IKEA has a strategy to make switching to clean energy for all of its suppliers easier.
Author: Tom Idle
It is a challenge that homewares giant IKEA has been trying to solve these past couple of years. In 2021, the firm launched a dedicated program to support its suppliers in China, India and Poland in accessing more clean energy. The scheme created bundled framework agreements and PPAs making it easier for suppliers to buy renewable power from the grid. It also set up a mechanism to provide finance for suppliers keen to invest in onsite projects.
Recognising that many of IKEA’s suppliers struggle to purchase 100 percent renewable electricity — and that only a portion can be generated onsite — the firm says it has “shown that it’s possible to make renewable electricity both accessible and more affordable.” The initiative has already contributed to reducing IKEA’s climate footprint by a further 5 percent and doubled the share of renewable electricity being used in China from 32 percent in 2021, to 64 percent in 2022. According to the company, offers for affordable renewable electricity contracts in India and Poland have been “successfully finalised and will come into effect during 2023.” In Poland, PPAs from wind and solar have been secured — giving suppliers at least 50 percent cheaper electricity compared to current market prices.
Now, IKEA has announced plans to expand the scheme further this year, with suppliers in 10 more countries — including Germany, Italy, Lithuania, Sweden, Turkey and Vietnam — set to take advantage. The combined electricity consumption for production in the 10 nations accounts for around 13 percent of the climate footprint associated with IKEA’s production; so, success is crucial if IKEA is to meet its goal to be people- and planet-positive by 2030.