Speaker: Andreas Rangel Ahrens, Head of Climate at IKEA, hosted by Fergal Byrne, Executive Producer, The Sustainability Agenda
Available on: Spotify | Apple Podcasts | Google Podcasts | Sticher
Looking at carbon emissions coming from a company’s operations only has long been understood as insufficient if we are serious about decarbonization. But looking separately at emissions coming from own operations as well as the value chain may not be ideal either. This is what IKEA has found. “We usually do not split [emissions] into scopes 1,2, 3. We always look into the totality of the IKEA business impact on climate change,” says Andreas Rangel Ahrens, Head of Climate at IKEA, explaining that instead the company sets specific goals for each part of business: materials, production, transport, etc.
Mr. Ahrens explains that around two-thirds of IKEA’s footprint comes from upstream in the supply chain. It's the materials used in the products, how the products are manufactured, and how they're transported.
“That's why I think it's so important that we do not split or that we don't bundle all of the scope 3 missions together because there are three different agendas, or even four,” he says.
This meant that when setting those goals all parts of the business had to be engaged and all the managers involved had to understand not just what goals were being set but also what actions they needed to take.
Working With Suppliers on Reducing Emissions
This strategy is particularly important when working with suppliers – while from an accounting perspective, the emissions IKEA is addressing in the supply chain are Scope 3, it is important to tackle them separately. Mr Ahrens explains that by doing it this way, IKEA can look into improving existing materials or changing them if needed to improve energy efficiency.
This of course wouldn’t be possible without successful long-term relationships with suppliers, which have been built, on average, over 11 years. “We’ve been collecting energy consumption data from our direct suppliers since 2010, if not earlier,” says Mr. Ahrens. And it’s not just about collecting data. IKEA employs a very collaborative approach when working with suppliers, ensuring that feedback is always given and action plans are developed jointly. “This has helped us to really drive down carbon footprint from production and it has almost been reduced by 40% compared to 2016.”
Goal Setting When Acting on Scope 3
When it comes to planning and setting goals, what works best, IKEA has found is to have both short-term and long-term goals. Long-term goals reflect the general commitment and are aligned with global expectations, and short-term goals are the ones that are actually included in business plans.
“If we look at IKEA, our business plans run on a three-year horizon and our strategy runs on a five-year horizon. If we set goals for 2040 or 2050, they are too far away, and they cannot actually be incorporated into the business plan,” explains Mr. Ahrens.
“If you set them looking at a five- or ten-year horizon, you can also slice them up and see, based on where we need to be in five, ten years, how much we should achieve in the next three years. And it becomes more tangible for the business as well.”
And in fact when looking at greenhouse gas emissions, it's not so much where we want to be in 2050. It's really about the extent to which we are able to reduce emissions by 2030 if we want to meet the 1.5-degree scenario. This really emphasises the urgency of actions right here, right now, instead of looking into the future and hoping for technological developments that might or might not come to be realized.
In terms of following up onr goals, IKEA has set a goal from, with strategic goals when it comes to greenhouse gas emission reductions until 2030 in line with both the IPCC reports but also UN sustainability development goals also run until 2030. So all of our sustainability goals run until 2030.
But then, where relevant, the company has also set shorter-term goals like sub-goals. For instance, it aims to use 100% renewable energy by 2025 for its own operations.
And looking at direct suppliers, it wants to phase out all coal and fossil oil-based fuels used on-site already also by 2025 because due to its significant impact both on our climate footprint, as well as on air pollution.
About the Scope 3 Agenda Podcast Series
The Scope 3 Agenda Podcast is a monthly series produced by EcoVadis in collaboration with Fergal Byrne from The Sustainability Agenda featuring stories from senior business leaders working on supply chain decarbonization to reduce Scope 3 emissions across different industries. In the ten episodes we talk to business and thought leaders from a range of industries and explore strategies, challenges and lessons learned by companies who have embarked on a decarbonization journey.