The IKEA road to decarbonising transports
Do you know your favourite IKEA armchair has travelled hundreds of miles before it reached the coveted corner in your living room? Typically, the armchair’s journey would have started from a supplier’s factory to reach a distribution centre. From here it would go to a store and then to your house. This journey has an impact on people and our planet because transport and logistics leave behind a carbon footprint. So, IKEA wants to do something about it.
We sat down with Elisabeth Munck af Rosenschöld to know how IKEA is working on its 2030 goals to reduce carbon emissions from every transport by an average of 70 per cent for its land and ocean transportation. Elisabeth was just about a child when she heard about the gradual depletion of the ozone layer and its harmful effects on people. She remembers it quite clearly - the news items were full of warnings that humanity was in acute danger if urgent steps were not taken to tackle the damage to the ozone layer.
What intrigued her even more was how our seemingly harmless actions – like buying refrigerators or use of deodorants, which contain CFCs (chlorofluorocarbons) – were adding to the problem.
Though Elisabeth was still young at that time, she did what she knew best – she read more about it, discussed it with those around her, and decided she would like to be in a place where she could do something to bring about a change.
A few decades later, today, she is the Head of Sustainability at IKEA Supply Chain Operations, leading the brand's decarbonisation agenda for transport and logistics services, which manages two million shipments every year.
“Big shifts around us, be it the ozone layer depletion or the population explosion in the last 40 years, have driven me to become a catalyst of change, bring people together and work towards a common goal of doing something good for the planet,” says Elisabeth.
IKEA Supply Chain Operations has set ambitious climate goals for 2030. These targets align with the 1.5 degrees trajectory of the Paris Agreement. The commitments include reducing its carbon emissions by 70 per cent in average for its land and ocean transportation and greenhouse gas emissions by 80 per cent from all logistics operations. And achieving these targets will also take skill, persistence, determination, and cooperation.
“My interest is to integrate sustainability into business. There is such a big transformation possible by bringing the two together. It has business advantage, has a value for the customer, and a value for the brand,” she says.
Connecting people to bring change
All IKEA products, be it your favourite BILLY bookcase or POÄNG chair, go through a journey. The journey starts from the supplier to a distribution centre and finally to a store from where the products reach millions of people to help them create their beautiful homes.
With increasing urbanization, new store formats, new selling capabilities like e-commerce, and fast-changing customer behaviours, the demand for home furnishing products is rising. But the demand and response to it needs to be sustainable and effective in the long run.
So, IKEA is rethinking everything – the materials used for making products, energy consumption in the operations, to how products are transported through the supply chain to keep growing but within the boundaries of the planet.
Even as IKEA has started its decarbonisation journey, it is not an easy one. Transportation is often referred to as a hard-to-abate sector. The term 'hard-to-abate sector' refers to a segment for which modernisation or transition is not easy because it either lacks technology or the costs are prohibitive.
In the context of transportation, it often refers to the immense challenge of electrification and the costs involved in making these transitions. For example, in transportation, a change is not just about opting for electric vehicles; it means such large vehicles must be available in the first place. They also need to be able to travel long distances, which means charging points need to be in place. To make it sustainable the electricity also needs to come from renewable sources.
For IKEA, 4.3 per cent of the brand's total value chain climate footprint comes from product transport. In FY21, the climate footprint for product transport decreased in absolute terms by 2.8 per cent compared to the baseline year FY17.
But there is still a long way to go to reach the climate targets we have set in IKEA for transportation and logistics. "We need to work together with our service providers and be aligned with each other on our common decarbonise journey. IKEA can bring forth changes for a more sustainable environment, but we cannot do this alone. Alongside like-minded partners, and stakeholders, we can multiply and amplify the small steps to become strides," says Elisabeth.
To this effect, IKEA has identified Reduce, Replace and Rethink as three pillars of its decarb journey for the highest impact. "We have created a diversified portfolio of initiatives and solutions, short- and long-term simultaneously, with the same sense of urgency. We want to engage with others and collaborate to find better solutions, advocate policy change, and take further actions," says Elisabeth.
“IKEA can bring forth changes for a more sustainable environment, but we cannot do this alone. Alongside like-minded partners, and stakeholders, we can multiply and amplify the small steps to become strides.”
Elisabeth Munck af Rosenschöld
Reduce
Reduce refers to the IKEA initiatives to save the use of energy and fuels and enhance efficiencies, explained Elisabeth.
For this, for example, IKEA collaborates with carriers and distribution centres to increase the number of goods transported per shipment. This includes increasing equipment utilisation, using bigger equipment, and hauling longer and multiple trailers. With fewer shipments, there is a reduction in transport costs and avoided emissions.
And these initiatives are yielding results. One of the IKEA service providers in Finland has started using trucks that can carry two 45 feet high-capacity containers, the largest containers available in Europe. By transporting two containers with one vehicle, CO2 emissions per shipment have reduced by 45 per cent.
"A crucial factor for optimising fuel consumption is to deploy the recent innovations available in the freight industry. A new truck used in the Netherlands has shown that an efficient engine reduces fuel consumption by up to 10 per cent. At the same time, the innovative hardware and software solutions help maintain average speeds, save costs, and reduce emissions," says Elisabeth.
Replace
Replace refers to the initiatives IKEA is looking at for substituting fossil fuels with better and cleaner alternatives.
IKEA has identified switching to intermodal solutions as one of the ways, says Elisabeth. For this, IKEA is collaborating with its partners to move more and more goods from roads to rail, short sea, and barge.
"By finding new ways to supply our products and scaling up the development of intermodal solutions, we can drastically decrease the use of fossil fuels and lower emissions from our operations," says Elisabeth.
In FY21, IKEA's relative emissions from land transport decreased by 2.2 per cent, compared to FY20, primarily due to an increase in intermodal solutions.
When it comes to the Replace strategy, IKEA is also increasing the use of more sustainable fuels and striving for electrification of freight fleets. It aims to end the dependency on fossil fuels. In Sweden, nearly half of the IKEA domestic transport is done using electric rail powered by hydropower and the rest on trucks using biofuels such as HVO (hydrotreated vegetable oil).
In 2018, IKEA started its fossil-free journey in Dubai, a city renowned for its oil reserves, by using five per cent of biofuels from used cooking oil in the domestic transport from the ports and to the stores. Since then, IKEA has scaled up the solution and uses one hundred per cent biofuels for all these domestic deliveries.
"Since we started our decarbonise journey, we have achieved a lot. However, the world is in a countdown mode to limit climate change, and there is a need to speed up. We need to urgently transition into renewable energy use," says Elisabeth.
Rethink
Rethink refers to being open to innovative ideas and collaborating with others to drive innovation.
For example, IKEA is on a journey to phase out fossil fuels and sees electrification as a key contributor to reducing CO2 emissions. So, for this, IKEA is collaborating with like-minded companies to scale the build-up of infrastructure and deploy electric vehicles.
There are other collaborations too. In 2021, IKEA joined forces with several global companies by signing the 2040 ambition statement through the colla borative platform Cargo Owners for Zero-Emission Vessels, facilitated by the Aspen Institute. The ambition statement highlights that global transport buyers want zero-carbon shipping and rapidly accelerating decarbonising efforts. By signing this, IKEA aims to ship goods only on zero emission vessels by 2040.
“When we say climate positive, it is an alliance beyond our carbon footprint.”
Will all this ensure that IKEA reaches its 2030 goals to become climate positive? Elisabeth says it is not enough that IKEA achieves its goals because climate change needs to be prioritised by all stakeholders along the value chain of our products.
"If we buy all the biofuel available in the market and there's nothing left for anyone else, we have not achieved anything. When we say climate positive, it is an alliance beyond our carbon footprint," Elisabeth says.