IKEA has taken another step in its sustainability strategy by extending its renewable electricity program to 14 additional countries, including the United States. The expansion aims to address emissions within its supply chain and move closer to the company’s goal of achieving 100% renewable energy across its operations. As part of its climate goals, IKEA focuses on reducing greenhouse gas emissions from production and increasing the use of renewable energy sources. The initiative supports suppliers in making the transition by providing access to pre-negotiated agreements for purchasing renewable electricity.
When IKEA introduced the program in 2021, it was initially implemented in China, India, and Poland. The company later expanded the initiative in 2023 by adding ten more countries, including Germany, Sweden, and Vietnam. Since its launch, the program has contributed to a steady increase in the share of renewable electricity in IKEA’s production processes. The latest expansion builds on these efforts, aiming to further assist suppliers in reducing their reliance on fossil fuels.
Why is renewable electricity important for IKEA?
Electricity consumption contributes significantly to IKEA’s overall emissions, accounting for approximately 36% of the company’s production-related emissions. Addressing this issue is a key part of its broader commitment to become climate positive by 2030. By supplying renewable electricity to its production facilities, IKEA seeks to mitigate its environmental impact while also helping its suppliers meet sustainability targets. The company has set a goal of achieving 100% renewable electricity across its operations by 2025, while also working towards fully renewable energy use, including heating and fuels, by 2030.
How does the expanded program support suppliers?
The initiative provides suppliers with local solutions such as bundled framework agreements and Power Purchase Agreements (PPAs), allowing them to secure renewable electricity at pre-arranged prices. The approach simplifies the process of transitioning to clean energy, making it both accessible and cost-effective. According to Sriram Rajagopal, Head of Climate and Air Quality at Inter IKEA Group:
“We are striving towards 100% renewable energy across the IKEA value chain. Electricity generation from fossil fuels is one of the largest sources of greenhouse gas (GHG) emissions globally. By collaborating with suppliers, we can make the shift towards using more renewable electricity easy, accessible, and affordable. This collaborative effort not only helps reduce our environmental impact but also empowers our suppliers to decarbonise their operations.”
With the addition of 14 new countries, including Brazil, Japan, Thailand, and Spain, the program now covers a wider range of suppliers. The company reported that renewable electricity usage in Vietnam alone increased by 40 percentage points between fiscal years 2023 and 2024. Susanne Waidzunas, Global Supply Manager at Inter IKEA Group, stated:
“We have received great response from our partners since the launch of the programme and are excited to expand it further. The share of renewable electricity used by our suppliers in Vietnam increased by 40 percentage points between FY23 and 24, reaching 84%.”
The expansion reflects IKEA’s continued focus on reducing emissions in its production process. While renewable electricity usage in product manufacturing reached 75% this year, the company is working to further increase this figure. With this extension, suppliers in new markets will have greater access to sustainable energy sources, contributing to IKEA’s long-term environmental targets.
In its efforts to transition towards renewable energy, IKEA has introduced multiple initiatives alongside this program. The company has also been investing in renewable energy infrastructure, such as wind and solar farms, to support its sustainability objectives. Compared to its initial renewable energy strategies, which focused more on its own operations, the current program emphasizes assisting suppliers in adopting cleaner energy sources.
The expansion of IKEA’s renewable electricity program highlights the company’s strategy to lower emissions within its supply chain. The initiative not only supports IKEA’s climate goals but also enables its suppliers to benefit from access to renewable energy. As more companies focus on sustainability, accessibility to affordable clean energy remains a crucial factor in achieving broader emissions reductions. The program’s success will depend on continued collaboration between IKEA and its suppliers, as well as the availability of renewable energy in the newly included markets.
