Finance.

Sustainability is becoming “more relevant,” Ikea Chief Executive Officer Mikael Ohlsson said by phone. “By producing as much renewable energy as we use through the system, we contribute to development in society and make ourselves even more competitive.”

2020 Targets

The company’s new sustainability strategy sets 2020 goals for its products, raw materials and suppliers, which number more than 1,000 in 53 countries. The retailer already has 43 megawatts of solar photovoltaic panels and 180 megawatts of wind turbines either operating or under construction.

Ikea has set aside 1.5 billion euros ($2 billion) to achieve its 2009-2015 renewables goal, up from an earlier commitment of 590 million euros, Howard said. “To secure our long-term energy supply is a fantastic use of the money we’ve put aside for a rainy day,” he said.

Ikea used about 3,600 gigawatt-hours of energy last year, more than half of it electricity. While that’s expected to rise by 2020, energy-efficiency measures such as swapping all light bulbs for light-emitting diodes will keep that growth in check, Howard said, without giving a forecast for energy use in 2020.

IKEA said on Oct. 1 it will only sell LED lighting in its stores from 2016. By making its electrical products -- including ovens and microwaves -- more efficient, it can save customers money, according to Howard.

Certified Sources

The company’s goals also include using only cotton certified by the Better Cotton Initiative, getting half its wood from “preferred” certified sources, verifying that all the palm oil used in candles and foods is sustainable, and recycling 90 percent of waste from its stores.

The pledges encourage customer loyalty and attract investors and workers, Howard said.

“If you were an investor and somebody came to you and said ‘I’ve got this great unsustainable business,’ or someone came to you and said ‘I’ve got this great business and we’ve got a plan to make it as sustainable as possible,’ which would you like to invest in?” he said. “We’ll see a really big movement in this direction. Over the next few decades, this is the era of the sustainable business.”

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