IKEA announced a significant expansion of its programme to assist its suppliers in gaining access to renewable energy, expanding the initiative to ten new markets as part of its goal to reduce supply chain emissions and work towards 100% renewable energy across its value chain, according to the press release.
IKEA launched the renewable energy programme in 2021 in three markets: China, India, and Poland. Under the programme, the company provides local solutions to direct suppliers, such as bundled framework agreements and Power Purchase Agreements (PPAs), to purchase renewable electricity from the grid, thereby covering electricity demand that cannot be generated onsite.
Further, the programme offers onsite investments, such as solar panels and boilers, which can address all heating and approximately 15% of the suppliers’ electricity consumption. This is accomplished through the 100 MEUR renewable energy financing announced in December 2019.
According to the company, the programme is a critical component of IKEA’s long-term commitment to becoming climate positive by FY30 by reducing more greenhouse gas emissions than the value chain emits while growing the IKEA business. This includes a target of reducing absolute greenhouse gas emissions from production by FY30 compared to the baseline year of FY16.
According to the company, the programme showed success in the initial rollout. For example, the renewable electricity share for production in China increased from 32% in FY21 to 64% in FY22, owing primarily to the programme.
Therefore, IKEA has decided to include ten additional markets in the programme: The Czech Republic, Germany, Italy, Lithuania, Portugal, Romania, Slovakia, Sweden, Türkiye, and Vietnam. The total electricity consumption for production in these markets accounts for 0.27 million tonnes CO2 equivalent or 13% of the production’s carbon footprint. The implementation begins in the year 2023.
“Striving towards 100% renewable energy is critical to limit climate change to 1.5°C. We know that many of our supply partners struggle to purchase 100% renewable electricity and that only a part can be generated on-site. By working together, we have shown that it’s possible to make renewable electricity both accessible and more affordable. We hope this also inspires other businesses to support their suppliers in the same way,” says Andreas Rangel Ahrens, Head of Climate, Inter IKEA Group.